Tobacco prices up as smuggling tunnels are almost out

Friday 26/06/2015
Egyptian soldiers inspect a smuggling tunnel in the divided border town of Rafah, along the border with the Hamas-run Gaza Strip.

Rafah - Abu Mansour spent the night of June 15th haul­ing shipments of smug­gled cigarettes and other tobacco from a furtive tunnel in the Gaza Strip.
The skinny, short man appeared unfazed when gunshots and blasts echoed from across the border.
The Egyptian Army has mounted an extensive campaign to destroy tunnels that act as lifelines for all kinds of goods to the Gaza Strip on the eastern Mediterranean. Private homes and installations built in a 1-kilometre area on the Egyptian side of the border have been razed over the past two years to hamper smuggling, which Egypt and Israel say bolsters the rule of the militant Hamas in the coastal enclave.
Trade through the tunnels be­gan months after Israel imposed a blockade following Hamas’ violent 2007 takeover of the Gaza Strip. That caused severe shortages of supplies, such as medicine, food and fuel used to generate electric­ity.
Business through the tunnels flourished after Egyptian president Hosni Mubarak was ousted in 2011 but declined after his successor, Muslim Brotherhood leader Mu­hammad Morsi, was removed.
Huge tunnels were once dug to allow the passage of a variety of goods, including food, fuel, refrig­erators, television sets and even bigger items such as tractors.
Militants also used the same underground passages to bootleg caches of weapons and ammuni­tion. The tunnels being used now are small, and the products are packed into plastic tubes that run from Egyptian territory to Gaza.
At least 10% of the existing “se­cret” tunnels are operational, while the remaining 90% of the tunnels have been destroyed, according to sources in the business who insist­ed on anonymity.
Since cigarettes are heavily taxed in Gaza, they have become popular items to be smuggled into the en­clave, where jobless youngsters sell them on the street.
“Once upon a time, Rafah was a hub for smuggling from Egypt to Gaza,” sighed Abu Mansour, 40. He used a pseudonym fearing retribu­tion from Israel, which maintains a tight grip on Gaza and its Hamas rulers, who advocate Israel’s an­nihilation. “But after the Egyptian security campaign mounted, the city of Sheikh Zowayed in the Sinai peninsula, 6 kilometres east of the border, has become the capital of smuggling to Gaza,” noted the na­tive of Rafah.
In the wake of the crackdown, smugglers mapped out new routes and techniques to keep their busi­nesses alive, he said. “We adapt to all conditions by creating new tac­tics and tricks, either by digging new tunnels or inventing new smug­gling methods,” said Abu Mansour, whose sole career has been smug­gling cigarettes and other kinds of tobacco.
Abu Mansour’s technique to cope with the new realities is simple: “We place a plastic tube in the tun­nel with a narrow diameter, barely enough to fit a pack of cigarettes, so with its length, the tube can take dozens of cigarette packs. Then, I pull the tube out and collect the in­coming shipment.”
On this night a friend of Abu Mansour’s suddenly climbed out of the tunnel, saying he had spent 12 hours inside awaiting a shipment. The man, who declined to be identi­fied, said he did not fear being in a pit and that all he cared for was the financial gain.
“The profit we make inspires us to continue smuggling,” he said. “I know it’s a risky business, but we make good dough.”
But across Gaza, some merchants complain that the destroyed tun­nels, tightened Egyptian security measures and the smaller under­ground passages from Egypt have brought their businesses to a virtual standstill.
Ahmed el-Hamms, a 40-year-old tobacco street vendor for more than seven years, said he was barely making ends meet these days.
“Cigarette prices doubled, com­pared with three years ago,” he said. “When the tunnel business started, we made a good profit, but after the Egyptian security campaign, it all dried up.”
Unemployment hit a record 43% under the tight Israeli blockade af­ter Hamas’ takeover of the enclave from the moderate Palestine Na­tional Authority. Hundreds of Gaza residents, who became jobless after the Israeli siege that banned its in­habitants from working in the Jew­ish state, turned to street vending, mainly selling cigarettes.
“Selling cigarettes is no longer a good business because prices are expensive for both the vendors and consumers,” said Hamms, as he lift­ed a box filled with smuggled packs of cigarettes.
“I hope I can have a decent job other than selling smuggled ciga­rettes.”
Local tobacco merchants said one pack of smuggled cigarettes costs them about $2.50 and it is sold at tri­ple that amount. Before the Israeli siege, a pack of imported cigarettes sold at 33 cents.
Kamal Salem, a Gaza City tobacco store owner, said “cigarette smug­gling has never really stopped com­pletely. It only goes through phases, or difficult times, when Egyptian authorities confiscate cigarette shipments.”
A senior Finance Ministry official in Gaza said another hurdle in that business was the hefty taxes col­lected by the Hamas government “to ease its cash crunch”.
Economic expert Moeen Rajab said merchants were also to blame, adding, “They buy huge quanti­ties of cigarettes and other tobacco products at low prices and store them until prices jump to maximise their profit.”