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The workers herd cows through the dusty tunnels beneath the Gaza border, but this time they are leading them

Little help to the economy

Palestinians smugglers exporting Israeli products, Gaza raw material into Egypt via tunnels.

By Mai Yaghi – RAFAH, Gaza

out of the isolated Palestinian enclave and into Egypt.

The lifting of restrictions in recent months has seen consumer goods pour into the Hamas-run territory through Israeli crossings, transforming the tunnels that once served as a lifeline for Gaza into its sole export channel.

The tunnels are still used for smuggling in construction materials that Israel only allows to enter via authorised crossings for projects carried out under international supervision.

But the canvas sacks full of food, beauty products and second-hand clothes that used to be dragged through hundreds of tunnels beneath the border now flow the other way in a lucrative trade conducted by an entrepreneurial few.

"We reversed our trade since the easing of the Israeli blockade and now we export," said a tunnel operator who goes by Abu Jamil.

"The Egyptian traders demand Israeli livestock to breed with their own to improve its quality," the 45-year-old smuggler said, calling his partners on the other side of the heavily-guarded border to tell them the cows are coming through, each with an Israel tag on its neck extolling its breeding potential.

The Egyptians also order Israeli coffee, blue jeans, mobile phones, and what Abu Jamil refers to as "raw materials" -- scrap copper, aluminium and used car batteries that can be recycled in Egypt.

Abu Ahmad, 30, another tunnel operator, watched as his workers use a makeshift pulley to lower several cases of Israeli-made soap and hair gel into a tunnel lit by a row of electric lights.

Over the last two weeks he has exported chickens, pigeons, beauty products and clothes imported from Turkey and China.

He even exports fresh fruit, including figs, lychees and mangos, saying it only takes around 10 minutes to pass the goods to the other side.

"A lot of the fruit we import through the Israeli crossings are not available in Egypt, or if they are the prices are high," he said.

The same tunnel owners and operators that have made fortunes importing desperately needed goods are still profiting from Israel's closure regime, which prevents legitimate exports from the territory.

Abu Ahmad makes around 50 dollars (36 euros) for every cage of chickens he exports and 150 to 300 dollars (110-220 euros) for every tonne of goods.

The profits generated by the trade have always benefited a small circle of tunnel owners and smugglers, with low-paid labourers, many of them teenagers, doing much of the dangerous subterranean work.

More than 130 Gazans have been killed in accidental cave-ins or the Israeli bombing of the tunnels in the last three years, according to local medics.

And while the larger economy has shown some signs of recovery since the easing of the closures, unemployment remains above 30 percent and four out of five Gazans relay on international aid.

Israel and Egypt first imposed the closures after Gaza militants kidnapped a soldier in a deadly cross-border raid in June 2006 and tightened them when Hamas -- which is pledged to Israel's destruction -- seized power a year later.

Israel began easing the restrictions earlier this year and started allowing in nearly all purely civilian goods in June following the international backlash after the deadly May 31 seizure of a Gaza-bound aid fleet.

Gaza's above-ground businessmen insist that the tunnels have done little to help local industry or contribute to long-term growth and have demanded Israel open its crossings for exports.

"Exporting through the tunnels does nothing for us," said Amr Hamad, head of the Palestinian Federation of Industries in Gaza.

"We want to export in an official way and not through smuggling so that our local industries can breathe."

Israel has said exports are out of the question as long as there are no security forces on the Gaza side of the border that can search shipments for bombs, weapons and fighters.

As a result, more and more Gazans are resorting to the tunnels, which are regulated and taxed by Hamas.

Abu Mohammed Zomaili, the owner of a furniture shop and a clothing store in Gaza City, says he has doubled his profits since the easing of the blockade by exporting bedsheets and clothes made in Turkey and brought in through Israel.

He says he is able to compete because Egypt imposes high customs duties and taxes on imported goods in order to promote its own local industries.

But even if Egyptian security forces were to seize some of his goods he would continue exporting because he sells his products in Egypt for twice what he pays for them.

"I don't risk anything and the profit margin is double," he says.

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