The Phenomenon of Tunnels in The Gaza Strip: Shattered Economy, the Catholic marriage, a Bitter Harvest

Sameer Abu Mdallaleh and Ghassan Abu Hatab

This study deals with a rare phenomenon in terms of form, but the manifestations and characterization on the ground is not a rare issue, for the tunnel economy as a non-productive economic activity is classified as a wealth economic activity, and its major field is exchange. In the sense referred to, this type is a collection of certain parasitic activities of a certain social segment that is gathered with the existing power through mutual personal interest - In our research themes the existing power is de facto authority in the Gaza Strip.

As a rentier economy that does not add any new economic values to the community, its theoretical and practical concepts has been entrenched in the absence of a proper legal, legislative and economic system, so that mechanisms of corruption in the interpretation and explanation have developed -as if it's contributing in solving problematic economic and social issues- resulting in a significant growth in networks of shadow economies of  black market, parallel economy and wealth  inflation of a very limited category.

Tunnels economy in Gaza transfers wealth - money- regardless of its source - and mostly it's not a source stimulated by a humanitarian cause, from the Gaza Strip to Egypt and in one direction, aiming to import goods and services that may be necessary and may not; hence, instead of investing these funds in productive and generating value economic activities such as industry and agriculture  and thus contributing to the reduction of unemployment and poverty problems, what happens is a  reverse transfer of the Gaza Strip resources, and the return of these resources - financial assets in the form of goods and services to be sold in the local market, and reap the profits for the benefit of the new capitalists, or what might be called crony capitalism (the marriage of money and power).

Although the construction sector has been a very active sector in the "tunnels trade," and consequently its contribution to the GDP was tangible, however, the annual economic growth rates were not accompanied by an improvement in wages and life-style levels; Instead, the gap between the rich and the poor has increased, so did the income levels of the new princes and those of low income.

Thus, smuggling economy attributes are deepened, as well as money laundering, speculation in real estate and land, and the imposition of monopoly prices that respond to encourage owners of tunnels and influential figures in the dissolved government institutions, according to the prices of oligopoly monopolistic competition, _ in the name of investment, or rather employment opportunity - cost opportunity- aiming at raising profits to the maximum.

Based on the above, the study assumes in its theoretical and conceptual framework that the phenomenon of tunnels has deviated completely away from the stated goal for which it was established - resisting the occupation and relieving the burden on people. As an approach, it could be argued that they are similar to financial markets that existed historically to mobilize savings for the purpose of productive investment -that is growth and development by people, for people and to people. However, with the rise of financial capitalism there became a disconnection between the monetary relations department and the real circle of the national economy, money generated money without real economic production and no economic added value.

Hence, the tunnel economy has deepened structural abnormalities of the Palestinian economy in Gaza Strip, considering that what characterizes tunnel owners and activists is having the so-called comprador mindset, a local agent working in the areas of symbolic economy, which boosted the "get -rich -quick” concept without having a real production base, contributing to the disintegration of the social and political status of the Gaza Strip.

Generally, it could be argued that the phenomenon of tunnels, as well as informal roads -that is called sometimes smugglers roads- is accompanied often with cities or border areas. It represented a haven in times, and a crossing point in other times, for a lot of people on both sides of the borders of the two countries or regions, of which are smugglers and outlaws and illegal immigrants, not to mention the national liberation movements, which used the tunnels in many times as a shelter, and passing of weapons or goods to the besieged areas, and other purposes that challenge the existing authority.

On the Palestinian side, deployed tunnels in Rafah, on the border with Egypt, has derived its legitimacy from need to oppose the circumstances of the occupation, being a source of support for the Palestinian resistance since the beginning of the 8th decade of the 20th century. However,  considering the Israeli blockade of Gaza Strip during 2006, following the winning of Hamas in the legislative elections and forming the 10th  Government, the tunnels represent an attempt to break this blockade, that included all aspects of life, starting with fuel, electricity, water, medications, raw materials, and food supplies, including preventing the transfer of salaries to employees. The blockade was accompanied by economic stagnation and slowdown that prevailed in all economic sectors due to preventing entry of raw material and closing more than 90% of the establishments.

After seven years of tunnels trade in Gaza Strip, and months after closing the tunnels, we can say that the tunnel economy is a devastating and a non-productive economy, despite its partial advantage of dissolving the humanitarian problem of providing basic and essential goods. This phenomenon has  managed to undermine the possibility of building and establishing a productive economy that could be based on maximizing their own available and possible resources as a prelude to a sound economy that handles the existing disparity in trade balance, and enhances the potentials of the community economy founded to stimulate the production of material goods,  goods and services that might provide material components for a sustainable economic development, that gives the priority to combating the phenomena of unemployment and poverty within  certain  balanced financial, commercial and monetary economic policies, heading towards an  economic development that ensures  social justice. This could be accomplished through the reform of the structural and organic imbalances in the Palestinian economy, based on the neo-liberal policies that resulted in deepening its subordination to the Israeli economy, and the increasing reliance on the outside, especially in imports, and the maximized dependence on foreign aid. Additionally, the Palestinian Authority needs to pursue policies that put an end to non-productive, illegal work, and to eliminate death values replaced by the values of Enlightenment and Renaissance as a prelude to catch up with modernity and progress.

This study seeks to shed light on the phenomenon of tunnels on the Gaza Strip's border with Egypt, and to identify the advantages and disadvantages as well as the consequences of the closure and available economic alternatives, and their impact on the construction sector as one of the most affected sectors of the economy by the closure of tunnels in the Gaza Strip.

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2014