Smuggling booms in Gaza as Israeli restrictions push prices skyward

The smuggling of goods restricted by Israel into the Gaza Strip has become a booming enterprise, with items ranging from cigarettes and iPhones to fuel and solar panels reaching desperate residents of the war-torn coastal enclave. An investigation based on Israeli court documents and interviews with traders, merchants, truckers, officials, and Palestinian residents reveals a complex illicit market where soldiers and other middlemen are accused of pocketing millions of dollars.

Most sources spoke on condition of anonymity due to their involvement in the illegal trade and safety concerns in Gaza. The investigation found that Gaza's Hamas-run government reportedly takes a cut of profits from goods entering the enclave, a practice merchants refer to as "taxing." Mohammad Barbakh of the Palestinian Economy Ministry in Gaza said the government receives up to 20% of the price of smuggled goods if merchants report them, but that figure jumps to 80% if items go unreported and are discovered. He added that authorities don't call their cut "taxes" and haven't taxed legally entering goods since the war began.

Two senior Hamas administration officials, speaking anonymously, estimated that up to $100 million had been collected on smuggled goods since a fragile ceasefire deal. They said the money helps fund social services and pay salaries for Gaza's civil service and police force. Ismail al-Thawabta of the government's media office said no collected funds go to Hamas' military wing.

Since late 2025, Israeli authorities have broken up several alleged smuggling rings, indicting more than a dozen people, including reserve soldiers operating in Gaza. Traders and merchants say that's a fraction of those involved. In one major case, prosecutors accused several people of running a smuggling ring out of the central town of Kiryat Gat, including bribing reserve soldiers. Court documents assert millions of dollars are changing hands, with two Israeli brothers earning some $2.2 million from smuggling runs before their arrest.

Smuggling is a major source of income as most of the population has "lost their source of living," according to a tribal leader. Several top merchants estimated that smuggling comprises over half their total operations and can bring in more than 70% of profits. These costs are passed on to residents, with a vehicle battery going for more than $2,300, compared with $140 prewar.

Cigarettes and tobacco products, banned from entry since the war's start, are perhaps the most in-demand items. Prices per pack hit $140 recently and exceeded $1,000 during Israel's total blockade. "You could find two or three men sharing one cigarette," said Mohamed Abu Taha, a Gaza resident. Shipments of thousands of packs have been hidden in Israeli military vehicles, commercial trucks, aid shipments, and even hollowed-out pineapples.

Beyond cigarettes, smugglers bring in essential goods like concrete, vehicle parts, anesthetics, and other drugs. Israel restricts quantities of some goods and bans others outright, classifying some 150 broad categories as "dual use," asserting they could be repurposed by Hamas militants for military functions. COGAT, the military department coordinating goods entry, said it has let in some "dual use" items under strict monitoring.

The Israeli military said it takes smuggling "very seriously" and that cases of suspected involvement by personnel are "examined and handled in accordance with the law." However, officials didn't answer detailed questions on the roles of soldiers or Gaza's government in smuggling.

Gaza residents have faced another summer with limited resources. Fans that once cost $100 now run $500. "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," said resident Mohamed Abu Olwan. "What would they make with them? Rockets?"