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Hamas profits from Israel's Gaza blockade

The group, which taxes goods smuggled through tunnels, is supplanting Gaza's business leaders and could strengthen its political position as well.

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An Israeli blockade on all but humanitarian goods has lead to the creation of tunnels through which smugglers operate.

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A few months ago, Gaza City's beachfront Commodore Hotel plastered a large Koranic message atop its new glass front door. The hotel lobby, once dusty and aging, got a complete makeover in green, the color of Islam.

What happened? The decades-old establishment on a prime piece of Gaza coastline was recently purchased by Abdul Aziz al-Khaldi, an ardent supporter of the Islamist movement Hamas, which has ruled this coastal strip since winning a brief war for control of the area with rival Fatah in June 2007.

Mr. Khaldi is part of a coterie of local businessmen close to Hamas who appear to have emerged as the big financial winners from the Israeli-imposed economic blockade of this tiny enclave.

The two-year-old blockade has strangled Gaza's economy and put the majority of Gazans out of business. Israel's logic has been that a collapsing economy will convince Gaza's people to push Hamas from power. But instead, Hamas – which rose to prominence as a "clean" alternative to the famously corrupt Fatah – has benefited handsomely. Now, the movement and its friends appear to be supplanting Gaza's traditional business leaders, which could entrench its political position as well.

They're doing so, veteran Gaza businessmen say, thanks to the fact that Hamas can generate capital while all its potential competitors are running dry. They charge that Hamas and its associates have been using their control of smuggling tunnels, money changing, and tax revenue to buy prime tracts of land and buildings across Gaza, particularly along the enclave's main boulevards.

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