The smuggling of restricted goods into Gaza has expanded into a multimillion-dollar underground economy as the ongoing Israel-Hamas war continues to disrupt daily life. An Associated Press investigation found that soaring prices, severe shortages, and strict import restrictions have fueled illicit trade involving everything from cigarettes and fuel to medical supplies and smartphones. Court documents and interviews with traders, officials, merchants, truckers, and residents describe a system in which smugglers, middlemen, and even some Israeli soldiers are accused of profiting while ordinary Palestinians struggle to afford basic necessities.
An Underground Economy Fills the Supply Gap
Since the war began in October 2023, Israel has tightly controlled the entry of commercial goods into Gaza, citing security concerns and restrictions on items considered “dual use,” meaning they could potentially serve civilian or military purposes. According to the AP investigation, merchants increasingly rely on smuggling networks to bring in products that cannot be imported legally or in sufficient quantities.
Items ranging from anesthetics and solar panels to vehicle parts, fuel, and iPhones are reportedly entering Gaza through clandestine routes. While humanitarian aid continues to arrive through approved channels, many commercial shipments face lengthy approval processes or are rejected altogether, creating opportunities for illegal trade.
Residents Face Skyrocketing Costs
The shortages have driven prices to extraordinary levels for everyday goods. Residents interviewed by AP described paying thousands of dollars for vehicle batteries and hundreds of dollars for basic household items that once cost a fraction of the price.
Mohamed Abu Taha, a Gaza resident and father of one, said, “The smuggling flourished in the second half of 2024 as the market started to dry up.” He added that “Baby formula and pet food were also smuggled.”
Cigarettes have become one of the most profitable products on the black market. According to residents, packs have sold for as much as $140, and even exceeded $1,000 during periods of complete blockade.
Abu Taha also described the scarcity by saying, “You could find two or three men sharing one cigarette.”
Allegations of Profiteering Across the Supply Chain
The AP investigation alleges that money changes hands at nearly every stage of the smuggling process. Traders told reporters that payments are made to drivers, warehouse workers, middlemen, and, in some cases, Israeli soldiers accused of facilitating shipments.
One trader explained, “The occupation has left no other option before us. Smuggling has become routine.” He added, “We benefit, they benefit and the people in Gaza benefit because we provide goods, including food, to the market.”
The Israeli military said it takes smuggling “very seriously and works to prevent it.” It stated that allegations involving military personnel are “examined and handled in accordance with the law,” while declining to answer several detailed questions from the AP investigation.
Court Cases Reveal Expanding Smuggling Networks
Israeli authorities have prosecuted several alleged smuggling rings since late 2025, including reserve soldiers accused of transporting contraband into Gaza.
According to court documents reviewed by AP, prosecutors allege that millions of dollars were generated through the illicit trade. One case accuses several defendants of bribing reserve soldiers to move thousands of packs of cigarettes, medical equipment, and hundreds of smartphones into Gaza.
The investigation also highlights a mysterious coordinator known only as “Abu Bassel,” whom multiple sources described as one of the most influential figures in the smuggling network.
A senior Gaza Chamber of Commerce official said, “He is the master.” The official added, “Nothing can enter Gaza without his stamp.”
Hamas Government Also Accused of Collecting Revenue
Merchants and Palestinian officials told AP that Gaza’s Hamas-led government collects revenue from smuggled goods, although officials denied directly running smuggling operations.
Mohammad Barbakh of Gaza’s Economy Ministry said the government receives a percentage of the value of smuggled goods depending on whether merchants report them to authorities. He maintained that officials do not refer to these payments as taxes.
Government media official Ismail al-Thawabta told AP that none of the collected funds are directed to Hamas’ military wing and said the money is used to provide public services and maintain government operations during the conflict.
Questions Over Restricted Goods Continue
Many Gaza residents question why certain household items remain prohibited.
Mohamed Abu Olwan said, “When we ask the merchants why they don’t import fans, they say the Israeli army refuses to allow them in because they’re dual use.”
Displaced resident Mohamed Abuel-Enein expressed frustration, asking, “I don’t understand the harm in allowing fans through the crossings.” He continued, “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.”
The Associated Press investigation portrays a wartime economy in which severe shortages and import restrictions have transformed smuggling into a critical source of goods and income inside Gaza. While Israeli authorities continue to pursue alleged smuggling networks and maintain that restrictions are necessary for security, residents face soaring prices for essential products. As accusations of profiteering extend across multiple groups involved in the conflict, the underground trade has become an increasingly significant part of daily life for millions of people living in the territory.
