Twilight of Gaza's Smuggling Tunnel Millionaires

The town of Rafah straddles the border between the Gaza Strip and Egypt. Life there is bleak. Children wearing flimsy flip-flops in the dead of winter play with scraps of metal; young men drive donkey carts carrying gravel; litter lines the street. These are symptoms of Gaza’s economic disease. The small sliver of land—227 square miles wedged between Israel and Egypt—is home to 1.6 million people, nearly 40 percent of whom live below the United Nations poverty line. A recent report by the Palestinian Central Bureau of Statistics estimated unemployment was 31.5 percent in early 2012. Real gross domestic product per capita in 2011 was $1,165, 88 percent of the 1994 level.

Yet there has long been a sure way to make money in Gaza: by going under it. The tunnels that move goods into the Strip from Egypt have been linchpins of the economy, employing 12,000 to 15,000 and supplying as much as 75 percent of the products sold in the markets, according to Sameer Abumdallala, head of the economics department at Al Azhar University in Gaza. Now the smugglers say their importance is waning: Access to Israeli goods is improving, and the Gazan government has begun regulating the tunnels, sapping profits.