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Gaza's tunnel tycoons

Some 600 new millionaires made their fortunes by smuggling goods in Gaza tunnels, at the expense of thousands of workers risking their lives. Social uprising on the way?

Doron Peskin
Published: 03.19.12, 15:10 / Israel Business

The Gaza Strip usually makes headlines for rocket launching and IDF raids, but the daily lives of its residents are mostly affected by poverty, unemployment, faulty infrastructure and Hamas government corruption. A new study shows that in the past five years a new class of young millionaires emerged in Gaza.

 

The Gaza blockade enabled many to capitalize on the smuggling of goods via the Rafah tunnels. A new class of 600 young "tunnel millionaires" made their fortunes often at the expense of thousands of workers risking their lives in the tunnels.

 

Many of the new financial tycoons invested their money in grandiose real estate projects such as luxurious shopping malls and hotels, out of the reach of most Gaza residents. This resulted in a spike in real estate prices that further worsened the economic stagnation. Many of the new millionaires are associated with Hamas leadership, and are involved in money laundering schemes, investing mostly outside Gaza.

 


"המיליון הראשון היה הכי קל להשגה". מנהרות רפיח (צילום: רויטרס)

 Smuggler in Rafah Tunnel (Photo: Reuters)

 

As a result, their contribution to the Gaza market is slim, many claim in Gaza. They are furious with the new elite that use their capital to further monopolize the market to their own benefit rather than invest in the local market and create new jobs.

 

From horse and carriage to luxury cars

For some of the millionaires, theirs is a Cinderella story. A carriage driver turned became a luxury cars dealership owner, and a simple construction worker evolved into a real estate tycoon. Arab media recently showcased the story of 27 year-old Abu Ibrahim who turned his demolished house into a tunnel and in less than five years became a millionaire. The prices of smuggled goods, said Ibrahim "skyrocketed" in the past years, allowing him to earn up to $100,000 a day. His workers were paid $100 a day.

 

The Hamas government cooperates and supports the nouveaux riches. It refrained from enforcing clear financial laws and regulations, and under the premise of "the struggle against Israeli blockade" it allowed the tunnel business to flourish without any regulation, while earning millions from taxes on gas, cigarettes and illegal drugs and pills.

 

Doron Peskin is head of research at Info-Prod Research (Middle East) Ltd .

 

 

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