"What Gaza needs is real development, but because of the blockade we are obliged to concentrate on humanitarian work," Filippo Grandi, head of the U.N. Relief and Works Agency, told reporters in Gaza on Thursday. UNRWA is Gaza's biggest foreign agency, supporting some 1.2 million refugees and their descendants in the territory.

Spending on emergency needs, such as food and medicine, does not address fundamental problems, Grandi said. "In fact, it's a waste of money, but a waste we are obliged to make because of the blockade," he added. He said his agency is running low on funds and, among other things, had to cancel its popular summer camps for tens of thousands of Gaza children.

In its six-decade history in Gaza, UNRWA's main roles have been supplying refugees with basic food products and operating schools.

One-third of Gaza's labor force is unemployed, and exports are at only 5 percent of what they were in 2007, he said.