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Story of Gaza Tunnels: Motivated by incarceration in this large concentration camp

Israel’s “soft quarantining” of Gaza—the steadily tightening restrictions on the movement of persons and goods into Israel—began with the Oslo peace process and in preparation for the establishment in the Strip of the Palestinian Authority (PA) in 1994.

After Oslo’s signing, Israel built a barrier around Gaza. Though access continued through Israel’s terminals, periodic closures led Gazans to seek alternatives.

The perimeter barrier was among the first targets of protestors when the Al-Aqsa intifada broke out in September 2000, but by June 2001 Israel had replaced it with a higher, grimmer, more impenetrable upgrade.

Frequent lockdowns at Israel’s terminals and the destruction of Gaza’s seaport and airport in 2001, coupled with the militarization of the intifada, intensified the drive for outlets south.

Hence the expansion and upgrading of the tunnels, which for the first time served as safety valves for wholesalers to alleviate the artificially created shortages.

Given their quest for weapons and the need for funds to finance operations during the intifada, the various Palestinian political factions operated the longest and deepest tunnels.

The cash-strapped PA sought to co-opt clans along the border where tunneling was easiest.

Sami Abu Samhadana, a senior PA security official and prominent Fatah leader in Gaza, himself from a Bedouin clan straddling the Rafah frontier, oversaw much of the expansion. This fusion of security and business interests, of militia activity and private entrepreneurship, was to become a hallmark of future development.”

This is the section of the long article pertaining to the Gaza tunnels


The underground lifeline for Gaza’s population was no less a salvation for the Hamas government, which struggled to survive efforts by multiple foes to engineer its collapse or stoke social unrest by means of a siege.

Over time, the tunnels enabled Hamas to consolidate its hold on the Strip and to circumvent U.S.-led international financial restrictions. According to banking sources, the TAC raised $150–$200 million in revenues in 2009, a figure that continued to climb in 2010 as the tunnel traffic grew, but then tapered off after Israel relaxed its closure and Egypt restricted fuel bound for Gaza.

As a result, Hamas became increasingly immune to the financial leverage both of the international community and—significantly—its own Damascus-based leadership.

As noted above, the government increasingly consolidated its hold on revenues over time. Following the 2007 takeover of the Strip, the Interior Ministry reasserted Hamas government control over the commercial tunnels in place of the IQB.

From then on, the ministry not only regulated the tunnels but also took charge of collecting the tunnel revenues, depositing them directly into its own account to cover its budgetary expenditures. While any excess funds were transferred to the central government, other ministers grumbled that the Interior Ministry’s prior claim on tax receipts was less than satisfactory.

In 2011 the government, with support from the Hamas movement and the Palestinian Legislative Council, reached an agreement whereby the ministry would deposit all receipts into a single treasury account but would be given priority in disbursements. With the situation thus regularized, National Economy Minister ?Ala’ Rif?ati was able, soon after his appointment in 2011, to post two hundred customs and excise officers to the tunnel enclave alongside Interior Ministry employees to enforce levies.

Through its growing tax base, Hamas increased its economic independence from Israel and the PA, although the latter continued to make salary payments to the some seventy thousand employees on its payroll. Hamas even made some progress delivering on its 2006 campaign promise to free Gaza from Oslo’s 1994 Paris Protocol, which gave Israel virtually full control over the Palestinian economy.

The development of direct trade ties with Egypt also enhanced Hamas’s ideological vision of fostering ties with the Islamic world and downgrading relations with Israel. According to a Hamas official, “The siege is a blessing in disguise. It is weaning us off of Israel and 60 years of aid, and helping us to help ourselves.”

Armed with resources to govern from the tunnel proceeds, Hamas transformed itself from a nonstate actor with a social and charitable network, underground movement, and guerrilla force into a governing authority with a well-equipped internal security force, bureaucracy, and economy. The commercial tunnels and the Sinai population’s growing economic dependence on trade with Gaza gave Hamas the soft power to project its influence into the Sinai Peninsula, even as the factional tunnels enabled its military wing to augment this “soft” influence by exercising its own leverage there.

Overall, the eclipse (at least temporarily) of Egypt’s internal security force in the peninsula and the simultaneous increase in Gaza’s military capabilities—combined with Gaza’s economic, social, and cultural pull—led observers close to Hamas to describe the movement as gaining strategic depth inside Egypt’s periphery. If indeed the enclave emerges as a regional center of gravity, all parties hoping to establish stability in the Sinai will have to take it into account.

