RAFAH, Gaza Strip -- Deep beneath the sands of this battle-scarred border town, Abu Mosab is making a fortune.

The money comes in the form of blue jeans, candy bars, cigarettes, shoes, refrigerator parts, gasoline and generic Viagra.

All of it and more passes through Abu Mosab's subterranean tunnel as it makes its way from Egypt to Gaza. And all of it is highly profitable because of a strict Israeli blockade that, officially at least, has kept out all but the most basic supplies.

For smugglers such as Abu Mosab, the siege has been their salvation.

"It's good for us," he said as he chain-smoked Egyptian cigarettes in his well-appointed Rafah living room. "And it's bad for everyone else."

It has been a year since Hamas took power in Gaza in a violent coup, toppling a fragile unity government and killing off rivals. Israel responded with a siege, and 12 months later, the results for most Gazans have been disastrous.

Much of the strip's economy has been driven, literally, underground. Unemployment has soared. Businesses have shuttered. And the prices for many goods have tripled or quadrupled amid rampant shortages.

But there have been some winners, and Abu Mosab -- who would allow only his nickname to be used -- is among them.

Hamas itself may be another.

Hamas now has at least three major roles in Gaza, though the lines between each have become blurred. It is the government, brought to power in the Palestinian territories in a January 2006 election and then using force to take exclusive control of Gaza a year ago. It is a radical Islamist movement that battles the Jewish state but that agreed in principle Tuesday to an Egyptian-brokered truce intended to end violence with Israel in and around the Gaza Strip. And it is the chief player in a sprawling illicit economy.

Hamas imposes stiff taxes on the tons of contraband that flow beneath the border each night, collecting revenue from the tunnels to fill its own coffers, according to those involved in the trade and international observers. Hamas also gets to decide who receives scarce supplies, allowing it to consolidate its authority. All the while, the group has used its control to commandeer tunnels of its own, ensuring a steady supply of weapons to use in its attacks against Israel.

"If you want to strengthen radicals and paralyze moderates, I can't think of a better way to do it than by closing Gaza's commercial crossings and depriving 1.5 million people of the right to earn a decent and legitimate living," said Sari Bashi, executive director of the Israel-based human rights group Gisha.

Israeli officials say they are well aware of the massive scale of the smuggling and that Hamas benefits from it. Hamas and its allies have launched daily rocket salvos from Gaza; while many of the rockets appear homemade, Israel believes that some of the group's more advanced weaponry has been smuggled in from Iran via the Egyptian tunnels.

A report issued this week by Israel's internal Shin Bet security service asserted that Hamas has used the tunnels to bring in longer-range rockets, thousands of pounds of explosives and even experts in warfare who can train Hamas recruits. Under the truce deal announced Tuesday, Israel is demanding that Hamas end all smuggling related to its military wing.

But Israel also seems reluctant to try to stop the smuggling altogether because it would increase the pressure to allow more supplies through the official crossings.

"The best thing from our point of view is that there would be no smuggling of ammunition. We don't care about the other things," said Shlomo Dror, spokesman for Israel's Defense Ministry.

Israel's hope in imposing the siege was to employ economic pressure to weaken Hamas, forcing Gazans to turn against the group as their suffering made them long for better days under the rival Fatah party.

There are indications that the strategy is working -- to a point. In 2006, Hamas won legislative elections in a landslide. But a poll released this month found that Hamas's popularity in Gaza had recently plummeted, with only 39 percent favoring the group's leader, Ismail Haniyeh, compared with 56 percent for Fatah boss Mahmoud Abbas.

But if Hamas's popularity is declining, its power seems to grow.

"For anything that comes through the tunnel, either they take taxes or they confiscate half the goods," said Mahmoud Qeshtah, a 21-year-old candy salesman. "Day after day we are dying, and Hamas is responsible."

Qeshtah is resigned to paying Hamas when the group's representatives come to collect. Everything he sells has been smuggled in through the tunnels, and he does not want to risk being shut down.

Hamas's official policy is that the smuggling is illegal and should be stopped. "Like any other country in the world where there are shortages, a black market develops. It's normal," said Ziad al-Zaza, the economics minister in Gaza and a Hamas member. "But we are going after it, and we have managed to stop most aspects of this market."

Asked if Hamas earns any money from the smuggling, Zaza denied it. "Not one penny," he said.

But on the border, it's a different story.

There, amid bullet-riddled concrete buildings and heaps of stinking trash, Hamas guards keep a close eye on the teams of tunnel diggers who push ever-deeper into the hot sands.

The tunnels are dug beneath white tents that resemble greenhouses, but there are few attempts to conceal what goes on within, and the guards do nothing to stop the work.

During cigarette breaks, tunnel workers freely discuss their jobs, complaining that the work is dirty, dangerous and low-paying. But they also say they have no choice.

"I used to own a clothes shop. But no one is buying because the clothes are too expensive and the people have no money," said Abu Saed, 22, his black jeans smothered in dust.

Instead, he now smuggles clothes.

The tunnels resemble mine shafts, descending deep into the ground -- about 75 feet -- until workers hit clay that's strong enough to hold together. They then snake horizontally to the southwest for as much as half a mile, coming up on the Egyptian side.

The tunnels are bolstered by slats of wood, and they include intercom systems, lights, storage rooms and automated pulley systems. But they are also vulnerable to collapse; almost every week, one does.

"Yesterday, my friend died. He was supposed to marry next week, but the sand collapsed over him," said Abbas Alakkad, 36, who also works in the tunnels.

Another danger is the tear gas. Egyptian border guards used to look the other way when it came to the tunnels, the workers said, but in recent weeks they have begun to crack down by lobbing gas canisters into tunnel openings.

Alakkad, a hulking man with muscled arms, said he makes only 50 shekels -- about $15 -- for a long day's work. The tunnel owners, by comparison, make tens of thousands of dollars a month.

"They are bloodsuckers," Alakkad said.

When he complains to Hamas officials about the poor conditions and low pay, Alakkad said, he always gets the same response. "They say they don't have anything to do with this," he said. "The government should prevent the people from getting injured. But because they are taking money from it, they don't care."

It is impossible to know exactly how much money because no one knows how many tunnels exist. Estimates range from dozens to hundreds that are scattered along the eight-mile border.

Even so, shortages persist.

"People in Rafah used to know that they could find anything here. These shelves used to be full. Now it's shameful," said Talat Abu Eyadah, pointing to the empty display cases in his dim and dusty Rafah grocery store. "Nothing is available. And if you do find it, you can't afford it."

That's music to the ears of Abu Mosab, the smuggler, who prides himself on finding hard-to-get items. "Whatever the shopkeepers ask for, we bring," he said. "If they want a certain kind of shoe, we'll get them those shoes."

But his work does not come cheaply. He charges $6,000 in transportation costs for every ton of material that travels through his tunnel.

A thin man of 36 with a toothy smile and a long, wispy beard, Abu Mosab said he feels sorry for all of the people who are suffering.

"It's miserable here," he said. "And Hamas is responsible. They are the reason for the siege."

But for his own sake, he hopes Hamas's reign lasts as long as possible.

"God willing," Abu Mosab said, "I will pass the tunnel along to my sons."