Smuggling boom in Gaza fuels black market for goods banned by Israel
A Palestinian vendor offers bottles of diesel for sale in al-Maghazi refugee camp, central Gaza Strip, 15 August 2026
The Associated Press and Amira Hass report in Haaretz on 20 August 2026:
Palestinians in Gaza are paying soaring prices for basic goods, while hospitals and businesses have increasingly turned to smugglers to obtain medicine, fuel, equipment and other supplies banned or restricted by Israel, according to an Associated Press investigation.
The investigation, based on Israeli court documents and interviews with five major traders involved in smuggling, three merchants, two truck drivers, Palestinian officials, United Nations personnel and Gaza residents, found that a sprawling underground economy has expanded during the war, generating millions of dollars in profits for networks on both sides of the Gaza border.
Smugglers, Israeli soldiers, Palestinian intermediaries and Hamas authorities have all benefited from a trade that has grown around Israel’s restrictions on goods entering Gaza, while residents pay soaring prices for basic necessities.
Cigarettes and tobacco products, which Israel has prohibited from entering Gaza since the start of the Israel-Hamas war in October 2023, have become among the most lucrative items. But smugglers also bring in a wide range of other goods, including smartphones, solar panels, fuel, medical supplies and anesthetics.
Israel restricts or bans the entry of certain products it classifies as “dual-use” items, arguing they can be repurposed by Hamas for military purposes. According to COGAT documents, the list includes around 150 categories of goods, including concrete, asphalt, steel pipes, wooden planks, vehicle parts and X-ray machines. The restrictions have created opportunities for smugglers, who rely on networks of middlemen and alleged payoffs to move goods into the Strip.
“The occupation has left no other option before us. Smuggling has become routine,” one trader told AP. “We benefit, they benefit and the people in Gaza benefit because we provide goods, including food, to the market.”
The Israeli military said it takes smuggling “very seriously” and works to prevent it. It added that any suspected involvement by Israeli soldiers is “examined and handled in accordance with the law,” but did not answer detailed questions from AP about allegations involving military personnel or the role of Gaza authorities in the trade.
A shadow economy built around shortages
Since the beginning of the war, Israel has tightly controlled the movement of goods into Gaza. A nearly three-month blockade on aid and commercial entry in 2025 contributed to severe shortages and warnings of famine.
Although commercial deliveries have increased since the October 2025 cease-fire, they remain far below prewar levels, leaving many residents dependent on informal supply chains.
Israel currently allows 12 senior Gaza traders to import approved commercial goods. Shipments must pass through Israeli inspection and receive authorization, a process merchants and aid workers have described as slow and opaque.
The Israeli military body responsible for coordinating civilian affairs in Gaza, COGAT, said some dual-use goods, including generators and X-ray machines, have been approved in specific cases under monitoring.
But merchants told AP that demand has pushed many businesses and institutions toward illegal channels. Government agencies have sought smuggled fuel, spare parts for civil defense vehicles and generators, while hospitals have turned to smugglers for medicines and equipment in short supply.
Some traders told AP they send lists of prohibited goods to “coordinators” – Israeli and Palestinian middlemen who arrange shipments and routes into Gaza. Commercial goods and aid typically enter through Kerem Shalom, where trucks are inspected, but traders alleged smugglers sometimes bribe soldiers, use military vehicles or, less frequently, humanitarian trucks to move goods.
The AP investigation identified one of the trade’s most powerful alleged coordinators as a man known only as Abu Bassel, whom court documents and traders described as central to a network connecting Israeli and Palestinian middlemen.
Israeli court documents describe an incident in which police raided a warehouse in a West Bank settlement containing cigarettes and mobile phones intended for Gaza. According to the documents, one suspect called Abu Bassel during the raid and handed the phone to an Israeli officer. After the conversation ended, police stopped the operation, left the site and made no arrests or confiscations.
“He is the master,” a senior Gaza Chamber of Commerce official told AP. “Nothing can enter Gaza without his stamp.” Traders said they did not know Abu Bassel’s real identity, whether he was Israeli or Palestinian, or how he built his network. Israeli court documents allege that he used an aid organization as a cover, a claim the organization denied.
The costs of the restrictions are passed on to consumers. Residents told AP that vehicle batteries, which sold for about $140 before the war, now cost more than $2,300. Solar panels that once cost 16 cents per watt can now sell for $3.25 per watt.
“Smuggling flourished in the second half of 2024 as the market started to dry up,” Gaza resident Mohamed Abu Taha told AP, saying chicken, meat, baby formula and pet food were also brought in covertly.
No item, however, appears to generate more demand than cigarettes. Residents said a single pack has recently sold for as much as $140, and prices exceeded $1,000 during the period of total blockade. “You could find two or three men sharing one cigarette,” Abu Taha said. According to traders and court documents, cigarette shipments have been hidden in commercial trucks, humanitarian shipments, military vehicles and even inside hollowed-out pineapples.
Alleged profits for Israeli soldiers and Hamas authorities
The investigation found allegations that payments are made throughout the smuggling chain, including to drivers, warehouse workers and others involved in moving goods.
Several senior traders estimated that smuggling now accounts for more than half of their operations and can generate more than 70 percent of their profits. One trader told AP: “You are paying at every step, plus the price of the goods themselves.”
Court documents allege that reserve soldiers were paid to assist in moving shipments through Gaza. In one major case, prosecutors accused a reserve commander, Bezalel Zini – the brother of Shin Bet chief David Zini – of receiving the equivalent of about $120,000 to smuggle three shipments containing roughly 6,000 packs of cigarettes in his military vehicle.
Two other reservists allegedly carried out four trips into Gaza in a single day, transporting 20,000 cigarette packs, hundreds of iPhones and medical equipment, according to the indictments.
Court documents allege that one smuggling ring earned about $2.2 million between October and December before its members were arrested, while other defendants were accused of making $1 million to $3 million. The cases represent only a small portion of the smuggling networks operating in Gaza, according to traders interviewed by AP.
Hamas authorities also benefit financially from the trade, according to merchants and Palestinian officials. Mohammad Barbakh of Gaza’s Economy Ministry told AP that authorities receive up to 20 percent of the value of smuggled goods when merchants report shipments, and up to 80 percent if goods are discovered after being hidden. Officials denied calling these payments taxes and said they have not imposed such charges on goods entering legally since the war began. Two major traders told AP that Hamas authorities summoned them over their smuggling operations, and that one paid $3.5 million to settle the matter while another paid around $3.75 million.
Two senior Hamas administration officials told AP that the funds help pay salaries and support public services. They estimated that up to $100 million had been collected from smuggled goods since the cease-fire.
Merchants and officials also alleged that Hamas confiscates some smuggled goods and resells cigarettes, though Hamas denied the claim.
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