CAIRO: Palestinians face inflated prices for groceries and batteries, hospitals have turned to smugglers for medicine and equipment, Israeli soldiers and other middlemen are accused of pocketing millions of dollars, and the Hamas-led government takes a cut as the smuggling of goods restricted by Israel into the Gaza Strip has boomed, according to an Associated Press investigation based on court documents and interviews with traders, truckers and officials.
Cigarettes and tobacco — banned from entry to Gaza since the start of the Israel-Hamas war in October 2023 — rake in the biggest profits for smugglers and merchants, officials and residents say. But everything from iPhones and solar panels to fuel and anesthetics are also brought into the tiny coastal territory illegally. Israel restricts quantities of some goods and bans others outright. It defines many as "dual use" — including concrete, vehicle parts and X-ray machines — asserting they could be repurposed by Hamas militants for military functions.
To build a picture of the illicit trade, The Associated Press analyzed Israeli court documents and spoke to five major traders who import smuggled goods, three merchants who sell them, and two truckers — all on condition of anonymity because of their roles in the illegal smuggling business and concerns about their safety in Gaza. AP also interviewed four Palestinian officials, two on condition of anonymity because of worries about retribution from Israel, Hamas or merchants; two U.N. officials, on condition of anonymity over concern for their jobs; and a dozen Palestinian residents, who spoke about how they get everyday items and their skyrocketing costs.
AP found a rush from all sides to profit off the tight restrictions imposed by Israel on Gaza and its 2 million residents, most of whom have been displaced by the war. Smuggling rings — which have long flourished, circumventing two decades of Israeli blockades and building a network of businessmen and collaborators — pull in millions of dollars. Payoffs go to Israeli troops, drivers, warehouse workers and others on both sides of the border, according to traders and court documents.
"The occupation has left no other option before us. Smuggling has become routine," one trader said, noting that some in Israel's military are willing to help — for a price. "We benefit, they benefit and the people in Gaza benefit because we provide goods, including food, to the market."
The Israeli military said via email that it takes the issue of smuggling "very seriously and works to prevent it." It said any cases of suspected involvement by Israeli military personnel are "examined and handled in accordance with the law." But military officials did not answer a list of detailed questions from AP on the roles of soldiers or Gaza's government in smuggling.
Gaza's Hamas-led government also takes in some of the profit, according to merchants and one Palestinian official. Merchants call it "taxing" — on both smuggled goods and those brought in legally.
Mohammad Barbakh, of the Palestinian Economy Ministry in Gaza, told AP the government receives up to 20% of the price of any smuggled goods if the merchant reports them to authorities, and that increases to 80% if the items go unreported and authorities discover them. But he said authorities don't refer to their cut as "taxes" and that they haven't taxed goods entering legally since the war's start.
How smuggled goods flow into Gaza
Since the war began, Israel has tightly controlled all entry of food, aid and goods into the Gaza Strip, including a total aid blockade that shut off entry entirely for nearly three months last year, pushing parts of the territory into famine. The flow of goods has increased since a fragile ceasefire deal went into effect in October but remains well below prewar levels.
Besides the U.N. and other humanitarian groups bringing in aid, Israel has given 12 traders in Gaza permits to import commercial goods, according to Gaza's Economy Ministry. Contents of shipments must be approved by Israeli authorities, a process aid workers and merchants say can be long and opaque, sometimes ending with a rejection on grounds of "dual use."
The military classifies a list of some 150 broad categories of items as "dual use," including concrete, asphalt, steel pipes and wooden planks, according to documents provided by COGAT, the military department in charge of coordinating entry of goods into Gaza. In a statement to AP, COGAT said it has let in some "dual use" items including generators and X-ray machines, in specific cases under strict monitoring.
Some traders turn to smuggling networks to meet demand in Gaza, where smaller merchants look to sell contraband.
Two merchants and a trucker who is part of Gaza's union told AP that sometimes government agencies ask for specific items to keep functioning — fuel, spare parts for civil defense vehicles or generators. Hospitals also turn to smugglers, for drugs and some equipment.
And tribal elders request smuggled goods for their communities, including medicines that are in short supply, a tribal leader told AP, on condition of anonymity over concerns for his safety.
Two traders who control a large portion of the smuggling scene and an aide to a third told AP they send lists of contraband goods they want to import to "coordinators" — Israeli and Palestinian middlemen in Israel and the West Bank. Coordinators line up merchandise, then arrange a route into Gaza.
Commercial goods and aid mostly go through the Kerem Shalom crossing in the south, where every truck is inspected. The military also has routes in and out of Gaza for its vehicles. Smugglers use both avenues, bribing soldiers to smooth the way for trucks or carry goods in military vehicles, according to the traders and Israeli court documents.
Trucks belonging to humanitarian groups are also used sometimes, though less often, according to merchants and Israeli government statements.
Smuggling accounts for much of Gaza's economy
Smuggling has become vital to Gaza's economy — it's a major source of income as most of the population "lost their source of living," the tribal leader said.
Several top merchants estimated that smuggling makes up over half their total operations and can bring in more than 70% of profits.
Payments go to many players, including drivers and warehouse workers in Israel and Gaza, said one major trader. "You are paying at every step, plus the price of the goods themselves," he said.
