Gaza’s Great Tunnel Recession

Battered by Israeli and Egyptian military strikes and undermined by the easing of the blockade on Gaza, the once-booming tunnel industry is a shadow of its former self.

AFP/Getty Images
AFP/Getty Images

RAFAH, Gaza—It’s a clear sign that an industry is well established when cafes spring up to cater to the workforce. In the best of times, Café Abou el Nour relied on just this business model, supplying a place to rest and talk for the busy workers in Gaza’s tunnel industry. The smuggling zone extends across both sides of the border separating Egypt and Gaza, and is split down the middle by a low Egyptian border fence outfitted with manned guard towers several hundred meters apart.

Once, there were more than a thousand tunnels on this patch of land. These days, however, squeezed by the Egyptian and Israeli governments and the easing of the Gaza blockade, the tunnels have dwindled to as few as 200, according to tunnel workers. Café Abou el Nour also sits empty, save for a 10-year-old worker snoozing in the corner, a few stray cats looking for a handout, and the establishment’s preoccupied owner, Ahmed Abou el Nour. "There is no work these days," he says, "because the tunnel business has been very bad."

Khaled Baraka, a 20-year-old native of Rafah, was one of the workers who benefited during the tunnels’ boom time, which began in 2007 following Hamas’s armed takeover of the Gaza Strip. Neither the Israelis nor the Egyptians had cracked down on the industry yet, and the Israeli blockade imposed after Hamas seized power guaranteed that the tunnels would be Gazans’ primary lifeline for basic necessities.

Hamas nurtured the tunnel industry and continues to view it as an important source of revenue. The party issues licenses for the tunnels, charging Gazans up to $6,000 for the privilege of beginning construction. It then taxes each tunnel $200 per month, according to Baraka and another tunnel worker. In return for these fees, the municipality of Rafah oversees the tunnel trade — helping to resolve disputes between tunnel owners, imposing labor laws, and providing emergency rescue support in the event of a collapse.

When Baraka began his career in the tunnels as a digger, he was working three or four days a week and making up to $200 per day. While the volume of goods passing through the tunnels made the industry seductively lucrative to Gazans, workers lived in fear of tunnel collapses, Israeli airstrikes, and Egyptian military raids. He quickly rose to the position of tunnel manager, overseeing workers in a tunnel. In the middle of 2009, he purchased a 20 percent stake in the tunnel, paying for his portion largely in labor.

But the industry had already begun its decline. After its nearly monthlong war with Hamas concluded in January 2009, Israel managed to convince Egypt that the success of its strategy to isolate Hamas depended on Egyptian help in shutting down the Islamist party’s primary source of goods and weapons. In response, Egypt ramped up its efforts: Over the last year and a half, workers say, Egypt has been responsible for far more tunnel closures than the Israeli air raids.

The visual contrast between the Egyptian side of the tunnel industry and its counterpart in Gaza attests to the firm hand Egypt keeps on the smugglers. While the Gaza side of the industry operates openly, the Egyptian tunnels operate in secrecy, opening into houses or remote fields.

According to some in Gaza, however, Egypt has shown restraint. "The Egyptians are very smart," said Ahmed Yousef, a political advisor to Hamas leader Ismail Haniyeh. If they chose, "They could close all the tunnels tomorrow." While Egyptian President Hosni Mubarak is a staunch U.S. ally and adheres to a peace treaty with Israel, he also does not want to provoke anger throughout the Arab world, and at home, by entirely cutting off Gaza’s economic lifeline. Protesters throughout the Arab world earlier this year railed against the Egyptian government’s construction of an underground steel wall meant to thwart the smugglers, which Hamas dubbed the "wall of death."

Since then, Gaza’s tunnel economy has only declined further. In the wake of the May 31 Israeli raid on a Gaza-bound aid flotilla, which left nine Turkish activists dead and created a worldwide backlash against the blockades, Israel replaced the limited list of goods that were allowed into Gaza with a small list of items that it insisted should still be excluded. As a result, many Palestinians quickly turned their backs on the tunnels, choosing to buy cheaper, higher-quality products from Israel.

In fact, though Hamas continues to support the tunnel trade and its implied defiance of Israeli policy, many Palestinians are desperate to see the industry fall into obsolescence. Tunnel goods are dramatically more expensive than Israeli products, a particularly important consideration in a territory where money is tight and the unemployment rate tops 40 percent.

Cement, one of the few items that Israel still forbids from entering Gaza, sells at more than a 100 percent markup after it passes through the tunnels. On the Egyptian side of the border, it costs nearly $100 a ton — but then it passes through the hands of tunnel owners, wholesale merchants, and store owners, all looking to make a profit. By the time it reaches consumers in Gaza, the price has shot up to around $220 per ton.

For Gazan consumers, caught between buying goods brought to Gaza illegally and those allowed in by the Israeli enemy, quality is also an important consideration. "If the borders open for good, I will never, ever buy goods from Egypt again," said Mohamed Abou Matar, a shop owner in Rafah, as he sipped a cup of Israeli coffee. He had a particular gripe with Egyptian cigarettes, which are notoriously bad. His customers, he said, craved cigarettes from Israel.

Baraka was one of the victims of the tunnel industry’s change of fortunes. The Israeli air force bombed his tunnel in January, caving in a middle portion. Baraka decided that he would not invest in repairs, effectively handing in his retirement from the industry. "I quit working in the tunnels because I lost too many friends," he said. He was also discouraged by the Egyptian government’s renewed anti-tunnel efforts, fearing that Egypt would pump poison gas into his tunnel. Now, he has joined his brothers in the more modest, but far safer, business of buying and selling charcoal.

With the tunnel industry on the wane, the strip of land along the Egyptian border is far quieter than even a year and a half ago. The bustle of the area has disappeared with the stream of goods. However, there are some signs that the tunnel business is not dying, but merely in a state of suspended animation — waiting for the political winds to produce conditions favorable for a revival.

On one recent afternoon, Ibrahim Abou Taha, 17, lounged in the shade of his tunnel’s tent. Nothing had come through the tunnel for days, he said, but he liked to stay close to the entrance so as not to risk losing his job.

Asked if crackdowns by the Egyptians and the Israelis had made him worry for his safety and if he would consider abandoning the tunnel trade, as so many others had, Abou Taha shook his head. "All of us will be dead someday," he said, several minutes after the roar of an Israeli jet had faded.

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