Going under in the Gaza Strip

By Patrick Jackson
BBC News

Gazans continue to use the tunnels into Egypt despite Israeli air strikes

Blockaded, impoverished and ever open to Israeli attack, the Gaza Strip has little to offer investors on the surface of things.

Which is largely why, by the end of 2008, an estimated 4,000 Palestinians decided to bury their money, financing the construction and operation of smuggling tunnels connecting Gaza to Egypt.

Many millions of dollars may have been ploughed into tunnel schemes. Gaza's ruling Islamist group Hamas sought to control them, to the extent of issuing construction licences.

Goods flowed beneath ground, bypassing Israel's blockade. Weapons flowed too.

Before and during its three-week assault on Gaza, which ended in January, the Israeli military bombed the tunnels. Israel said that it had destroyed four out of every five.

Now the investors want their money back and they think Hamas should pay.

Cows and iPods

Jonathan Ferzinger, a journalist at Bloomberg in Tel Aviv who has been investigating the tunnels, believes there were about 1,000 tunnels at one stage.

TUNNELS INTO GAZA Up to 1,000 were dug along the 15-km (nine mile) Gaza-Egypt border Tunnels up to 20m (65ft) deep have been recorded Israel has on occasion considered digging a moat along the border Smugglers' alley key to conflict Guide: Gaza under blockade Gaza industries struggle to rebuild

The investment drive started about a year ago, he says, after it had become clear that tunnels were the only way to beat the Israeli blockade.

"All sorts of stuff was going under the border, everything from iPods to cows," he told the BBC's World Update programme.

"As this became the only going enterprise in Gaza, people saw it as an investment opportunity.

"It cost $100,000 (£62,600) to dig one of these tunnels and so word went out that they needed money and people could make fantastic returns."

The Bloomberg journalist points out that Gaza has been an economic "black hole" for years.

Today unemployment stands at 40%.

'Hamas's responsibility'

According to Omar Shaban, director of the Gaza-based economic research institute Pal-Think, investors should hold themselves to blame in the first instance for risking their investment in "black businesses".

An Israeli air strike on tunnels in September killed two Palestinians

But, he told the BBC, they also "blame the de facto government in Gaza for not taking proper measures to prevent or regulate... or make people aware of the consequences of putting their money in informal channels of investment".

It is believed that investors are being offered 16 cents on the dollar in compensation, provided they abandon any further claims.

"Hamas wants to be seen to be taking care of people," Jonathan Ferzinger notes.

Whatever compensation deal is reached with the investors, it is clear the tunnellers are not going away.

Just last Saturday, Israeli aircraft bombed two tunnels along the Gaza-Egypt border.

Mr Shaban stresses that the Israeli blockade is at the heart of the problem.

It has created an "economic structure that is neither registered nor documented nor transparent", he says.