All those costs get passed on to the people in Gaza. Residents say a vehicle battery can go for more than $2,300, compared with $140 prewar. Solar panels sell for $3.25 per watt, from 16 cents a watt.
"The smuggling flourished in the second half of 2024 as the market started to dry up," said Mohamed Abu Taha, a Gaza resident and father of one, noting that chicken, meat, and other food staples were brought in covertly. "Baby formula and pet food were also smuggled."
But perhaps no items are as in demand as cigarettes and tobacco. The price per pack, residents say, has hit as much as $140 recently, and over $1,000 during Israel's total blockade.
"You could find two or three men sharing one cigarette," Abu Taha said. Some resort to smoking a dried green called molokhia. COGAT did not reply when asked why cigarettes are banned.
For smugglers, cigarettes and nicotine products are easy to hide and the potential profit huge. Shipments of thousands of packs have been hidden in Israeli military vehicles, commercial trucks, aid shipments and even hollowed-out pineapples, according to traders, court documents and Israeli official statements.
The Hamas-led government is taking in money on smuggled goods, sources say
On smuggled goods, Gaza's government profits primarily by taking its percentage of the price but doesn't engage in commercial smuggling directly or oversee the trade, according to merchants and Barbakh, the economy ministry official.
Two major traders said the government demands for money increased since the ceasefire deal. Both said they were summoned by Hamas authorities over goods they smuggled to Gaza over the course of the war. A settlement was reached, and one of the traders said he paid $3.5 million; the other, around $3.75 million.
Two senior officials in the Hamas administration said — on condition of anonymity because they weren't authorized to speak to journalists — the money helps fund social services and pay salaries for the tens of thousands employed in Gaza's civil service and police force. They estimated up to $100 million had been collected on smuggled goods since the ceasefire.
Barbakh said the government doesn't have exact figures on smuggled goods "because these operations are conducted clandestinely, away from the oversight of relevant authorities."
In response to AP questions, Ismail al-Thawabta of the government's media office said none of the collected funds go to Hamas' military wing. He said all resources are directed to providing services to people and "maintaining the continuity of public facilities under the exceptional circumstances in the Gaza Strip."
The government destroys any expired goods it confiscates, including groceries.
But the two senior officials — as well as two merchants and one trucker — told AP that Hamas sells confiscated cigarettes. Al-Thawabta did not respond when asked about the claim.
'He is the master,' an official says of one smuggling coordinator
Smugglers appear to wield enormous influence. In court documents, Israeli prosecutors pointed to one mysterious smuggler known only as Abu Bassel who they said has "numerous connections within the Israel Police."
In one instance described in the documents, Israeli police stormed a warehouse in a Jewish settlement in the West Bank full of cellphones and cigarettes that smugglers were loading onto trucks for Gaza. One of the smugglers called Abu Bassel and handed the phone to an officer, the document says, and after a conversation, police called off the raid, leaving without arresting anyone or confiscating any goods.
All of those who spoke to AP said Abu Bassel is the smuggling world's biggest coordinator. They also said they knew nothing about him — his real name, whether he was Israeli or from the Palestinian territories, or how he built his network.
"He is the master," a senior Gaza Chamber of Commerce official said. "Nothing can enter Gaza without his stamp."
One Gaza merchant said he has spoken by phone with Abu Bassel but wouldn't provide AP the number. He said the shadowy figure uses connections with the military and intelligence to resolve problems for shipments. "Many police raids have been thwarted because of him."
The Israeli court documents also have no details about Abu Bassel's identity but said he uses an aid organization, Al-Mughtarib Al-Falastini, as a cover. The group denied in a Facebook post that it was involved in smuggling.
Israeli indictments show some of the scope of smuggling
Since late 2025, Israeli authorities have broken up several alleged smuggling rings, indicting more than a dozen people, including reserve soldiers operating in Gaza. But the traders, merchants and truckers who spoke to AP say that's only a fraction of those involved.
In one of the biggest cases, prosecutors accused two Israeli brothers, Eliran and Avi Algarabli; business partner Yaron Peretz; and another Israeli of running a smuggling ring out of the central town of Kiryat Gat.
According to a series of indictments against them and others, they're accused of bribing reserve soldiers in Gaza, chief among them Bezalel Zini, brother of the head of the Shin Bet, Israel's powerful domestic security agency.
The documents say Zini was a commander in a military engineering unit. The ring allegedly paid Zini the equivalent of about $120,000 to smuggle three shipments totaling some 6,000 packs of cigarettes in his vehicle, according to the indictments. Two other reservists enlisted by the ring ran four trips into Gaza in one day, ferrying in 20,000 packs of cigarettes, hundreds of iPhones and medical equipment, the indictments say.
Court documents assert that millions of dollars are changing hands in smuggling rings. The Algarabli brothers earned some $2.2 million from a series of smuggling runs from October to December, when they were arrested, documents say. Other defendants in cases are accused of making $1 million to $3 million.
Gaza residents question why items are banned
For Gaza residents, living through another summer with limited resources has become almost unbearable.
Fans that once cost $100 can 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," resident Mohamed Abu Olwan said.
Mohamed Abuel-Enein, a displaced man from the southern city of Rafah, said that's illogical.
"I don't understand the harm in allowing fans through the crossings," he said.
"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."