underground economies

The existence of black markets in virtually every economy on the planet is a testament to human resourcefulness and natural entrepreneurship. For those that are building tunnels under Gaza’s border with Egypt, $100,000 and a few months work can generate up to $10,000 a day in fees, and help to provide critical supplies and less critical desires into the struggling Gaza strip. One economist has estimated that roughly 90% of the annexed economy is driven by these covert smuggling operations. Unfortunately, along with tea, cows, washing machines, and gas flow AK-47s, drugs, and anti-aircraft missiles as soaring Gazan demand meets profitable Egyptian supply…

Photo Essay: Gaza’s (Literal) Underground Economy
By Preeti Aroon in November 2008

Since Hamas gained control of Gaza in June 2007, Israel has blockaded the flow of goods into and out of the territory. But when trade is closed aboveground, the economy simply moves underground, in more ways than one.


The land down under: Except for basic humanitarian supplies, Israel has blockaded the flow of goods into Gaza since June 2007, when Hamas, a militant Islamist group committed to Israel’s destruction, ousted its more secular rival, Fatah. The blockade has led to a new economic structure—a literal underground economy—in which everything from food to gasoline to underwear is illicitly imported from Egypt via underground tunnels into Rafah, which sits on Egypt’s border at the Sinai Peninsula. Above, Palestinian men pull a bag of smuggled food, milk, and other supplies from an underground tunnel linking Rafah, in southern Gaza, to Egypt, on June 27.

Cash cow: A confused-looking bovine is lowered into an underground chamber in Rafah on Nov. 15. Recently, livestock smuggling has climbed as Muslims prepare for Eid al-Adha, in early December, during which animals are slaughtered in commemoration of Abraham’s willingness to sacrifice his son for God. In October, calves at one tunnel cost $600 each: $350 for the animal and $250 for the passage. Such smuggling is lucrative for smugglers and Hamas, which in October started collecting a $2,500 yearly license fee from tunnel owners.

Tea time: A Palestinian in Rafah carries a sack of smuggled tea pulled from a tunnel on Oct. 3. Estimates of the number of tunnels between Rafah and Egypt vary from a few hundred to 800, perhaps because their construction is presently a growth industry, with 98 percent of all other industrial operations shutting down since the blockade started. Tunnels are typically 0.5 km (0.3 miles) long and cost as much as $90,000 to dig. Owners typically rake in $10,000 daily. Smuggling constitutes approximately 90 percent of economic activity in Gaza, Gazan economist Omar Shaban told The Guardian.

Hungry for help: Children at the Rafah refugee camp on Oct. 16 pack food aid distributed by the U.N. Relief and Works Agency. Some 750,000 Gazans depend on U.N. food aid. On Nov. 13, the United Nations agency ran out of food; Israel hadn’t allowed trucks with relief supplies to enter since Nov. 4 in response to rocket and mortar firing by Gazan militants into southern Israel. Trucks were allowed in Nov. 17, but the border was closed again Nov. 18 after rockets were fired into Israel.

Tunnel vision: A woman checks out televisions smuggled from Egypt on sale in Rafah Oct. 27. Although essentials such as food and gasoline are smuggled through tunnels, so are less essential goods such as cigarettes, lingerie, and laptop computers. Even most residents of Gaza’s zoo arrived via the subterranean passages known as hayyeh, including two lion cubs, a parrot who can ask for a kiss in Arabic, and three gazelles, one of which bit smugglers who forgot to drug it before the journey. It’s just a matter of time before an elephant can lumber in, the zoo’s manager joked to the Associated Press.

Black-market black gold: Bottles of smuggled petrol wait for buyers in Rafah on June 21, when the fuel was selling for $7 per liter ($26.50 per gallon). A delivery of diesel, intended for Gaza City’s electricity plant, was stopped at the Israeli border on Nov. 13. As a result, it was lights out for two thirds of the city’s 480,000 population that evening when the plant turned off due to a fuel shortage. Israeli Defense Ministry officials said the border was closed that day due to rocket attacks from Gaza and intelligence that Gazan militants planned to attack a border crossing.

Siphoning off: A Palestinian man prepares to transport fuel underground in Rafah on Nov. 16. Plastic pipes that run through many tunnels siphon in heavily subsidized Egyptian fuel. One Gazan man who runs a fueling station told The Guardian that he earns 3.5 shekels per liter ($3.33 per gallon) from Egyptian fuel, compared with
0.5 shekels per liter (48 cents per gallon) from Israeli fuel.

Up in arms: Automatic rifles, antitank missiles, and explosives intended for militants are among the illegal goods that have been smuggled into Gaza through the subterranean tunnels. Here, a Palestinian security officer carries AK-47 rifles on Dec. 7, 2005, in Rafah. At the time, Palestinian security forces had shut down two tunnels that had been used to sneak in the contraband from Egypt.

On dangerous ground: An Israeli army officer in the Philadelphi Route on Oct. 18, 2006, examines a tunnel suspected of being used for smuggling weapons. The Philadelphi Route is a 12-km (7.5-mile) buffer zone along the border between Gaza and Egypt. On this particular tunnel-hunting mission, the IDF discovered five tunnels in one day.

Closing up shop: Palestinian police fill in a tunnel in the Rafah refugee camp on
Aug. 23, 2003. The Palestinian Authority that day sealed three tunnels and arrested smugglers. Another method of putting the tunnels out of commission is flooding them with water.

Coming to blows: Yet another way to destroy a tunnel is simply to blow it up. Here, on Nov. 1, 2007, an IDF troop stands at the edge of what was once an opening of a smuggling tunnel in Gaza. Israel isn’t unique in using explosives; so has Egypt. In late September, Egyptian forces blew up two tunnels, which resulted in five smugglers killed. Of 20,000 to 25,000 people involved in tunnel smuggling, at least 48 have died underground this year, often when the sandy tunnels simply collapsed, burying people alive.

Light at the end of the tunnel? Above, a 10-meter shaft leading to a tunnel is discovered by Israeli troops Aug. 4, 2004, at a home in Rafah. Tunnel openings are frequently hidden in homes—for example, in closets. As Israel continues its blockade to weaken Hamas’s control and respond to hostilities, tunnels have proliferated. Debate rages over whether Israel is creating a humanitarian crisis, or whether Palestinian militants are digging Gaza into a hole, metaphorically speaking, by resorting to violence. For the foreseeable future, though, it appears that authorities will continue playing whack-a-mole with Gaza’s underground economy.