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Gaza’s Underground Economy By: David Frankfurter
FrontPageMagazine.com | Wednesday, June 09, 2004

“Operation Rainbow”, the Israeli army’s recent incursion into the Gaza town of Rafah, was accorded intensive coverage by the world media. The actions of both sides were exposed - and judged in the courts of world opinion. For example, in flagrant breach of the Geneva Conventions, Palestinian combatants were transported in UNRWA ambulances. In another incident, an Israeli tank missile overshot its target, killing both Palestinian combatants and civilians.

Gaza’s extensive underground tunnels, used by the Palestinians for gunrunning, were also exposed. The BBC among others published a full pictorial exposure on its website. Evidently, since the Palestinians declared war on Israel in September 2000, they have constructed dozens of these subterranean networks.

Romantic legends surround resistance movements. Such tunnels are pictured as being hand-dug by idealistic freedom fighters - in this case to supply arms to the heroic Palestinian resistance. In fact, the real picture is far from romantic. There are even ramifications concerning EU and British government aid for the Palestinians.

These tunnels originate on the Egyptian side of the border and exit in the back streets and congested civilian neighborhoods of Gaza. Guns, anti-tank and sagger missiles are not the only items transported. Drugs, precious metals and electrical goods are also brought under the border. Women, destined to be victimised by a lucrative sex trade, are also smuggled via Egypt. The operators, traders and middlemen all make significant profits - a profit margin that is apparently significant enough to distract the Egyptian border police.


How are these tunnels dug?  With professional earth-moving equipment. The tunnels are extensively engineered - installed with electricity, telephone communication, airshafts, and recently even with proper lifts. They average about 500 metres in length.


How many are there? The number is difficult to confirm, as the tunnels often connect to each other. Israel has exposed around 100 of them to date.


What are the costs of such complex, extensive engineering? Sources put the cost at up to $1,000 per metre – or up to $500,000 per tunnel.


Part of the economic overhead includes hiding the tunnel’s exit. Every Gaza family knows that allowing their home to hide a tunnel is a high-risk business.  And so, the owners receive ‘rent’ of $1,000 per month for the use of their home.  Should the tunnel be discovered and the house destroyed, the family is promised compensation by the Palestinian Authority. This includes a brand new home in the up-market neighbourhood of Tel Sultan.


The economics of the whole enterprise extends beyond the ‘host family’ holding the tunnel franchise. As more tunnels are uncovered, the value of the smuggled goods has risen. Bullets, which used to cost $1, now cost five times that price. One might suppose that the prices of other smuggled wares have risen according to the same scale.


A more sinister role is played by the Palestinian Authority (PA), headed by Chairman Arafat. This is the only body in the region with the logistical might to manage such a comprehensive enterprise. And it has been repeatedly caught in arms smuggling, a clear contravention of the Oslo Accords and other agreements.


The PA also has the financial resources to devote to these schemes. From the EU alone, it has received 4 billion euro ($4.9b) over the past decade, in addition to donations from individual countries - including the British government.


And here is the catch. UK charities operating in the area repeatedly claim that the average Palestinian is forced to live on $2 a day. The UK Government is about to announce a full package of financial support for “Palestine”, including a further £26m ($47m) in 2004.


The abject poverty of the average Palestinian contrasts sharply with the vast quantity of monies donated to the Palestinian cause. The contrast may be explained by an independent IMF report on financial mismanagement in the PA. Also, the EU reported in March 2004 of clear evidence of the diversion of aid money to fund terror. Even former Palestinian ministers and bankers are complaining of corruption amongst the top leadership.


The diversion of funds to terror is a compound crime. It is an abuse of trust. Taxpayers across Britain and Europe are seeing their hard-earned money go not to the Palestinian people, but to pay for - among other things - complex underground smuggling operations. The efforts of Britain and the EU should be channeled towards aiding the Palestinian people, and guiding the region to peace, rather than escalating warfare. 

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