When Egyptian President Hosni Mubarak confirmed in late January that his government was planning a new wall along Egypt's border with Gaza that will descend 100 feet below the surface – to shut down the Gaza tunnels that have smuggled trade goods, people, and weapons under the border for years – merchants here rushed to stock up. Hamas, the Islamist movement that runs the Gaza Strip, dubbed the structure "the wall of death."
While many here worry that the trade will be choked off, others say the territory's unbridled tunnel trade has not always been a boon for Gaza's 1.5 million people. Some even argue that the closure of the tunnels would be a positive development.
"The tunnels are a curse from God. They destroyed Palestinian society," says Maamon Khozendar, a Gazan petroleum importer and the territory's most wealthy businessman. "And if Egypt manages to close the tunnels, Israel would of course have a moral obligation, as the occupying power, to open its borders and bring goods and food to the Palestinians. Right now, they can just forget about us."
Israel and Egypt sealed Gaza's borders after Hamas seized power in June 2007, banned all commercial imports and exports, and allowed in only a trickle of humanitarian aid. The tunnels, which hustle in everything from appliances and medicine to chocolate bars and motorcycles, have become a vital lifeline in the face of a collapsed economy and rising poverty.
Some 80 percent of imports
The World Bank estimates at least 80 percent of Gaza's total imports come from the tunnels, of which there are between 500 and 1,000. But economists and local businessmen say the illicit, unregulated trade has created a powerful mafia in Gaza that may not be easily unwound.
"The tunnels created a new economic structure with new millionaires who believe in neither transparency nor regulation," says Omar Shaban, a Gaza-based economist and president of the local think tank Pal-Think. "The whole thing is illegal, and this is not a phenomenon we can just get rid of overnight. But no one's doing anything to stop it."
In 2009, a Ponzi scheme centered on fake investments in the subterranean passages cost some 4,000 Gazans tens of millions of dollars. Investors were left with little or no legal recourse.
"The tunnels are destroying Gazan society. Illegality destroys," says John Ging, the director of operations for the United Nations Relief Works Agency (UNRWA) in Gaza. "A civilized society builds itself around the rule of law. But there is no legal economy here; it is truly just a tunnel economy. And this is one very clear example of how Gaza is being forced down the wrong track." The Al-Mezan Center for Human Rights in Gaza says at least 130 people have died in the tunnels since 2007, in Israeli airstrikes and collapses. Rights groups here say Hamas fails to implement any safety regulations for the industry it controls and relies on for cash and weapons. The smuggling has helped entrench Hamas, analysts say.
"The smuggling increases the population's dependence on those groups in Gaza which are not part of the formal economy, those who were active in smuggling before the closure," says Nicolas Pelham, a Jerusalem-based political analyst who consults for the International Crisis Group (ICG). "It's a way of delegitimizing the normal supply routes into Gaza, and those with business ties to Israel, and creating a power base for this new elite."
Weapons are also a concern. Guns and explosives have been pouring into Gaza, still struggling to recover from last year's war and with an already deeply entrenched weapons culture.
No other option?
But aid workers say Gazans have no other option in the face of an Israeli-Egyptian blockade.
Mr. Khozendar says if Egypt stops the smuggling but Israel doesn't open its own borders, Israel should at least facilitate a special crossing for Gaza's traditional private sector. He says such an initiative would undermine what he calls the "criminal tunnel industry" and boost those businesses he says want economic prosperity without a political agenda.
"We don't want the tunnels, and Israel doesn't want us. So open up the sea. Open a special corridor so we can at least trade with the West Bank," says Khozendar. "One week of real commercial trade with either Israel or the West Bank would close one of the tunnels for a month."
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