The ripple effects of the Egyptian crisis represented by the overthrow of President Mohammed Morsi and the demonstrations that followed have reached neighboring Hamas-ruled Gaza. The supply of goods smuggled from Egypt through underground tunnels has nearly come to a halt, severely exacerbating the economic hardship already being suffered by the Palestinian residents of the besieged coastal strip.

The Hamas government had come to rely heavily on the taxes and tariffs imposed on goods flowing through the crossings with Israel and the tunnels with Egypt to cover monthly costs and payments for governance, especially after the waning of international funding, especially from Iran.

The amount of goods entering Gaza through the tunnels had been equal to that coming in through the crossings with Israel. The Hamas government taxes the majority of the Egyptian products to raise revenue, while the taxes on the Israeli supplies, including basic goods, go to the government in Ramallah.

Al-Monitor secured a copy of a confidential local comparative study on goods entering Gaza through the Egyptian tunnels versus the Israeli Karam Abu Salem crossing. The study, procured from a source who preferred to remain anonymous, reveals that the majority of basic goods enters Gaza  through the tunnels, not through the crossings.