An End to Gaza's (Literally) Underground Economy

RAFAH CITY, Gaza -- After a three-year absence from the store shelves of Gaza, a popular Israeli beverage called Tapuzina reappeared recently, only to disappear again in less than an hour. Eager residents, it turned out, had called each other excitedly and rushed to the supermarket. Some got the word but showed up too late. The drink was gone.
 
Tapuzina is one among many Hebrew brand names that returned to Gaza's stores after Israel eased its economic siege of the territory in June, following its deadly raid on the Turkish flotilla. Gazans have flocked to buy the new goods, which they say are higher-quality and cheaper than what was previously available--contraband ferried through tunnels from Egypt.

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But at the Egyptian border, in the heart of Gaza's tunnel industry, there's little if any rejoicing at the blockade's dismantlement. As Israeli consumer goods saturate Gaza's markets, the tunnels have lost their clientele. Smugglers understand that their days are numbered, but there's nothing to replace the jobs the industry provided.

"Work has run dry. Every day is getting worse and worse. It's the end of the tunnel period," says Abu Mohammad, a tunnel owner who has made millions from the industry. "It's not just me suffering. It's everyone in this business. ... No one knows what will happen to us."
 
Once the lifeline of the coastal enclave's economy, tunnels were set up as a workaround to the embargo Israel imposed after the Islamist group Hamas seized control of Gaza in 2007. At the industry's zenith in 2008 and 2009, approximately a thousand subterranean passageways snaked beneath the border to Egypt, transporting everything from potato chips to cars to weapons.
 
The resilient industry survived Israeli bombings, Egyptian gassing, and flooding. Days after the end of Israel's 22-day offensive in January 2009, activity in the tunnel zone was frenzied--generators hummed, pulleys screeched and loading trucks banged. Most recently, smugglers drilled through the steel subterranean wall Egypt began to construct last December.
 
Today, though, the tunnel district is eerily silent. Market traders have either bought Israeli or stalled orders in anticipation of new goods from the Jewish state. An estimated 10 percent of the tunnels are still operating, but even those work sporadically.
 
Most tunnels are concentrated about half a mile from the Egyptian border, in an area five miles long and less than two miles wide. They open up in neat rows, shaded by white and black plastic tents.
 
Abu Saber's tunnel is at the front line, closest to the Egyptian border. Rolls of smuggled iron sheet are stacked neatly at the passageway's entrance. The haul is Saber's first shipment in 10 days.
 
The sandy floor of his tunnel slopes downward, easing into the ground. Buttressed inside by iron walls, the tunnel is about five feet wide and high enough to walk only slightly hunched. Inside, it's muggy and dank, pungent with the smell of earth and human sweat.
 
Before the blockade was eased, Saber's tunnel, like many others, operated 24 hours a day, seven days a week and employed 10-12 people for each 12-hour shift, carting everything from chocolate to refrigerators. Now, Saber says, he's barely making enough hauling iron, steel, and ceramics--products that remain embargoed. And even profits on those have dropped dramatically.
 
"Before one ton of iron sold for $400 [U.S.], now it goes for between $150 and $200. These prices are not good enough for labor and expenses," Abu Saber laments.
 
Tunnel proprietorship costs. Owners say they spent between $150,000 and $500,000 to construct a tunnel and then another $2,600 to the local municipality for a license. Each month, $300 goes to electricity and water. They pay labor about $25 per shift. Maintenance adds up to between $2,000 and $3,000 a month. There are tunnel courts where laborers can take their employers if they don't pay salaries.
 
"The municipality treats the tunnels as a priority," says Issa El Nashar, mayor of Rafah City. "Like any other industry, it needs services and it needs facilities." The municipality provides power and water to the tunnels. Meanwhile, Hamas taxes cigarettes and fuel.

Two hundred feet away from the tunnel district, three coffee shops stand in a row to serve the industry. Here, unemployed ex-tunnel workers loiter in plastic chairs, chain smoking and drinking coffee.
 
"I'm just sitting, just waiting for someone to call me to work," says Ibrahim Shaar, 30. He says the last time he worked a shift was a month ago. Men like Shaar have lost their livelihoods and so far there's no new industry to replace it.
 
Israel has continued its ban on importing raw materials that would help Gaza's post-war reconstruction, citing security concerns. As a result, rebuilding, as well as the construction of new houses for the growing population remains stalled. Laborers can't work.
 
Shaar isn't sure what he will do now. If Israeli goods continue to come in, "it will be even more worse because now we can find jobs for a day or two, when the blockade is over we won't find any. ... If Israel allowed all the goods into the Gaza Strip, I'll have no money to buy them," he chuckles.
 
"We'll be looking for our food in the garbage," bemoans Fadil, an older man sitting next to Shaar.
 
A bankrupt tunnel owner sits at the next table. "He owes me money," Fadil gestures. The man grins sheepishly in return, declining to be interviewed. Fadil explains his ex-boss built the tunnel for $250,000. Today, he'll sell it for $90,000, plus the $60,000 incurred debt on the passageway. That sum includes $800 owed to Fadil, who has six children to feed.
 
Fadil berates him for a few minutes from across the cafe, but the conflict doesn't escalate. "I know he can't pay me," Fadil shrugs in defeat.
 
While official labor statistics on tunnels do not exist, rough calculations with NGO officials in Gaza City indicate that at the height of their activity, the tunnels directly employed up to 20,000 men or about 7 percent of Gaza's unemployed male workforce. This is no small number in a territory whose 400,000 working males each has an average of seven mouths to feed. Unemployment here hovers at 44 percent.
 
But the end of the tunnel industry doesn't mean just the downfall of smugglers; its effects trickle down to the service industries that had evolved around it.
 
Shops along Rafah City's roads stock tunnel supplies, generators, pulley systems, and plastic drums for conveying goods. Today, no one's buying. Boys with horse carts, who used to ferry tunnel goods, sit idly while their horses swat flies.
 
Abu Mohammad, a truck owner, pulls up at chair at the unemployed tunnel worker café. (He's unrelated to Abu Mohammad the tunnel owner; in the Middle East and across the Muslim world, "Abu Mohammad" is like "John Smith.") One the many indirect employees of the industry, previously, he would hire three or four laborers to load up at the tunnels and deliver the goods across the territory. He admits, he used to make a killing, jingling his thick silver watch to prove it.
 
"I used to work seven days a week, even Fridays [the Muslim day of rest], 14-15 hours a day. ... Now I work maybe twice a week for eight hours," he says.
 
Although there are still goods to be trucked from the Israeli crossings, Mohammad says he can't just swap routes. "I need permission from the Israelis and to make the tax papers between Israel and the Palestinian Authority. It's not allowed for everyone to do this," he explains.
 
Despite it all Mohammad is hopeful. "This might not be good for my business, but if the blockade is lifted maybe other people will work. What closes in my face may open for others, those people have been sitting idle for a long time."
 
Others in the dying industry echo Mohammad's sentiments: maybe someone else will profit from the loosened restrictions, but it probably won't be them. Some say they are happy to see the end of the industry and its dangers, expressing faint hope of employment if Israel permits the import of building materials, factories re-open, or Israel allows day laborers back into its country.
 
In a plush gated villa, Abu Mohammad, the tunnel millionaire and head of Shaar's clan, is stunned. "I expected that goods coming from the border would affect business, but not this fast," he says.
 
Mohammad's family began working the trade in the '80s; today the clan of 12 brothers commands 40 tunnels and is flush with cash. They are rumored to have Arabian and Spanish purebred horses in their stables. "We look for God's mercy," he murmurs, his hands upturned. "The future is totally black. I don't think the good days of this industry will ever come back."