Inside the tunnels of Gaza’s inventive economy
by Nicolas Pelham, MERIP, MER261
For an informal smuggling route, the tunnel complex underneath Gaza’s border with Egypt is remarkably formal. A security cordon of chicken-wire fencing surrounds the Gazan side of the site, barring entrance from Rafah town a few hundred meters away. At each exit a squad in military fatigues monitors the round-the-clock traffic for blacklisted goods. At one checkpoint, Hamas security men frisked a youth in jeans and a baggy T-shirt, discovering a colored paper bag taped to his waist. Inside were 16 packets of tramadol, an opioid painkiller that can be purchased over the counter in Egypt but is sold by the pill in Gaza. The young man’s stash would have fetched 6,000 shekels (over $1,600) on the streets.
Tunnel operators permit such illicit commerce at their peril. Amid the dust clouds churned up by the endless shoveling and hauling stands the nerve center, a bungalow housing the Border and Crossings Authority, adorned incongruously with a bed of anemones. In 2010, the Authority closed at least five tunnels for smuggling tramadol and two tunnels for evading payment of tobacco taxes. “We used to earn thousands smuggling small shipments of handguns, grenades, bullets and dynamite,” says a tunnel operator of five years standing, “but it is no longer worth the risk to be prosecuted by Hamas.”
Known until its upgrade in September as the Tunnels Commission, the Border and Crossings Authority regulates Gaza’s underground trade flows, estimated by Gazan businessmen at over $700 million annually. Hitherto entirely under Interior Ministry control, the Authority is comprised of a 300-strong Interior Ministry armed force, which patrols the Egyptian border on motorbikes and checks the papers of all those entering and leaving the closed zone. Another corps of 200 customs officials, under Economy Minister ‘Ala’ al-Rifati, oversees tariff payments, performing spot checks of cargoes to ensure compliance. Before exiting, truckers queue to register their loads at booths in front of the Authority’s gates. Each truck then sits on an electronic weighing machine inlaid in the sands. Truckers receive a printout of the results, to be declared on leaving the tunnel zone.
The industrial scale of the tunnel business is staggering, dwarfing what passes through the Israel’s Kerem Shalom crossing, even now that Israel has relaxed its siege on Gaza in an attempt to calm the furor that erupted after its naval commandoes killed nine aboard a maritime aid convoy in May 2010. Bulldozers shovel gravel into huge dump trucks, and tankers loaded with fuel ply the sands shrouding the site in a dust cloud. Among the quantities arriving daily by tunnel, according to UN figures collected from local merchants, are 800,000 liters (around 5,000 barrels) of fuel, 3,000 tons of gravel, 500 tons of steel rods and 3,000 tons of cement — about as much as Israel shifts in a week. On one visit in October, I counted a truck pulling out of the complex every three minutes.
Necessity, the Mother of Invention
By the contemporary standards of Gaza’s traders, the times are remarkably peaceful and bustling. In the late winter of 2008, Israel unleashed a war on Gaza, Operation Cast Lead, whose bombardment pummeled many tunnels. In 2010, the regime of Husni Mubarak in Egypt announced it had played its part in the siege by plugging 600 tunnels with a variety of methods, from explosives to flooding with sewage, and most menacingly by sinking a steel barrier deep underground. Extortion and confiscation of goods was systemic. “If you didn’t pay their extortion, they imprisoned you,” recalled a tunnel owner on the Egyptian side of the border, who claimed interrogators had strung him by his hands during his ten-day detention, to extract a 250,000 pound ($45,000) bribe as the price for escaping a five-year prison term.
But Egypt’s revolutionary upheaval and Israel’s growing readiness to accept if not deal with Hamas have brought the clandestine trade into the open. Where once haulers descended by rope ladder, tunnel operators have installed electric lifts descending 65 feet underground. Narrow, easily disguised shafts built of wood have morphed into gaping openings, 13 feet in diameter, lined with cinder blocks. In place of the shahata pulley mechanism — a plastic sheet silently hauled through the tunnels by winch — some tunnels now sport a dozen carts rumbling on rails, much as in coal mines.
The birth of the tunnel economy, however, lies in harsher times, when Israel and Egypt responded to Hamas’ June 2007 takeover of Gaza by imposing a hermetic seal around the coastal strip. Western powers acquiesced to the quarantine, adding a financial boycott of their own, and reducing the territory to dependence on humanitarian drip feed. Denied petrol, Gazans discarded their cars on roadsides, and rediscovered donkey travel. Toilet paper was banned.
