The town of Rafah straddles the border between the Gaza Strip and Egypt. Life there is bleak. Children wearing flimsy flip-flops in the dead of winter play with scraps of metal; young men drive donkey carts carrying gravel; litter lines the street. These are symptoms of Gaza’s economic disease. The small sliver of land 227 square miles wedged between Israel and Egypt is home to 1.6 million people, nearly 40 per cent of whom live below the United Nations poverty line. A recent report by the Palestinian Central Bureau of Statistics estimated unemployment was 31.5 per cent in early 2012. Real gross domestic product per capita in 2011 was $1,165, 88 per cent of the 1994 level. Yet there has long been a sure way to make money in Gaza: by going under it. The tunnels that move goods into the Strip from Egypt have been linchpins of the economy, employing 12,000 to 15,000 and supplying as much as 75 per cent of the products sold in the markets, according to Sameer Abumdallala, head of the Economics Department at Al Azhar University in Gaza. Now the smugglers say their importance is waning: Access to Israeli goods is improving, and the Gazan Government has begun regulating the tunnels, sapping profits.
The tunnels are a byproduct of Gaza’s tortured history. The Strip was ruled by an Egyptian military governor until the 1967 war, after which the Israeli army occupied it and Jewish settlers moved in. The army and settlers didn’t leave until 2005. As part of the Camp David accord, the Israelis and Egyptians split the Gazan city of Rafah in two; a wall divides the halves. To stop weapons smuggling, the Israelis demolished housing to create a no man’s land on the Gazan side of the wall.
For years, Gazans could cross into Israel to work, and goods flowed more or less freely into the Strip. That came to an end in 2007 when Hamas, the militant Islamist group, vanquished the more moderate Palestinian Authority by force after winning Gaza’s first free elections in 2006. Israel and Egypt imposed a wide-ranging embargo: Israel viewed Hamas as a terrorist organisation, while Egyptian President Hosni Mubarak worried about the militants extending their influence to his country. With the embargo making goods scarce, the tunnel operators flourished. After Muslim Brotherhood member Mohamed Mursi assumed Egypt’s presidency, he eased freedom of movement for Gazans but didn’t take substantive measures to lift the economic blockade.
Emad Shaaer has been plying the tunnel trade since the 1990s. At 6 foot 3, he looks more like a retired quarterback than a don of contraband. Over nearly two decades, Shaaer has owned seven tunnels, the proceeds of which bought him two farms, a lavish vacation cottage, and three cars. “When I get money, I buy land, I build a house, I buy cars,” Shaaer says of his investments. “So I have millions [in assets], but I don’t have a million dollars in cash.” For the Shaaers, smuggling is a family business. After Israelpartitioned Rafah, families such as the Shaaers found themselves on both sides of the border. They turned this division to their advantage. The Egyptian branch of the clan helped the Gazan branch smuggle weapons and people into and out of the Strip. Residents of the two Rafahs wanted to see each other, but getting official permission to go back and forth was difficult. Initially, the Shaaers and others dug short tunnels that followed a network of irrigation pipes: The tunnels’ endpoint would be the basement of someone’s house. After the Israelis established their buffer zone, Shaaer says the Gazans began to dig bigger and longer tunnels.
The tunnels that move goods into the Strip from Egypt have been linchpins of the economy, employing 12,000 to 15,000 and supplying as much as 75 per cent of the products sold in the markets, according to Sameer Abumdallala, head of the Economics Department at Al Azhar University in Gaza. Now the smugglers say their importance is waning.
Shaaer entered the smuggling business with his brother, working in a relative’s tunnel to learn the business—making contacts inEgypt, knowing where the dirt walls needed concrete reinforcement and where wooden planks were enough. The brothers spent four months digging their first tunnel by hand. The Israelis were still in Gaza, and the risk of detection by their military or Egyptian authorities was high. “There was no compass to figure out where we were going. It’s just like sitting in a car with black windows,” Shaaer recalls.
After a three-week operation ended, construction materials were in high demand to rebuild the heavily bombarded Strip, and the owners of the tunnels that remained did a brisk business. By 2009, Hamas realised the trade’s economic potential and began to regulate and tax goods coming through the passageways. Shaaer says he now must pay about $2,680 to the Government per tunnel permit per year. Omar Shaban, director of Pal-Think for Strategic Studies in Gaza, estimates that the Hamas Government’s annual income from taxing gas, cigarettes, and construction materials brought through the tunnels comes to $188 million. Sobhi Radwan, the Hamas mayor of Rafah, denies that tunnel owners pay for permits or that the Government regulates or taxes products coming through the passageways.
Tunnel owners and workers say that in 2009 a Hamas tunnel committee distributed a list of items, including fuel and cars, that could not be brought in without its approval. Shaaer says Hamas has also set a limit on how much tunnel owners can charge for building materials like cement. The price cap, he says, is reducing his profit. The industry also faces more competition from Israeli products, which have returned after Israel partially lifted the economic siege of Gaza in 2010. The easing was part of an effort to mollify global public opinion inflamed by the Israeli raid on a Turkish flotilla trying to break the siege. Gazans still want all restrictions lifted.
Armed Hamas guards in dark uniforms are now stationed at every entry point to the tunnel zone. They shoo away most journalists and accompany visitors to the tunnel entrances. Members of the tunnel committee say they’re not authorised to speak to the press. Smugglers say the real money now comes from bringing in goods subject to heavy taxes or forbidden by Hamas. Underground passageways have been built that stretch for more than a mile to skirt the watchful eyes of Hamas. The openings are tucked between houses to hide the smugglers as they haul up cigarettes and other contraband.
One 29-year-old, who wanted to be called Abu Ahmed, has been in trouble with Hamas four times for bringing in fuel; Tramadol, a prescription painkiller used recreationally; Schweppes Gold, a flavored malt beverage; and cigarettes through his tunnel. Shipments were confiscated and he’s been fined. The Tramadol got him six months in prison. But the money he’s made has bought him a new house, and he can buy a new car whenever he wants. “Whatever you do, you have to be careful,” he says, though he admits the allure of quick money is hard to ignore. “If I had the chance to bring in 400 packages of Tramadol, I would do it again.”
Reclining in the living room of his vacation home, Shaaer reflects on the money he’s made and the future of his seven children inGaza. “You have money, you have good style of life, but you can’t use your money, you can’t travel outside and enjoy your life. Gaza is a special prison,” Shaaer says.
The bottom line: Hamas makes as much as $188 million annually taxing gas, cigarettes, and construction materials brought through the tunnels.