Underground Economy, Essay Example

This article describes the “underground economy” that sustains the territory of Palestine. That is, due to sanctions and Israeli policy after Hamas took power in 2007, all imports and exports were effectively banned by border checkpoints (on the Israel side). The underground tunnels that lead from Egypt to Palestine arguably provide the only “lifeline” for economic activity. Although the tunnels provide exchange, they do so at a steep price: not only must consumers play transport costs for commercial items (a premium well in excess of the listed price), but they also incur the risk of being bombed by Israeli fighters hovering above.

Israel primarily blocks trade from Palestine due to the potential threats: A number of terrorist attacks from 2008-2009 were associated with weapons smuggled across the border from Egypt to Palestine. As part of a larger national policy to prevent attacks, Israel has banned trade of mostly everything in order to prevent future attacks.

I have two contradictory reactions to this article. On the one hand, Israel’s position seems fairly draconian in that they fail to allow the territory of Palestine to engage in trade. Indeed, at a basic level, a territory should have the basic rights to engage in imports and exports to pursue economic sustainability. This is even more so the case for Palestine, a territory that has long struggled to build a viable economic foundation. On the other hand, however, there are decent political and security reasons for the blockade: Foremost amongst these is that some individuals (presumably associated with the Hamas government) smuggled arms across the border when sanctions were not implemented; terrorists then used the arms in a targeted attack against Israeli citizens. Thus, although there is some reason to support the ban on the grounds of safety- the depth of the ban seems extreme in that it prevents consumers and entrepreneurs the goods they need to promote economic activity.