Gaza looks beyond the tunnel economy

Tobias Buck
Financial Times
24 May '10

(Not exactly the picture they normally are trying to convey, is it.)

The young tunnel worker flashes a broad smile as he tightens his grip and starts lowering himself down a narrow shaft into the sandy depths below Rafah.

Seated on a piece of wood attached to an electrical winch, he descends 18 metres and starts crawling into the narrow tunnel that continues for another 700 metres, linking this border town in the southern Gaza Strip with Egypt. Somewhere below, his colleagues are shoring up the tunnel's precarious supports, damaged by a recent explosion.

While the dangerous work proceeds below, Nasim, one of the owners of the tunnel, waits in the tent that covers the entrance. He is among a small number of Gazans who have made a fortune by undermining Israel's economic embargo of the Strip. Until recently, tunnel owners could expect to make at least $50,000 (€40,000, £35,000) in net profits every month by smuggling fuel, cigarettes and other goods from Egypt.

For close to three years, the tunnels below Rafah have offered a unique lifeline to Gazans, who are otherwise deprived of all but the most basic humanitarian supplies. They have also allowed Hamas, the Islamist group that controls the Strip, to replenish its coffers and rebuild its military arsenal, making the tunnels a target for Israel.

Today, however, Nasim is more worried about the decline in business than he is about Israeli air raids. He says Hamas, whose security officers can be seen in the tunnel area, is taking an ever greater cut of the operators' profits. Moreover, the prices of many smuggled goods have fallen in recent months, thanks to a supply glut that is on striking display across the Strip.

Some argue that Gaza's tunnel economy is becoming a victim of its own success. Hundreds of tunnels have shut down over the past year as the result of greater Egyptian efforts to stop the flow of goods - and weapons - into the Strip. But the remaining tunnels, about 200 to 300 according to most estimates, have become so efficient that shops all over Gaza are bursting with goods.

Branded products such as Coca-Cola, Nescafé, Snickers and Heinz ketchup - long absent as a result of the Israeli blockade - are both cheap and widely available.

(Read full story)

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