Necessity proved the mother of invention. In January 2008, Hamas forces bulldozed their way through the iron wall Israel had erected on the eve of its 2005 pullout from Gaza along the Strip’s southern border with Sinai. Hundreds of thousands spilled into Egypt on a shopping spree, releasing a rush of consumerism suppressed for months. Egypt’s forces succeeded in herding them back, but henceforth Hamas looked to Egypt for its supply line. In the months that followed, tunnel operators imported Egyptian gasoline, first in sand-ridden plastic bottles, which ruined engines, and later through three-quarter inch pipes pumping more than 5,000 gallons per hour. By the time of Cast Lead, 90 percent of Gaza’s supplies were arriving by tunnel.
Fear of Egyptian detection and Israeli bombing prompted tunnel owners to dig deeper and longer. Economies of scale, import in bulk, increased competition and sliced markups all lowered costs, bringing goods within reach of an increasing number of Gazans, and further fueling expansion. A host of other factors added to the demand. Refurbishment of once rough-hewn tunnels ensured that goods arrived undamaged on the shelves. The low production cost and subsidy of Egyptian goods meant that the prices of key staples plummeted: Fuel, cigarettes and wheat were all available at a fraction of the price of imports from Israel, as were medicines such as Viagra. Cars crossed into Gaza, initially cut into three and welded back together on arrival; by mid-2009 they were arriving whole, tugged through the tunnels by bulldozers.
The trade is fast and mercifully free of red tape. While Israel’s crossings are subject to repeated closures, due to Jewish holidays or spikes in political tension, the tunnels operate 24 hours a day, seven days a week. Moreover, trade with Egypt gave Gazans access to the black market stretching deep into southern and northern Africa. The plethora of sports utility vehicles bearing license plates beginning with “12,” the number for smuggled vehicles, testifies to the roaring trade in luxury cars looted from eastern Libya after the collapse of the Qaddafi regime. One Rafah-based tunnel operator invested $100,000 to upgrade his tunnel, so that he could ship 200 cars per week.
Even after Israel eased the closures, its continued ban on heavy-duty goods, particularly building materials that it deemed could be dual-use but were vital for post-war reconstruction, stimulated development of the tunnel economy. Initially, Gazans substituted war detritus for gravel, a vital building material. But when Gazans had exhausted their supplies of ruins and reduced their two most visible symbols of PA cooperation with Israel — the shell-shattered industrial park on the northern Israeli-Gazan border and the Europe-funded airport and runway in the south — to sandpits, the tunnels were again adapted to meet demand. By mid-2011, prices for Turkish cement (Gazans snub Egypt’s lower-quality products) had fallen from almost $1,000 per ton at the height of the closures in mid-2008 to $250 in June 2010. After a spike prompted by intermittent Egyptian crackdowns, merchants close to Hamas flooded the markets with cement, fixing the per-ton price at $100, beating what Israel had charged before the blockade.
Imports aside, the tunnels offer multiple other ways of escaping the siege. They offer an outlet for exports, which (with the exception of carnations and strawberries) Israel prevents from leaving Gaza, even to fellow Palestinians in the West Bank. Tunnel carts hauling gravel to Gaza return with polystyrene boxes full of live lobster and crabs, much prized in Egypt, particularly in the breeding season, when Egypt’s fishermen stay onshore and allow stocks to recover. Gazans also export eggs, which are cheaper in Gaza than in Egypt; scrap metal, which goes to Sinai for recycling and return as metal sheeting; and, with the surfeit of Israeli consumer goods entering Gaza, such Israeli re-exports as hair gel.
The tunnels help people as well as goods sidestep the siege, whether descending in a bucket, harness or electric lift, or by walking down a ramp. Although Egypt’s immigration authorities have increased the daily exit quota crossing at Rafah’s overland terminal from 250 per day under Mubarak to 600 after his fall, the tunnels provide a convenient substitute for a process dogged by obstacles. The required entry clearance takes months to obtain, and even then Egyptian authorities routinely reject 15-35 percent of applicants under the age of 40 on security grounds as well as all those still standing in line when the border closes at 5 pm. By contrast, for a fare of 100 shekels, the tunnels offer a fast track. From one side to the other the 200-yard trip takes less than ten minutes, and is so painless that even frail, elderly grandmothers scramble across. Traffic rises at night, when the overland terminal closes, and parents arrive in Sinai with babes in arms. Once across, for a few hundred shekels Palestinians can obtain a counterfeit permit in al-‘Arish to exit the Sinai Peninsula and travel over the Suez Canal to Cairo.
