Gaza glutted with smuggled goods - profitability of tunnels plummets

Avi Issacharoff
Haaretz
17 February '10

Owners of the smuggling tunnels bordering the Gaza Strip and Egypt have been suffering from financial problems due to their tunnels' inactivity, according to Palestinian sources.

The reason, it turns out, actually stems from the overall success of smuggling tunnels in Gaza. Hamas has recently set up 'legal' tunnels, which they use to smuggle various merchandise. As a result, existing, non-Hamas run tunnels are suffering financially.

The Hamas tunnels are used to bring in merchandise intended for sale in markets, such as food products and home appliances. Palestinians believe that the overflow of goods caused a complete smuggling standstill in dozens of underground channels. Moreover, work on digging additional tunnels has also stopped.

The tunnel owners explain that the increase in merchandise in Gaza made prices sharply decrease, which seriously reduced the earnings from the 'illegal' smuggling industry. One of the tunnel owners told a news agency that he is waiting for a reasonable business offer to come along, because at the moment it isn't profitable for him to open the channel to smuggling.

In 2008, the smuggling tunnel trade flourished due to the Israeli blockade on Gaza, and was also strong in 2009 in spite of growing Egyptian surveillance of the tunnels, which endangered diggers and smugglers. Since June of 2007, over 100 Palestinians lost their lives in tunnel collapses.

The Hamas-run tunnels, which are deemed legal by the government, are now experiencing continuous activity. Under Hamas rule, hundreds of underground channels have been dug between Gaza and Egypt.

The recent increase in smuggled goods in Gaza caused many factories to renew activity. Overall, if judging by the two most smuggled products - gasoline and cement - tunnel activity has actually caused Gaza to experience an economic reawakening.

Ultimately, the tunnel owners' crisis came from being overly successful. "The last two weeks were the worst in the smuggling tunnel trade since the blockade in June of 2007," said a tunnel owner.
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