Smuggling networks have become central to Gaza’s wartime economy as Israeli restrictions on “dual use” goods push traders, hospitals and government agencies into illicit channels. From cigarettes and iPhones to fuel and medical supplies, contraband moves through Kerem Shalom with the help of bribed soldiers and middlemen, driving prices to staggering levels and reshaping daily life for civilians.
Palestinians in Gaza are paying sharply higher prices for everyday goods as smuggling networks expand to bring in products restricted or banned by Israel, while hospitals and government agencies have also turned to illicit channels to obtain medicines, fuel and equipment, according to an Associated Press investigation.
The investigation, based on Israeli court documents and interviews with traders, merchants, truckers, Palestinian and UN officials and residents, found that the trade has become an important part of Gaza’s wartime economy. Smugglers are bringing in goods ranging from cigarettes and tobacco to iPhones, solar panels, vehicle parts, fuel and medical supplies.
Israel restricts the quantities of some goods entering Gaza and bans others outright. It classifies around 150 broad categories as “dual use”, including concrete, asphalt, steel pipes, wooden planks, vehicle parts and X-ray machines, arguing that such items could potentially be repurposed for military purposes.
The investigation found that the restrictions have created opportunities for traders and middlemen on both sides of the border. Smuggling networks, which have operated for years to circumvent restrictions on Gaza, are now generating millions of dollars, with payments reportedly reaching drivers, warehouse workers and, in some cases, Israeli soldiers.
The Israeli military said it takes smuggling seriously and works to prevent it. It said any suspected involvement of military personnel is examined and dealt with according to the law, but it did not respond to detailed questions about the alleged roles of soldiers or Gaza’s government in the trade.
Since the start of the Israel-Hamas war, Israel has maintained tight controls over the entry of food, humanitarian aid and commercial goods into Gaza. A total blockade of aid last year halted supplies for nearly three months and contributed to famine conditions in parts of the territory.
The flow of goods increased after a ceasefire took effect in October, but remained well below prewar levels, according to the investigation. Israel has authorised 12 senior Gaza traders to import commercial goods, but shipments must receive approval from Israeli authorities. Merchants and aid workers described the process as lengthy and opaque, with some applications rejected because goods were classified as “dual use”.
As a result, some traders have turned to smuggling networks to meet demand. Smaller merchants then sell the goods in Gaza.
The trade is not limited to consumer products. Merchants and a truck driver told AP that government agencies sometimes request fuel, spare parts for civil defence vehicles and generators to keep basic services operating. Hospitals have also relied on smugglers for medicines and medical equipment, while tribal leaders have sought medicines that are in short supply for their communities.
According to traders, lists of wanted goods are sent to coordinators who operate as middlemen in Israel and the West Bank. They arrange purchases and then organise routes into Gaza.
Commercial shipments and humanitarian aid mainly enter through the Kerem Shalom crossing in southern Gaza, where trucks are inspected. According to traders and Israeli court documents, smugglers have used the same routes and have allegedly bribed soldiers to facilitate deliveries. Some goods have also been transported in military vehicles, while humanitarian trucks have been used less frequently.
For many traders, smuggling has evolved from a side business into a major source of income.
Several senior merchants told AP that smuggling accounts for more than half of their operations and can generate more than 70% of their profits. The costs associated with moving goods through the network are passed on to consumers, contributing to steep price increases.
A vehicle battery, for example, can cost more than $2,300 in Gaza, compared with about $140 before the war. Solar panels have risen to about $3.25 per watt from 16 cents before the conflict.
Mohamed Abu Taha, a Gaza resident, said smuggling expanded significantly in the second half of 2024 as supplies in the local market became increasingly scarce. Food products such as chicken and meat were brought in through covert channels, along with baby formula and pet food.
Cigarettes and tobacco have proved particularly profitable. Residents said the price of a pack has recently reached as much as $140 and rose above $1,000 during Israel’s total blockade.
For smugglers, cigarettes are relatively easy to conceal and offer high profits. According to traders, court documents and Israeli official statements, large shipments have been hidden in military vehicles, commercial trucks and aid shipments. In one unusual case, cigarettes were allegedly concealed inside hollowed-out pineapples.
The high cost of basic goods is also affecting daily life. Residents said fans that once cost around $100 can now sell for about $500. Some residents questioned why ordinary items such as fans are restricted as potential “dual use” products.
Mohamed Abu Olwan, a Gaza resident, said merchants had told him that the Israeli military would not allow fans through the crossings because of the classification.
Another displaced resident, Mohamed Abuel-Enein, questioned the rationale, saying people living in tents were struggling to cope with extreme heat.
The Hamas-led administration in Gaza is also collecting money from smuggled goods, according to merchants and a Palestinian Economy Ministry official.
Mohammad Barbakh told AP that the government receives up to 20% of the value of smuggled goods when merchants report them to authorities. If goods are not declared and officials discover them, the government’s share can rise to 80%. Barbakh said officials do not formally describe the payments as taxes and that legally imported goods have not been taxed since the beginning of the war.
Two major traders said demands for payments increased after the ceasefire. One said he paid $3.5 million after being summoned by Hamas authorities, while another said he paid about $3.75 million.
Two senior officials in the Hamas administration, speaking anonymously, estimated that as much as $100 million had been collected from smuggled goods since the ceasefire. They said the money helps finance social services and salaries for civil servants and police.
Ismail al-Thawabta, of the Gaza government’s media office, said none of the money goes to Hamas’ military wing and that resources are used for public services and to maintain government facilities under wartime conditions.
The investigation also found evidence of organised smuggling networks operating across Israel and Gaza.
One figure identified in Israeli court documents only as Abu Bassel was described by traders and officials as a key coordinator. Israeli prosecutors said he had extensive connections within the Israel Police. In one case, police reportedly raided a warehouse in a Jewish settlement in the West Bank where mobile phones and cigarettes were being prepared for shipment to Gaza. A smuggler contacted Abu Bassel during the raid, after which police left without making arrests or confiscating the goods, according to court documents.
Israeli authorities have broken up several alleged smuggling networks since late 2025 and indicted more than a dozen people, including reserve soldiers serving in Gaza.
In one major case, prosecutors accused Israeli brothers Eliran and Avi Algarabli, their business partner Yaron Peretz and another man of operating a smuggling network from Kiryat Gat. Court documents allege that the group bribed reserve soldiers to transport cigarettes and other goods into Gaza.
One soldier, Bezalel Zini, was allegedly paid about $120,000 to transport three shipments containing around 6,000 cigarette packs. Other reservists allegedly made four trips into Gaza in a single day, carrying 20,000 cigarette packs, hundreds of iPhones and medical equipment.
The court documents indicate the financial scale of the trade. Prosecutors said the Algarabli brothers earned about $2.2 million from smuggling operations between October and December, when they were arrested. Other defendants in separate cases have been accused of earning between $1 million and $3 million.
For Gaza’s residents, however, the expanding illicit economy reflects a deeper problem: the shortage of goods and the difficulty of obtaining basic necessities through legal channels. As restrictions continue and supplies remain below prewar levels, smuggling has become an increasingly important route for products that many residents, businesses and essential services cannot otherwise obtain.