Gaza’s Black Market Flourishes as Israeli Restrictions Drive Up Prices and Enrich Smugglers

CAIRO — Palestinians in Gaza are confronting soaring costs for basic goods such as groceries and batteries, while hospitals have turned to underground networks for medicines and equipment. An Associated Press investigation, drawing on court documents and interviews with traders, truck drivers, merchants and officials, reveals that smuggling of items restricted by Israel has become a lucrative enterprise. The Hamas‑led government reportedly takes a share of the profits, and some Israeli soldiers are alleged to be involved in the scheme.

Cigarettes and tobacco, banned since the Israel‑Hamas war began in October 2023, generate the highest returns for smugglers and merchants. Residents say the black market also supplies iPhones, solar panels, fuel, anesthetics and other contraband, ranging from vehicle parts to X‑ray machines—all classified by Israel as “dual‑use” items that could aid militant activities.

For the investigation, AP spoke with five major importers of smuggled goods, three shopkeepers, two truckers, four Palestinian officials (some speaking anonymously for fear of retaliation), two UN officials, and a dozen residents. The interviews uncovered a sprawling network that has long circumvented Israeli blockades and now thrives on the tightened restrictions imposed after the war.

Smuggling rings are pulling in millions of dollars, with bribes paid to soldiers, drivers, warehouse staff and other intermediaries on both sides of the border. According to one trader, “The occupation has left us no other option. Smuggling has become routine. We benefit, they benefit, and the people of Gaza benefit because we provide goods, including food, to the market.” The Israeli military says it takes smuggling “very seriously” and investigates any alleged involvement by its personnel, but it did not respond to detailed AP queries.

Gaza’s Hamas government also collects revenue from the illicit trade. Mohammad Barbakh of the Palestinian Economy Ministry in Gaza said the authorities receive up to 20 % of the price of reported smuggled goods, rising to 80 % if the items are discovered un‑reported. Merchants refer to this as “taxing” on both contraband and legal imports, though the ministry insists it does not call it a tax and has not taxed legal imports since the war began.

The flow of goods into Gaza has been tightly controlled since the conflict’s onset. A near‑total aid blockade for three months last year pushed parts of the territory toward famine. While a fragile ceasefire in October eased restrictions, imports remain far below pre‑war levels. Only a dozen Gaza traders hold Israeli permits to import commercial goods, and shipments must be approved by Israeli authorities, a process described as lengthy and opaque and often rejected on “dual‑use” grounds.

The Israeli military’s COGAT lists roughly 150 categories of dual‑use items, including concrete, asphalt, steel pipes and wooden planks. It says it has allowed some dual‑use items such as generators and X‑ray machines under strict monitoring.

Despite official channels, many traders resort to smuggling networks to meet demand. Merchants, truckers and even tribal elders say they sometimes request specific contraband—such as fuel, spare parts for emergency vehicles, medicines, and other scarce supplies—through these underground channels.

Two traders and an aide described a system in which they send lists of desired contraband to “coordinators”—Israeli and Palestinian middlemen in Israel and the West Bank. The coordinators line up merchandise and arrange clandestine routes into Gaza. Trucks from humanitarian groups are occasionally used, as are military vehicles, with soldiers allegedly being bribed to facilitate passage.

Smuggling now accounts for a substantial portion of Gaza’s economy. Several merchants estimate that contraband represents over half of their operations and can generate more than 70 % of their profits. Costs are layered: traders say they pay at every step, and these expenses are ultimately passed on to residents.

Prices have exploded. A vehicle battery now costs over $2,300, compared with $140 before the war. Solar panels fetch $3.25 per watt, up from 16 cents per watt. “The smuggling flourished in the second half of 2024 as the market started to dry up,” said Gaza resident Mohamed Abu Taha, noting that chicken, meat, baby formula and pet food were also smuggled. Cigarette packs have reached $140 per pack recently and over $1,000 during the complete blockade, forcing some residents to share a single cigarette.

Smugglers hide cigarettes in military vehicles, commercial trucks, aid shipments and even hollowed‑out pineapples. The Hamas‑led government is said to profit from this trade, though it does not directly engage in commercial smuggling or oversee the trade, according to merchants and Barbakh. Two major traders reported being summoned by Hamas authorities for smuggling activities and settling payments of $3.5 million and $3.75 million, respectively.

Senior Hamas officials, speaking on condition of anonymity, said the revenue helps fund social services and pay salaries for tens of thousands of civil‑service and police employees, estimating up to $100 million collected since the ceasefire. Ismail Al‑Thawabta, a government media representative, said none of the funds go to Hamas’ military wing and are used to maintain public facilities under the exceptional circumstances in Gaza.

The government claims to destroy any expired goods it confiscates, but two senior officials, two merchants and a trucker allege that Hamas sells confiscated cigarettes. Al‑Thawabta did not respond to this allegation.

One shadowy figure, identified only as Abu Bassel, is described as the “master” of the smuggling network. Israeli court documents note his “numerous connections within the Israel Police.” In one incident, police halted a raid on a West Bank warehouse after Abu Bassel’s phone call, and the operation was called off without arrests or seizures. The real name, nationality and exact methods of Abu Bassel remain unknown, but traders say nothing enters Gaza without his approval.

Israeli authorities have disrupted several smuggling rings since late 2025, indicting more than a dozen people, including reserve soldiers. One major case involves brothers Eliran and Avi Algarabli, business partner Yaron Peretz and another Israeli, accused of bribing reserve soldiers—most notably Bezalel Zini, brother of a senior Shin Bet official. Court documents allege that the ring paid Zini about $120,000 to smuggle 6,000 packs of cigarettes, and that other reservists conducted four trips in a single day, bringing in 20,000 packs of cigarettes, hundreds of iPhones and medical equipment. The brothers are said to have earned roughly $2.2 million from smuggling between October and December 2025.

Gaza residents express frustration over the restrictions. A fan that once cost $100 can now be $500, with merchants explaining that the Israeli army denies entry because fans are classified as dual‑use. “I don’t understand the harm in allowing fans through the crossings,” said displaced resident Mohamed Abuel‑Enein from Rafah. “What would they make with them? Rockets? We can’t live in these tents. All day long, we use cardboard to light a fire, or we splash water on the children because of the heat.”

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