In late July, the Tawjihi post-high school exam results were announced to the dread or delight of Gaza’s 36,594 exiting high school seniors. Over the summer vacation, these youngsters are making plans for their future like young people elsewhere. Will they attend one of Gaza’s five universities, which don’t offer badly needed degrees in environmental science, medical engineering, veterinary medicine and occupational therapy? Or will they seek to travel abroad, since travel to West Bank universities remains banned? Will they join the ranks of Gaza’s 34% unemployed, or seek work elsewhere, perhaps underground?

Photo: Karl Schembri/Oxfam

In July, following the Israeli Cabinet decision to “ease” the closure, only 4% of the goods entering Gaza were raw materials destined for production, and of course, export remains banned. Under these conditions, it’s clear that the market couldn’t have suddenly bounced back and that not all is good and well.

The youth of Gaza continue to wait for the promised, renewed “economic activity” and hope for opportunities to begin building tomorrow’s future. A new resort or restaurant built from tunnel money can’t possibly employ them all.

The means: Economic warfare: “The transfer of goods into the Gaza Strip will be restricted“. 

Implementation: Erasing the customs code ascribed to the Gaza Strip from the computer system of the Israeli Customs Administration and forbidding the import of any goods that are not defined as “humanitarian”.

The significance: Gaza is closed to the import of goods. Theoretically, goods exempt from customs (such as goods from the West Bank and Israel) could be imported, but in practice Israel does not allow the transfer of goods that are not humanitarian.

Consequences: The business sector that existed in Gaza on the eve of the closure in 2007 is precluded from importing raw materials and commercial goods, and the Palestinian Authority cannot collect on the taxes that would be imposed on these goods. Not to mention that 1.5 million people are suffering from a punishing closure, which severely limits their access to goods and to employment options.

And meanwhile in Gaza: The emergence of a “parallel market” in the form of approximately 1,200 tunnels, through which more than 4,300 kinds of items are imported (as opposed to the few dozen items which Israel allows in). Recently, the Hamas government took another step to institutionalize the tunnel economy when it decided to impose official taxes on some of the goods transferred through the tunnels, in addition to the taxes already imposed on those who apply for licenses to dig and operate tunnels.

Indeed, despite indications that the Hamas government is facing a cash flow problem and has even confiscated money, the public service sector in Gaza is now estimated to employ and provide a source of income for 30,000 workers and an estimated 180,000 family members who are sustained, among other things, by the taxes that the government collects in Gaza, including from the tunnel industry. And thus a new business class has emerged in Gaza, fast becoming wealthy from the tunnel economy.

So who, then, is Israel actually weakening?

Indeed, the tunnels industry at the Gaza-Egypt border has become “one of the largest branches of Gaza’s economy”, if not the largest. Yet the industry’s success is directly linked to Israel’s closure policy, which allows for the passage of “humanitarian goods” only (“humanitarian goods” are yet to be defined). Ironically, this new economy is proving most profitable for the Hamas government, which oversees tunnel mining and operations, and which collects taxes from tunnel owners.  The hundreds of tunnels operating today in Gaza and the thousands of people employed in them account for about two-thirds of the goods entering Gaza.

Although there are a few making big bucks off of the tunnel trade, in contrast, most residents of the Gaza Strip face a grim reality. The industry, by its very nature, is a testament to this. Many young people are forced, because they have no alternative employment options, to work in the tunnels and sometimes remain working underground for days on end. Since the start of the closure, approximately 110 people have been killed on the job, among them 30 children. The total number of people wounded due to tunnel related incidents such as suffocation and entrapment as a result of explosions, air strikes and collapses stands at approximately 190.

A clip produced by B’Tselem endeavors to illustrate, if only a little, this reality.

Source: B’tselem

Perhaps the Israeli business sector understands something that Israeli politicians simply don’t comprehend – that the Palestinian economy in Gaza, which has collapsed due the 27-month-long closure imposed by Israel, has changed beyond recognition: hundreds of tunnels are currently operational in the Strip (between 600 and 1,000) and thousands of people are risking their lives to work in them. These tunnels are supplying about two-thirds of the goods required by the residents of the Gaza Strip. Thousands of dollars in permit fees and millions of dollars in taxes are being collected by the Hamas government. 

While in Israel they are saying that the last Gaza war gave Israel an economic boost, in Gaza, besides the other kinds of damage sustained, thousands of people who chose to invest in operating the tunnels blown up by Israel have sustained a financial loss.

Israeli security officials view the tunnels as a security threat, due to the concern that arms will be smuggled through them, and this is the reason given for their destruction. Palestinian traders would also prefer to avoid the high costs of transporting goods via the tunnels and resume overland trade, via the border crossings that have remained closed now for over two years.

The other crossings have also been closed: Karni Crossing, which was the main trade route, has been closed since June 2007, and only one conveyer belt, used to transport produce and animal feed, has continued to operate on a partial basis since then. The Sufa crossing has not operated since September 2008 and Israel announced its permanent closure in March 2009. The transfer of goods via the Rafah crossing is prohibited. And so all of Gaza is now almost totally dependent on the Kerem Shalom crossing, which has limited capacity and was originally designed for the occasional transfer of humanitarian aid only. Now Israel apparently plans to burden Kerem Shalom with fuel and gas transports as well.

Of course, in response to rocket fire from the Gaza Strip, Israel occasionally closes Kerem Shalom too, due to what it identifies as dangers to the crossing.

The possibility that security risks would threaten the opening of Gaza’s crossings was the subject of considerable forethought. As a result, three fundamental conditions designed to ensure that the Gaza Strip crossings would operate continuously were established and agreed to by Israel:  (1) Recognition of the need to operate alternative lanes (lane redundancy); (2) recognition of the need to operate alternative crossings (passage redundancy); and (3) the primary objective which Israel committed to in the Crossings Agreement: the principle of continuous operation.

It is hard to imagine how one crossing, consisting of only one primary lane, can fulfill these fundamental conditions.

Meanwhile, Israel continues to strike against the tunnels underneath the Egypt-Gaza border, via which the majority of goods required by Gaza residents are transported, including by blowing them up.

Under these circumstances, with the sea and air routes completely blocked, the tunnels rejected as a legitimate option, and the overland crossings increasingly shut down, how exactly are the residents of Gaza supposed to get the goods they need?

Regarding Capt. Asher’s mission, an IDF officer offers this quote: “We have yet to find the perfect system, even though we have been searching for one for years.”

Since the closure of Karni Crossing in June 2007, movement of trucks into Gaza has declined by 75% and is limited to basic humanitarian goods. Consequently, moving goods through tunnels underneath the Gaza-Egypt border has replaced movement above-ground through Gaza’s crossings with Israel. According to Pal Think, two third of the goods entering Gaza are now smuggled through 400-600 tunnels.

The smuggling generally does not include raw materials – 97% of Gaza’s factories have closed since manufacturers can no longer purchase inputs via the crossings with Israel – and it does not include materials for international organizations, which remain dependent on the trickle of goods through the crossings with Israel.

On the other hand, the Hamas authorities and the Rafah governorate collect heavy taxes from tunnels – around $10,000 for each tunnel.

Perhaps it is time to consider who is really benefiting by restrictions on above-ground movement in and out of Gaza, and who is harmed?