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Gaza tunnels prove to be a bad investment

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Hamas government offers Strip’s residents, who invested their money in smuggling tunnels later destroyed in Israeli airstrikes, a partial repayment of 16.5% on the dollar The Hamas government is offering Gaza residents, who invested their money in tunnels later destroyed in Israeli airstrikes, a partial repayment of 16.5% on the dollar, the Bloomberg news agency reported Wednesday. According to the report, about 4,000 Gazans gave cash to middlemen and tunnel operators in 2008 as Israel blocked the overland passage of goods, but then Israeli warplanes bombed the tunnels before and during Operation Cast Lead, and the investments collapsed. Now the investors want their money back, claiming they had invested the money following the recommendation of Muslim clerics, operating on orders from the Gaza Strip government. According to the investors, the financing worked this way: In exchange for their money, investors were promised monthly dividends of 10%. The returns came from the profits of smuggling as well as new investments. ‘Worse than Madoff scandal’ Gaza City real estate broker Shurab, who invested about $500,000 of his family’s money, told Bloomberg he got as much as $50,000 a month in three months until the industry collapsed. According to Shurab, Hamas should return all of the $500,000 that he invested for 25 relatives, not just the 16.5%. The Hamas government’s economics minister Ziad Zaza said the money returned to the investors will be recovered from Ihab al-Kurd, the biggest tunnel operator. Zaza said Hamas had arrested and detained al-Kurd for fraud and “stealing money from the Palestinian people.” He has since been released. According to Omar Shaban, director of Gaza economic research institute Pal-Think, “When you compare the US economy with ours and see how dependent we have become on the tunnels, I assure you that our scandal is much worse than Madoff,” referring to New York financier Bernard Madoff’s $65-billion Ponzi scheme.