All told, the tunnels have kick-started Gaza’s reconstruction, propelling it out of the darkest days of the siege. Imports have triggered a building boom, which is finally succeeding in addressing housing demand pent up by five years of closure. Contemporary Gaza resembles a vast construction site. Piles of gravel, marble and steel rods line the roadside; carpets of locally manufactured cinder blocks dry in the sun. The sound of concrete mixers grates the air. Drab beachside hotels receive facelifts; families add new floors to their homes; new supermarkets open in Gaza City every month; and Hamas rebuilds the mosques and government offices Israel flattened in 2008-2009 bigger and brasher than before. According to World Bank figures, construction starts in the first half of 2011 grew by 220 percent.
The task of reconstruction remains daunting, but no longer beyond reach. Israel destroyed over 6,000 housing units during Cast Lead. To replace these losses and account for natural population growth, reckons UN Habitat, the UN’s housing agency, Gaza needs 60,000 housing units, requiring 158,450 truckloads of cement. In 2011, UN agencies estimated it would take 80 years to satisfy demand for cement at the rate it enters from Israel. Via tunnel, it would take only five years. Even so, for the Hamas government that projected pace is too slow. Economy Minister Rifati says that Hamas aims to increase construction from 10,000 units in 2011 to 20,000 by 2013.
There are negative side effects. While Gaza’s housing stock recovers, the Egyptian side of Rafah, the town cloven in two by Egypt’s 1979 Camp David agreement with Israel, is splitting asunder once more. Land heave from the tunnels rips fist-size cracks in the living rooms of the new mansions the tunnel operators built from their earnings. Three houses collapsed in one summer week. Subsidence has soared after the tunnel owners moved their operations from faraway openings to more convenient outlets under their homes after Egypt’s state security forces fled in the last days of Mubarak’s regime. A tunnel owner lounges on gold-embroidered cushions smoking a water pipe upstairs — his relaxation interrupted by the rumble of workers in his backyard shoveling aggregates into shoots that connect to the tunnel carts. In a nearby garage, a fleet of new cars waits for the signal to depart.
That said, the residents of Rafah’s ruins find relief inside Gaza. After years of separation, the tunnels are reconnecting Sinai’s Bedouin and 50,000-strong Palestinian population with kinsmen over the border. Each evening a troupe of Egyptians visit Gaza to dine with relatives. The more adventurous head to Gaza’s smart restaurants and cafés catering to Gaza’s new mercantile class, and the young to the growing number of beach resorts. “The girls are prettier in Gaza than in Alexandria,” says Ziyad, a young digger who has made the trip, and finds Gaza more liberal, despite its Islamist veneer, than his native city.
In a job market blighted by Israel’s ban on Gazan workers, bombardment of its manufacturing base, closure of export markets and a marked slowdown in donor-funded development projects, the multiplier effect is startling. Unemployment in the Strip slid from a peak of 43 percent in mid-2008 to 28 percent a year later. In Rafah, hitherto the enclave’s most depressed city, unemployment fell from near 50 percent in December 2007 to 20 percent by December 2008, Gaza’s lowest rate. Rafah’s main avenues bustle with shoppers and café goers late into the night, and the backstreets sport ATMs doling out hundred-dollar bills.
Collectively, the tunnels constitute Gaza’s largest non-governmental employer and its largest employer of youth. Workers earn as much from burrowing to Egypt as Palestinians in the West Bank do building Israel’s Jewish settlements. By mid-2011, the number employed in Gaza’s construction sector had almost doubled over a year earlier. UN officials complained that by the time Israel had approved the entry of materials for 43 projects, mainly schools, they could no longer find workers for hire. Boosted by the construction boom, real estate prices soared. At $5,000 per square meter, property in Jabalya, Palestine’s largest refugee camp, became a fraction less expensive than in Tel Aviv.
Other sectors flourished in tandem. By October 2011, Hamas officials claimed, half of the 1,400 factories Israel destroyed during Cast Lead had returned to production. The owner of a plastics factory boosted his work force above its pre-blockade size by importing fresh parts and raw materials. According to a September 2011 World Bank report, the Strip notched 28 percent GDP growth in the first six months of 2011, making it among the fastest-growing economies in the world.
