March 2, 2013

GAZA CITY (Ma'an) -- The construction industry in Gaza has been hit hard by Egypt's recent crackdown on underground smuggling tunnels, causing the price of raw materials to skyrocket, officials in the coastal territory say.

The executive director of the federation of Gaza's construction industry, Farid Zaqut, told Ma'an that Egyptian merchants have started raising the prices of construction materials in response to their government's campaign to close smuggling tunnels.

"A ton of cement rose from 400 shekels ($108) to 700 shekels ($188), while a ton of gravel rose from 85 NIS ($29) to 130 ($35). A ton of iron bars for construction has increased from 3,300 NIS ($886) to 3,700 ($994)," he explained.

Ongoing efforts by Gaza's Ministry of Economy could reduce prices back to normal, Zaqut said.

If the network of tunnels is fully closed by Egypt the problem will become much more serious, as the tunnels represent the only consistent route to import construction materials.

"The goods which arrive via the tunnels cover about 60 percent of the demand, and either way we need the official border crossings to operate normally," the construction official said.

Egypt's campaign has caused anxiety across the construction sector, with many questioning whether the government will initiate any border policy changes to replace the vital tunnel trade.

"Both contractors and citizens are worried because Egypt plans to shut down smuggling tunnels and there isn't a clear mechanism for the shipment of construction material into Gaza once tunnels are completely shut down," speaker of the union of Palestinian contractors Osama Kheil told Ma'an.

The partial closure of Gaza tunnels has served to decrease competition and encourage monopolies, Kheil said, adding that contractors are unable to complete projects which they have already started.

Many Gaza residents have also stopped construction work on their homes due to the ongoing prices rises.

"I started to build a house two months ago, but now I stopped work as a result of the sudden rise in construction material prices," a Gaza resident said.

"I went to buy gravel and iron bars and to my astonishment prices were very high. Prices of each type of construction material have risen by more than 200 NIS ($53) per ton."

A campaign by Egypt to shut down Gaza tunnels began last August following the killing of 16 Egyptian soldiers in a militant attack near the Gaza fence.

The campaign gained new momentum in February, when authorities began flooding underground tunnels as part of a ceasefire agreement to end cross-border violence between Gaza and Israel last November.

The network of tunnels is a vital lifeline for Gaza, circumventing a blockade imposed by Israel for more than seven years.

At one stage an estimated 2,500-3,000 tunnels snaked their way under the desert border fence.

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