When Smuggling is the Only Way In, and Out: The Depriving Economic of Gaza

The population of Gaza have long suffered from economic deprivation since the occupation of Israel. Gaza is surrounded by a barrier wall, built by Israel after the signing of the Oslo Accords in 1994, with crossings, closed most of the time due to attacks or fear of attacks from the Palestinian militants towards the Israeli military and civilians. Since then, the Gaza population have lived their lives under siege, where their basic needs – fuel, food, medicine, clothes and etc, were never met.

To cope with the blockade, apart from very limited aid from international bodies, the population of Gaza resorted to illegal smuggling, digging tunnels between Gaza and Egypt to bring in food, fuel and other items of scarce. The smuggling activity has prevented Gaza’s economic from collapsing, with increasing importance as the borders continues to close every single day. Omar Shaban, a Gaza economist, estimates that smuggling comprises about 90% of market activity in the territory.



The tunnels have been used to smuggle almost everything that can get through it – fuel, cigarettes, food, auto parts, foreign currency, electronic items, alcohol, livestock, clothing and etc. The tunnels also ferry people who cannot leave or enter Gaza without permission from Israeli or Egyptian. Hospital patients were sometimes drugged and shipped on a trolley along the tunnel to prevent panic attacks underground.

Hamas have also excavated tunnels to launch strategic attacks towards Israel Defense Forces and to stock up weapons and bombs within the Gaza Strip. According to the Israeli domestic intelligence agency, since June 2007, 175 tons of explosives, 10 million rounds of ammunition, tens of thousands of machine guns, grenades, land mines and precision-guided missiles, have been smuggled into the region.

These tunnels have been registered with the Hamas authorities by their owners, signing pledges to pay workers’ compensation and hooked up their underground operations to the local electricity network. Hamas have also been cashing in on ‘usage fees” and “value-added taxes” from tunnel owners for goods and “insurance policy” from gasoline buyers. The charge of smuggling a person is exorbitant, reaching up to $3,000 per person.

Tunnels, recently, have been equipped with power cables for electricity, oxygen tubes and intercom systems. Some of the rich owners have also managed to siphon Egypt’s heavily subsidised fuel through plastic pipes, rigged within the tunnel. A standard 500 meter tunnel costs $60,000 to $90,000 to build, while tunnel built with extra safety features can cost up to $150,000. These tunnels employ over 25,000 workers, mostly those who became unemployed from the closing down of factories and farms. Some of the tunnel builders were also children, small enough to dig through holes, in desperate need of money for food and has dropped out from school due to poverty.

During ceasefire, the underground business suffered because goods from Israel and Egypt were allowed to pass through the borders above ground, at a much cheaper price. Having spent an enormous amount of money on the tunnel’s construction and its usage, the tunnel owners, being businessmen, fired home-made rockets into Israel to prompt the government to seal off the borders again in order to resume their business.

The demolition of these tunnels was done by Egypt, Palestinian National Authority and the Israel Defence Force. The tunnels were mostly located within houses and school buildings for safe passage, especially for weapon smuggling and attacks. Explosive were used to destroy them, leaving the building totally unsalvageable. These tunnels, excavated with many branches, reopened almost too soon after the demolition, resuming the smuggling business.

The demolition, in a way, benefited the Palestinian, as the Palestinian National Authority will compensate house owners whom houses have been destroyed, with new concrete houses in the nearest neighbourhood. This policy have led the Palestinians to construct fake tunnel openings and spreading rumours of tunnels located under their house in order to receive these compensations.

The tunnels, so far, have managed to provide immediate needs for the population. Job opportunities in the tunnel business has been plentiful – excavation ‘engineers’, selling excavation tools and the actual smuggling workforce, with a much better pay from their previous jobs. The Gaza population, despite the exorbitant price of goods brought in through the tunnels, have managed to meet their short-term needs such as food, fuel, clothes and drugs.

However, the longer the tunnel remains as a lifeline for the Gaza population, the harder it gets for a proper Palestinian economy to be developed. Most of the population have sold off their disposable assets and relied on credit to buy the smuggling goods. Small industries still cannot resume their operations because the amount of goods and raw materials smuggled through from Egypt has been very limited and extremely expensive, making it unfeasible to run their business and actually gaining profits from it. This has caused some industries to close down and invest their limited amount of proceeds left towards, either building tunnels or operate a smuggling group to collaborate with the tunnel owners.

In the case of the ceasefire, the tunnel owners were somewhat afraid of peace, as it will get in the way of their wealthy business. When the borders start to reopen and more truck loads of supplies were allowed to enter Gaza, they will have to shut down their operations and resort to consuming products brought in from Israel. There is also a question of dignity there. With these selfish, yet understandable act of a mere business man, the road to peace will be interrupted and more Palestinian will suffer.

It is the right of the Palestinian to do whatever it takes to break the siege. Those with money, in a way, have helped to provide basic necessities for those in need. The desperate ones will settle for anything that comes along the way, even illegal goods. The liquidation of family assets has neglected the sustainability of their livelihoods. Land tenure, infrastructure, education and other investment that have long-term development impacts were no longer their priorities.

The ethical values of the Gaza population have become questionable when smuggling is no longer considered as illegal. The Islamic notions of ‘halal’ and ‘haram’, in this dire situation, have challenged the Muslims of their beliefs. The cost of human death from collapsing tunnels and breathing fumes within the tunnels have become acceptable, only to be compensated with money to the victim’s family. Smuggling weapons and bombs were no longer seen as an offence as they continue to pile up within the so-called vulnerable land.

The situation in Gaza is very unpredictable resulting from the ongoing conflict. Numerous attempts have been made to secure peace within the Strip, but due to the unwillingness and untrustworthy of certain main parties, it is almost impossible to reach a state of harmony and to save the falling economic of Gaza. The idea of peace can only be instilled if a mutual understanding can be reached and human greed can be breached.

Peace brings in more opportunities, short-term and long-term. A stable economic can foster a brighter future for Gaza. These smuggling tunnels are merely the basic survival instinct of the Palestinian, but its importance is growing as the borders remained closed and the population becomes hungrier. Who is to blame?

Be still my child. We are fighting for our freedom.


Armed Conflict & International Humanitarian
Oxford Brookes University