The Tunnels as a Political Tool
The turnaround for an economy that Western policymakers had connived to render a basket case has dramatically revived the political fortunes of Gaza’s masters, Hamas. “I was never Hamas, but they have done a sterling job in the face of outside hostility,” says a cab driver who spent 25 years as a day laborer in Israel. “Everyone is joining Hamas.” At their checkpoints at the gates of the tunnel zone, Hamas’ security officials proudly offer to show foreign visitors around the fruits of their entrepreneurship. “We saved Gaza from starvation,” says Muhammad al-Qutati, a commander and would-be tour guide. “It’s an achievement.”
Equipped with alternatives, Hamas has adapted quickly to external pressure. When, in January 2011, Salam Fayyad’s government in Ramallah halted supplies of Israeli industrial fuel for Gaza’s power plant on the grounds that Hamas was not paying its electricity bill, Hamas imported 660,000 gallons of far cheaper diesel each week from Egypt, keeping all three turbines running on their maximum setting. With improved reliability, Gaza’s blackouts have fallen from 12 hours a day to two. Even Hamas’ Fatah rivals accord the Islamists grudging respect for their state-building prowess. “In the face of adversity, war, siege and sanctions, they delivered,” says a former Palestinian Authority (PA) military intelligence officer and Fatah member, briefly arrested following the 2007 takeover.
Not only are the tunnels a safety valve, alleviating the risk that discontent will escalate into an uprising, but they have also punctured Gaza’s dependence on Israel. Although Israel acted unilaterally in declaring Gaza under Hamas a hostile entity and imposing the siege, the sentiment was mutual. By releasing Gaza from the shackles of the Paris Protocol, the part of the Oslo agreements that subsumed Palestine’s economy under Israel’s, the tunnels have fulfilled a key promise of Hamas’ manifesto for the 2006 elections. Gaza gained control over its own supply lines, established an independent gateway to the Islamic world and eased itself out of Israel’s customs envelope into Egypt’s. A senior Fatah official returning to Gaza for ‘Id al-Adha in early November marveled at the transformation. “Most of the products you see on the local market in the West Bank primarily come from Israel,” he said. “But in Gaza there is a broad array of different goods, particularly from Turkey and Egypt. If Gaza manages to cut the cord with Israel and reestablish itself with other markets, then that is not bad news.”
Israel’s closures not only enabled Hamas to tap new markets, they have also helped it limit the entry of undesirables, keeping their opponents out as much as the Islamists in. Following the takeover, Western diplomats cut aid programs and limited their visits to occasional day trips, exiting Gaza in their armored cars by 3 pm on account of the reduced operating hours at Israel’s crossings. Egypt and Israel both forced EUBAM, the European monitoring authority at Rafah, to suspend operations, ensuring that when the terminal started back up it did so without Western interference. Rivals of Hamas from Ramallah stayed away, dissuaded by Western donors and Israel, who threatened to withhold funding if they engaged with Gaza. Israel barred its nationals, even those trained to deal with emergencies, such as the media, entirely. A near-blanket ban on trade with Israel hit those merchants with the closest ties to Israel.
In a paradox verging on the absurd, the blockade is helping its supposed target, Hamas, while undermining its intended beneficiaries. With UN agencies and Western-backed NGOs barred by Western donors from buying tunnel imports, Hamas and its allied tunnel owners have taken the lead in reconstruction. Rather than depend on UNRWA, the UN’s Palestinian refugee agency responsible for sheltering three quarters of Gaza’s population, refugee families have turned increasingly to Hamas. “The flourishing illegitimate tunnel trade permits smugglers and militants to control commerce,” expostulated the UN’s Middle East peace process coordinator, Robert Serry, in his May 2010 briefing of the Security Council, fearful that the international community was hemorrhaging influence. “By contrast, international agencies and local contractors who wish to procure goods entering through legitimate crossings too often stand idle due to the Israeli closure.”
With their operations and patronage networks in jeopardy, NGOs and UN agencies campaigned vociferously against the siege. In an attempt to regain their stake in the supply chain and revive their state-within-a-state, UN officials presented a plan for a reopening of Israel’s crossing, in which they — not Hamas — controlled distribution. Simultaneously, they mounted a campaign highlighting the humanitarian costs of a tunnel economy, which Hamas officials too often left unmentioned. In three years an estimated 130 laborers perished underground, they noted; child labor was rife. A UN survey of over 500 Gaza traders and wholesalers in April 2010 was quietly shelved after it revealed that the tunnels had alleviated “to a reasonable extent or more” the shortages resulting from Israel’s restrictions.
