Monday, May 24, 2010

Gaza looks beyond the tunnel economy

Tobias Buck in Rafah
Published: May 24 2010 03:00

The young tunnel worker flashes a broad smile as he tightens his grip and starts lowering himself down a narrow shaft into the sandy depths below Rafah.

Seated on a piece of wood attached to an electrical winch, he descends 18 metres and starts crawling into the narrow tunnel that continues for another 700 metres, linking this border town in the southern Gaza Strip with Egypt. Somewhere below, his colleagues are shoring up the tunnel's precarious supports, damaged by a recent explosion.While the dangerous work proceeds below, Nasim, one of the owners of the tunnel, waits in the tent that covers the entrance. He is among a small number of Gazans who have made a fortune by undermining Israel's economic embargo of the Strip. Until recently, tunnel owners could expect to make at least $50,000 (€40,000, £35,000) in net profits every month by smuggling fuel, cigarettes and other goods from Egypt.

For close to three years, the tunnels below Rafah have offered a unique lifeline to Gazans, who are otherwise deprived of all but the most basic humanitarian supplies. They have also allowed Hamas, the Islamist group that controls the Strip, to replenish its coffers and rebuild its military arsenal, making the tunnels a target for Israel.

Today, however, Nasim is more worried about the decline in business than he is about Israeli air raids. He says Hamas, whose security officers can be seen in the tunnel area, is taking an ever greater cut of the operators' profits. Moreover, the prices of many smuggled goods have fallen in recent months, thanks to a supply glut that is on striking display across the Strip.

Some argue that Gaza's tunnel economy is becoming a victim of its own success. Hundreds of tunnels have shut down over the past year as the result of greater Egyptian efforts to stop the flow of goods - and weapons - into the Strip. But the remaining tunnels, about 200 to 300 according to most estimates, have become so efficient that shops all over Gaza are bursting with goods.

Branded products such as Coca-Cola, Nescafé, Snickers and Heinz ketchup - long absent as a result of the Israeli blockade - are both cheap and widely available.

However, the tunnel operators have also flooded Gaza with Korean refrigerators, German food mixers and Chinese airconditioning units. Tunnel operators and traders alike complain of a saturated market - and falling prices.

"Everything I demand, I can get," says Abu Amar al-Kahlout, who sells household goods out of a warehouse big enough to accommodate a passenger jet.

Mr Kahlout regards his suppliers in Rafah with distaste. "The tunnel business is not real business. They [the tunnel operators] are not respect-able: if they were able to cut off your skin and sell it, they would do so," he says.

His criticism is echoed by other business leaders in Gaza, who insist that the smugglers are creating a false sense of economic improvement while damaging the territory's battered private sector. They concede that the tunnels are providing essential goods, yet the smugglers are also bringing in consumer items that could be manufactured in Gaza, especially if sanctions were eased.

"We are just replacing legitimate businessmen with illegitimate businessmen," says Amr Hammad, a Gaza-based entrepreneur and deputy head of the Palestinian Federation of Industries. Flush with cash, the tunnel operators will soon "govern the whole economy of the Gaza Strip", Mr Hammad predicts.

Comment: Gazans are starving? Missing out on life? Deprived of goods? No,follow the money, understand the story behind the story-tell this to the flotilla "peace niks" soon to arrive to distort all that is truthful.

2 comments:

Anonymous said...

With no exports (and a reported 50%unemployment rate), what is the source of external cash for the import and retail purchase of these (and any) goods? Is it all various forms of foreign aid?

GS Don Morris, Ph.D./Chana Givon said...

Anonymous-first you may want to check your sources for your data; second, there is a huge "under the table" economy; third, yes, an enormous amount of aid flows into Gaza,that which is reported such as UN and that which goes unreported (from "outside sponsors)-end result result is cash an carry economy is doing fine-contrary to msm.