That said, the tunnel economy has also tarnished Hamas’s reputation for transparency, accountability, and financial propriety. “This is not the old style radical movement,” notes a Gaza economist; “Hamas has acquired a business venture.” The Hamas authorities were widely criticized from the outset for making tunnel licenses conditional on appointing its members to the boards of tunnel cooperatives, often on preferential terms. The government’s decision to wash its hands of the pyramid scheme for tunnel investment mentioned earlier, which had been endorsed by prominent Hamas preachers and had left numerous investors bereft of their savings, marked the first major dent in its domestic credibility.

Thereafter, Islamist and secular opponents alike adopted the discourse of corruption that Hamas had hitherto used to undermine Fatah. Some elements of the IQB, meanwhile, acquired a reputation for profiteering much like that associated with Muhammad Dahlan’s Preventative Security Forces that preceded them, dispensing with the resistance activities that were once their hallmark. Several prominent officials, including Hamas spokesman Fawzi Barhum, come from families with strong ties to the tunnel economy and were viewed as protecting their tunnel holdings. A Salafi jihadi from Gaza’s Middle Areas expressed it thus:

Before entering government, Hamas acolytes focused on religious sermons and memorizing Qur’an. Now they are most interested in money, tunnel business and fraud. Hamas used to talk about paradise, but now they think about buying land, cars and apartments. After the evening prayers, they would go to study, now the Imam looks at ways to make money. Before they prayed in the mosque, now they pray at home.

Hamas’s lack of transparency about its use of its tunnel earnings compounds suspicions. While Hamas officials say local revenues comprise half the government’s $750 million annual budget for 2011, local businessmen calculate the earnings to be considerably higher, raising questions about where the funds go and why there are repeated shortfalls in monthly civil-service salary payments.

Calls for accountability have mounted as the Haniyeh government has increased the tax burden. (National Economy Minister ?Ala’ Rif?ati, who upon taking office called for Gaza’s withdrawal from the Paris Protocol to spare the population Israeli-level tariffs, four months later declared his intention to raise tariffs in line with Paris Protocol rates.)

A similarly cavalier approach to child labor and tunnel fatalities damaged the movement’s standing with human-rights groups, despite government assurances dating back to 2008 that it was considering curbs. During a police patrol that the author was permitted to accompany in December 2011, nothing was done to impede the use of children in the tunnels, where, much as in Victorian coal mines, they are prized for their nimble bodies. At least 160 children have been killed in the tunnels, according to Hamas officials. Safety controls on imports appear similarly lax, although the TAC insists that a sixteen-man contingent carries out sporadic spot-checks.

All told, the tunnels have been a mixed bag for Hamas. While its detractors praise—albeit begrudgingly—its success in reducing the impact of Israel’s stranglehold, perceptions of corruption inside the organization have intensified. During the renewed fuel shortages of spring 2012, there were widespread allegations that Hamas leaders received uninterrupted electricity and that gasoline stations continued to operate for the exclusive use of Hamas members. True or not, they fed a growing mood of recrimination that Hamas had profited from the siege.


While the tunnels have spared Gaza’s economy from collapse and made possible some reconstruction, concerns that their utility might have peaked are rife. Despite the construction boom, the tunnels have not equipped Gaza with the tools required to rebuild and sustain a productive society. The manufacturing base remains hobbled by the ongoing ban on exports. Once its housing stock is restored, Gazans ask, what then? Where will the workers go? Tunnels were always a remedial answer to the blockade, not an economic solution. The high costs of food and other aid, ultimately borne by international donors and passed on to their taxpayers, can only be avoided when the border opens to normal commercial trade for both imports and exports.

To date, Gaza’s mercantile elite and foreign donors have looked to intra-Palestinian reconciliation and the reestablishment of PA control inside Gaza to end Israel’s five-year blockade. But even in the most favorable of circumstances, it is hard to see how trade and labor markets can return to their pre-2000 highs. Despite significant improvement following Operation Cast Lead, truckload entries in February 2012 represented less than half the average 2005 monthly entry of 10,400 trucks.

Moreover, even if Israel fully opened its crossings, tunnel operators might continue to enjoy some inbuilt advantages over formal trade, including the ability to smuggle subsidized Egyptian produce and the absence of red tape. As long as Gaza is vulnerable to the vagaries of Israel’s use of economic tools to cajole Gaza’s rulers, the tunnels will likely remain a strategically important safety valve and back door.