UN and West Bank PA losses were Hamas’ gains. The tunnels became a key driver of upward mobility, nurturing a new mercantile elite that owed its prosperity to Hamas’ new order. Yesteryear’s cosmopolitan merchants struggled to retain their market share against Rafah’s hitherto marginalized Bedouin, whose kinship ties with Sinai gave them a commercial edge.
To cement its control, Hamas’ authorities imposed border controls of their own, particularly after Egypt and Israel began to ease access to Gaza. In October 2011, the Islamist movement’s Interior Ministry rolled out a computerized immigration system, requiring foreigners to obtain a local sponsor before entering Gaza. A computer program devised by the ministry’s IT department instantaneously updated records processed centrally in Gaza City at the immigration desks in Rafah and Bayt Hanoun, the point of entry from Israel. The Border Authority tightened entry procedures, too, citing Egyptian demands, requiring prior coordination for all travel via tunnel. When I visited the Authority, a Jordanian woman and her eight-year old daughter, who had arrived without the requisite documentation, were waiting under police guard.
Increased regulation, too, furnished Hamas with a local financial base, cushioning its dependence on increasingly unreliable financial support from Syria and Iran. Once a tax-free enterprise promoted to escape closures, the tunnels became a source of domestic revenue. In September 2008, the Rafah municipality introduced a one-off license fee of 10,000 shekels per tunnel plus a 1,000-3,000 shekel supplement for connection to the electricity grid. Levies on select goods gradually rose. By the autumn of 2011, Hamas was collecting a 100 percent surcharge on fuel from the tunnels, selling fuel that cost less than a shekel per liter in Egypt for 2.7 shekels in Gaza (still not quite a third of the prevailing price in the West Bank). Hamas similarly profited from the nightly blackouts, when the din of diesel-guzzling generators reverberates in Gaza City. Imports of Libyan cars earned Hamas $3,000-10,000 apiece in custom duties and registration. The tunnels further help the Islamists circumvent US Treasury restrictions on financial transfers from abroad. Hamas middlemen purchase laptops (including the one used to write this article) in Egypt and sell them at near cost on arrival in Gaza.
As Gaza’s economy recovers, Hamas has succeeded in raising over half of its $300 million annual budget locally. Economy Minister Rifati, in conjunction with the monitoring and human rights commission of the Palestinian Legislative Council, the PA’s parliament, is finalizing a scheme for a new round of tariffs under the pretext of protectionism. “If we have a local alternative, we should raise tariffs on tunnel imports,” reasons Rifati, saying the scheme would target wooden furniture, carbonated drinks and biscuits, all of which Gaza produces.
Bolstered by improved revenues, Hamas widened and upgraded much of the Salah al-Din highway, a spine running from Gaza’s north to south, to accommodate the growing dump truck traffic, further bolstering revenues from the additional petrol consumption. The Hamas-run Gaza municipality beautified its sandy city-center wastelands with grass turf hauled via tunnel, in time for the welcome ceremony for the prisoners Israel released as part of its October prisoner exchange.
Adding to Hamas’ prestige and clout, the tunnels also bolstered its arsenals, not least with anti-aircraft missiles that Qaddafi’s fighters left strewn in wooden boxes in his palace grounds. According to Israeli analysts, the warhead Palestinian Islamic Jihad launched at Ashdod on October 25 weighed 88 pounds and was the largest fired from Gaza to date, comparable to the payloads Hizballah fired in the Lebanon war.
But for the most part, Hamas owes its growing regional influence to the soft power of consumption rather than military might. Channeled through the tunnels, Hamas uses Gaza’s purchasing power to extend its influence into Sinai and beyond. With Egyptian security forces absent at the tunnel mouths, Hamas’ sole control of the underground crossing gives it leverage over Sinai’s population, who need to ensure good relations with Hamas in order to travel. Excluded from the lucrative tourist trade operated by their Nile Valley overlords, the peninsula’s indigenous Bedouin have become increasingly dependent on smuggling to Gaza as their main source of livelihood. “A decade ago, my whole clan had three cars. Nowadays each household does,” says a Bedouin trader, from his new mansion on the Egyptian side of Rafah. So dependent did Sinai’s traders become that when Israel eased the closures in June 2010 a wholesaler in al-‘Arish, North Sinai’s provincial capital, claimed his profits dropped by 60 percent.
