Gaza tunnel trade squeezed by Egypt 'crackdown'

Tents covering tunnels on Gaza-Egypt border The tunnels along the border and covered by shabby tents look deserted

In the gently rolling dunes around the town of Rafah in southern Gaza, Sagah slopes around with his donkey looking like a man with time on his hands.

Fine white dust clings to the sweat on his arms under a hot midday sun. He's glum.

"For the last two weeks there has been no work. I am a poor man. I have no money," he shouts, clapping his hands together in exasperation.

Sagah's trade is smuggling. He is one of thousands of tunnel workers who have made a living ferrying goods from Egypt into Gaza.

The tunnel industry may be underground but there is nothing secret about it. It is completely out in the open.

There are thought to be more than 1,000 tunnels stretching along the border, most of them covered by shabby white tents.

Sinai attack

The last time I visited Rafah six months ago, the area resembled a vast industrial zone humming with trucks and diggers winding their way around the huge piles of sandy soil that have popped up like massive molehills.

Start Quote

Before my warehouse would have been full of Egyptian cement, now they are virtually empty”

End Quote Hani Alaya Cement trader, Gaza City

Today Rafah has more of a sleepy feel.

Sagah says that since the violence that broke out in the Sinai two weeks ago, work has dried up.

He blames the Egyptian government for, at least temporarily, cracking down on the tunnel industry.

It was 5 August when 16 Egyptian policemen were killed in an attack by militants in the Sinai peninsula close to Egypt's border with Israel and Gaza.

Egypt and Israel blamed Islamic extremists and suggested some of them might have come through the tunnels from Gaza.

Egypt's army launched a counter-offensive killing a number of militants in the Sinai.

But the other response of the new Egyptian government was to threaten to shut down the huge network of smuggling tunnels that cross into the Palestinian territory.

At least to some extent, it seems that has happened, although it is not clear how many - if any - tunnels have actually been destroyed.

Black economy

So how dependent on the tunnel economy is Gaza?

Gaza's economy has long relied on smuggling, since Israel and Egypt tightened a blockade on the strip in 2007, soon after the Islamist movement Hamas came to power here.

A tunnel in Rafah, southern Gaza Militants who killed Egyptian soldiers are believed to have got into Sinai via the tunnels

But in the past few years the tunnel trade has changed.

Three years ago shops and markets in Gaza were full of smuggled Egyptian goods, food, fridges, flatscreen TVs - just about everything.

But in 2010, in response to international pressure, Israel eased its blockade allowing in many more food products and consumer goods.

It came after nine Turkish pro-Palestinian activists were killed in clashes with Israeli commandos who intercepted a flotilla of ships trying to break the blockade.

Now when you visit a supermarket in Gaza nearly all the products are Israeli.

Despite the long-running conflict with Israel, Palestinians in Gaza nearly always tell you they prefer Israeli goods to Egyptian. They think they are better quality.

Initially the tunnel trade from Egypt suffered. But it has adapted and remains big business.

"The trade volume between Gaza and Egypt through the tunnels is up to $700m a year," says Omar Shabban, an economist with the Gaza-based think tank Palthink.

Mr Shabban says more than 10,000 people are employed working in the tunnels. He says what he calls a "black economy" has created a handful of millionaires, some with close ties to Hamas.

"There are over 1,200 tunnels, they smuggle cars and vehicles, they smuggle more than 500,000 litres of fuel every day, more than 300,000 packets of cigarettes every day - it's huge."

The tunnels are also used to transport people without the necessary papers to cross above ground.

Israel says weapons are also smuggled into Gaza.

But Mr Shabban says that by far the biggest area of trade is in construction materials.

"The construction sector in Gaza is almost 100% dependent on the tunnels."

Alternative route
Hani Alaya Hani Alaya's stocks of cement have dried up from the tunnel closures

Israel continues to enforce tight restrictions on the amount of building materials allowed into Gaza, saying they could fall into the hands of Hamas and be used for military purposes.

The tunnels have provided an alternative route and Hamas has been able to get hold of just about all the construction material it has wanted via Egypt.

Over the last year hundreds of thousands of tonnes of cement and gravel have been dragged through the tunnels.

Building merchants say the trade increased after the fall of the former Egyptian leader Hosni Mubarak.

It has fuelled a huge construction boom in Gaza building new roads, hospitals, schools, office blocks and housing.

On just about every corner in Gaza city you see some sort of building going up.

It has provided a much-needed boost to Gaza's struggling economy.

But in the past two weeks since the violence in the Sinai, there has been a slowdown.

"Before my warehouse would have been full of Egyptian cement, now they are virtually empty," says Hani Alaya, a cement trader in Gaza City.

He says he hopes the slowdown is partly because of Ramadan, the holy month of fasting for Muslims which has just finished, but he is anxious that the tunnel trade resumes.

'Open border'

Most people working in the construction industry in Gaza argue it would make far more sense if the border with Egypt were to be opened up to legal trade.

Long queue for fuel outside a petrol station More than 500,000 litres of fuel are smuggled through the tunnels every day

"It's either the tunnels or an open border," says Mr Alaya.

He hopes that Hamas's close ties with the new Egyptian Muslim Brotherhood leadership could see the border open for legal commercial traffic.

But there are reasons that is unlikely to happen, at least in the short-term.

"If Egypt were to transfer Rafah into a commercial crossing, Israel would immediately terminate its relationship with the Gaza Strip completely and make Gaza Egypt's problem," says Mokhaimer Abu Sada, professor of politics at Gaza's Al Azhar University.

"This is an Israeli trap for Egypt and the Palestinians."

And that is why many in Gaza believe Egypt will not follow through on its threat to shut down the tunnels permanently and that it will not be long before the tunnel industry will be up and running again soon.

"Egypt will not be able to do it. Hamas will not accept it," says Mr Shabban.

"Gaza cannot live without the tunnels. In a week or 10 days the tunnel business will be back to normal."

Gaza map

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