* Egypt started sealing tunnels after Aug. 5 Sinai attack
* Tunnellers say Gaza suffers from shortages, higher prices
* Hamas proposes establishing a free trade area with Egypt
* Israel imposed blockade after Hamas took over Gaza in 2007
By Nidal al-Mughrabi
GAZA, Sept 18 Egypt's crackdown on smuggling
tunnels along its border with the Gaza Strip is making shortages
ever tighter and has forced the enclave's Islamist Hamas rulers
to consider urgent alternatives.
Hamas officials asked Egypt late on Monday to consider
alternative trade routes, such as a free trade zone, a direct
deal that could boost Hamas tax revenues and circumvent rival
Fatah's and Israel's control of official imports to Gaza.
Egypt started closing the tunnels after the Aug. 5 attack in
Sinai when gunmen killed 16 Egyptian soldiers. Egypt suspects
the tunnels were used by some of the militants. Hamas says
no-one from Gaza was involved in the attack.
On Saturday, hundreds of Hamas supporters protested at the
Gaza border, demanding that Cairo stop sealing tunnels,
chanting: "Closing the tunnels is a death sentence for Gaza."
Israel has imposed a blockade on Gaza since 2007 when Hamas
seized control by ousting Fatah forces of Palestinian President
Mahmoud Abbas. It says the blockade is aimed at stopping weapons
and other military materials reaching Hamas.
Last year Egypt allowed more people to cross at the border
with Gaza in the town of Rafah but it is used only for travel,
not goods. Officially, goods enter Gaza only through Israel.
Israel allows in fuel and building materials mainly for
United Nations-funded projects but not for private use. Hamas
official Ibrahim Jaber of Gaza's Ministry of Planning said that
in 2011 some $1 billion worth of goods came in via Israel.
Maher Al-Tabbaa, a Gaza-based economist, said that 30
percent of Gaza's goods come from the tunnels. Tunnellers say 80
percent of food sold in Gaza comes through the tunnels.
"If tunnels are closed there will be a complete collapse in
Gaza. It would suffer an economic catastrophe," he said.
The tunnels have been used to import anything from food to
construction materials, fuel and cars, and militants have also
used them to import munitions used to attack Israel, which has
targeted some of the tunnels with air strikes.
"The tunnel business is drying up and Egyptian security
forces are working day and night to seal the tunnels. In one
area along the border 180 tunnels have been closed," tunnel
owner Abu Abdallah told Reuters.
He said that the clampdown had led to a rise in food prices
in the territory and that construction materials such as cement
and steel had also become more expensive.
"The construction boom in Gaza will come to a halt soon as
all tunnels that used to bring in gravel have been blocked by
Egyptian security," said Abdallah, who employs 40 people.
Ali, a tunneller for the past five years, said the import of
building materials was becoming impossible because Egyptian
suppliers were raising their prices, while Hamas was not
allowing them to follow suit.
"A tonne of cement now costs 400 shekels (about $100) but
Hamas forces us to sell at 370 shekels, which means I will lose
even before paying the workers who pull the goods through the
tunnel," Ali told Reuters.
"I and many others have stopped working because Hamas
regulations do not take our losses into account," he said.
Jihad Abu El-Kass, whose family owns a Gaza City
supermarket, said dairy products were in short supply.
Hamas officials have urged Egypt to allow Rafah crossing to
be used for goods also but Cairo has been reluctant to pursue
changes to international agreements with Israel and other
Western nations which stipulate that Rafah is only for travel.
Gaza's Hamas Prime Minister, Ismail Haniyeh, mooted setting
up a free trade area between Gaza and Egypt at a meeting on
Monday night with Egyptian Prime Minister Hisham Kandil, a Hamas
government official told Reuters from Cairo.
"We explained the concept in detail ... the idea is to
alleviate the economic hardship in Gaza," Taher al-Nono said.
An Egyptian official told Reuters that the proposal was made
at the meeting but that it was too early for a response.
Some Palestinian officials fear that such a deal might
encourage Hamas to finally shun a stalled Egyptian-drafted
reconciliation pact to end a rift with Fatah.