Sugared by commerce, some Bedouin speak of reconnecting with their linguistic, cultural and clan kinsmen across the border with Gaza, and reestablishing allegiances first severed when the British colonial rulers of Egypt demarcated separation lines with the Ottoman Empire in 1906. “We’re Palestinians working for the sake of Palestine,” says a tunnel laborer based on Egypt’s side of Rafah.
Egypt’s old guard, seeking to claw back power after the popular uprising against Mubarak, tries to reverse the tide. “We’re not in the business of legitimizing smugglers, terrorists, drug barons and outlaws,” says an Egyptian intelligence officer in al-‘Arish, citing soaring car theft supplying the Gaza market since Mubarak’s fall. But increasingly its hold on Sinai appears dependent on its readiness to deal with Hamas’ rule in Gaza, and the Islamist party’s hand on the tap of militants entering and exiting the peninsula. The growing economic dependence of Sinai’s population on trade with Gaza, the mounting military capabilities of Hamas inside Gaza, the comparative weakness of Egypt’s central authority, and Hamas’ ties with the ascendant Islamist movements in Tunisia, Libya and Egypt have all enabled Hamas to project its influence within the peninsula and beyond. After five years in power, Hamas has dug its way out of quarantine and through its commercial clout is reconnecting to the wider region.
For all the benefits, the tunnels have one — potentially fatal — flaw. In the eyes of Hamas’ own purists and other Islamists, the tunnels have twisted Gaza’s Islamist movement into a business concern. Merchants with Hamas connections vie for contracts for government supplies. Sophisticated faction-run tunnels, of which Hamas has the lion’s share, use their ability to transfer in bulk to undercut smaller suppliers. And, increasingly, internal political rivalries overlap with competition over who collects and distributes the spoils, pitting the interior ministry and the regional military commanders in the south against the overall head of the ‘Izz al-Din Qassam Brigades, Ahmad al-Ja‘abari. And with so much to gain from the tunnel business, few Hamas leaders seriously consider a reconciliation process with the Ramallah half of the PA unless it will allow them to retain hold of their assets.
The corruption is visible even on a cursory tour of the tunnel complex. Workers die from asphyxiation caused by tunnel collapse despite the lip service the Border Authority pays to health and safety. The life insurance it requires tunnel operators to pay in the event of death is rudimentary. Despite official curbs on child labor, after school, 12-year olds shift boxes of Egyptian vegetable oil, while their adult handlers and Hamas policemen look on. Much as in the coal mines of industrial England, the boys are in demand because their slight forms are better suited to working in confined spaces.
A World Bank survey in May revealed 46.5 percent of Gazan respondents believed large-scale corruption was commonplace in the public sector, lower than the 62 percent in the West Bank, but still disconcertingly high. The occasional upsurge in projectiles launched at Israel reminds cadres that Hamas is still an underground movement, not just the manager of an underground economy, but the lack of transparency and accountability are grist for the mill of rival Islamist jibes. “Both Abbas’ PA and Hamas are symbols of luxury and corruption,” says ‘Abdallah al-Shami, an Islamic Jihad preacher. “Gaza’s Islamic experiment has failed and become a burden on the people.” A salafi preacher says Hamas men have gone soft. “Before, if a family feud or shooting erupted, the police would come immediately. Now they come late. They feel they have something — a car and a villa — to lose, and ask why they should risk their lives.”
Hamas officials are not immune to the criticism. In recent months, Hamas’ Economy Ministry has taken control over the tunnel revenues from the Interior Ministry. Receipts are deposited in the single treasury account the Hamas government operates, says Huda Na‘im, deputy head of the PLC commission drafting a new tax regime for the tunnels, although the Interior Ministry maintains the right to a first cut. “Hamas is retaining its message despite Hamas millionaires,” she insists.
Na‘im and others argue that proper governance depends on Hamas ending its profiteering from car smuggling and engaging in an overland economy. With Hamas increasingly formalizing its relationship with Egypt, the obvious corollary would be for its trade route to follow. Egypt’s North Sinai governor and senior Hamas officials both speak of turning Rafah into a free trade zone, which the former says could add $1.7 billion, an amount equivalent to US military aid, to Egypt’s cash-strapped formal economy and give Gaza unfettered access to North African markets. Israel, he says, is reluctant, though it too could gain from elevating the tunnel traffic that operates clandestinely below the earth’s surface. But with such lucrative profits for the taking underground, it remains unclear whether all of Hamas’ own power brokers will agree.