For its part, Hamas continues to look southward to Egypt. Its hopes of capitalizing on the rise of its parent and sister movements in North Africa have so far failed to materialize. Travel to and trade with Egypt are certainly easier, but with goods still transported underground, the enclave remains psychologically and physically under siege. Despite the election of a senior Muslim Brotherhood official as the new Egyptian president, Egypt’s military apparatus retains, at least for now, control over the country’s security and borders.

High-level intelligence officers continue to view Gaza’s Islamist leaders as a threat to national security and have used restrictions on the entry of goods—particularly fuel—into Sinai in an attempt to bring them to heel. How the power struggle between President Muhammad al-Mursi and the SCAF plays out will be critical to determining the extent to which Egypt and Gaza can normalize their political and trade relations and end Gaza’s state of siege. While Mursi’s election was greeted ecstatically by Hamas’s rank-and-file, a sober realism and even hint of frustration at the tweaks to existing Egyptian policy rather than an overhaul continues to mark the statements of some Hamas officials.

That said, there are pointers that keep the hope of a sea change in ties with Egypt and the broader region alive. In February 2012, North Sinai’s Chamber of Commerce was the first official trade delegation to visit Gaza since the Hamas takeover in 2007. Others have followed, holding out the prospect that trade already legalized in Gaza could become so in Egypt as well. Ironically, any attempt to legalize trade above ground would likely result in both governments rendering the tunnels illegal and taking steps to terminate smuggling.

Both governments have already discussed bringing the underground economy to the surface, opening the Rafah terminal to trade, and opening a free-trade zone straddling the Egypt-Gaza border. Gazan businessmen, together with counterparts from Ismailia’s Chamber of Commerce, have since formed the Egypt-Palestine Company, aimed at establishing a 1,000 dunam free-trade zone. Egyptian officials suggest that the resulting trade could reach $2 billion annually, more than doubling current bilateral trade and surpassing the country’s U.S. military aid. In an attempt to show a cooperative spirit, Hamas returned five stolen cars to Egypt and pledged to stop (temporarily) the unlicensed import of cars.

Though small and reversible, such steps have kept alive a vision of Gaza’s exit from its pariah status and integration into the region’s emerging new order. In February 2012, Hamas announced agreements in principle with Egypt’s petroleum and energy ministries to link Gaza to Egypt’s electricity grid and gas pipelines, with the assistance of a $70 million loan from the Islamic Development Bank.

Though subsequently overturned by SCAF, these agreements offer a pointer of how relations could evolve. Hamas ministers have drawn up plans to link Gaza to the region’s labor and export markets as well as its transport system. “Within two years, you’ll be able to take the bus all the way from Gaza to Morocco,” predicts Hamas Agriculture Minister Mahmud al-Agha. Others speak of reviving the old railway that ran from Cairo through Gaza. Ismail Haniyeh’s recent audience with President Mursi resulted in what Palestinians said were a series of Egyptian commitments to increase passenger traffic through Rafah and fuel supplies.

Winding down the tunnel trade could provoke clashes with key vested interests both within the movement and without, particularly in the Sinai Peninsula. The tunnels have fostered common interests between Sinai’s Bedouin traders, transporters, and tunnel owners and Gaza’s consumers, which will not be easily decoupled. But the benefits of winding down would be considerable. Stemming smuggling would strengthen Hamas’s preelectoral claims to promote good governance and counter corruption, and possibly would revive tourism.

Indeed, Gaza’s rulers have committed to closing the tunnels in the event Egypt’s opens its border for formal overland trade. For Egypt, too, there would be benefits in overland trade, for the tunnels, a key component of the country’s black economy, have been a driver of corruption of state officials, encouraged the proliferation of weapons, and strengthened Sinai’s centrifugal forces. In short, while the tunnels have served as the homemade driver of Gaza’s reconnection to the region, the final realization of this goal can best be served by their demise.



Nicolas Pelham is a writer on Arab affairs for The Economist and the New York Review of Books. He is the author of A New Muslim Order (London: I. B. Tauris, 2008) and coauthor of A History of the Middle East (London: Penguin, 2004), and has reported on Gaza extensively over the past six years.

More in this paper:


Gaza’s Tunnel Phenomenon: The Unintended Dynamics of Israel’s Siege





June 2023

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