Jan. 21 (Bloomberg) -- The Gaza Strip’s tunnel smugglers are back in business, pumping gasoline and dragging cartons of cigarettes under the Egyptian border through dozens of passages that survived Israel’s three-week military offensive.

Within hours of the cease-fire between Israel and Hamas that took effect Jan. 18, Palestinians in Gaza’s southern town of Rafah said they started clearing away debris and discovered that many of the tunnels were intact.

“Immediately I called my partner in Egypt and asked him to pump some benzene and the benzene starting pouring out,” said a tunnel operator who calls himself Abu Ali. Like other smugglers, the 43-year-old bearded man declined to give his full name because it can be traced by authorities.

The Israeli army says it destroyed about 80 percent of the tunnels between Gaza and Egypt because they were being used to bring in weapons and rocket components. Israeli Prime Minister Ehud Olmert said he agreed to the cease-fire only after the U.S. signed an accord to help stop arms smuggling into Gaza.

All six of the smugglers interviewed today said that they had nothing to do with importing weapons. Several spoke about one operator who had four tunnels destroyed and was known to ferry both livestock and weapons.

Israel started its aerial bombardment Dec. 27 after Hamas said a week earlier it would not renew a six-month cease-fire and intensified rocket attacks on Israel’s southern cities.

‘Like Earthquake’

“It was like an earthquake,” Abu Albara, 25, who smuggled cows and sheep into Gaza from Egypt before the Israeli offensive and today was bringing in cigarettes and chocolate. “They used very powerful bombs.”

The Israeli army declined to comment on the renewed smuggling, repeating that four-fifths of the tunnels were destroyed.

“The operation sent a clear and loud message to Hamas that Israel will not tolerate rockets being fired at its civilians,” Major Avital Leibovitz, an army spokeswoman, said by telephone.

While Palestinians have been smuggling weapons and merchandise under the Egyptian border for years, the tunnels proliferated after the militant Islamic Hamas movement seized control of Gaza in June 2007. Israel responded by shutting down the border crossings through which supplies were trucked into the crowded seaside enclave of 1.4 million people.

1,000 Tunnels

Palestinians estimated there were close to 1,000 tunnels, which are generally dug about 20 meters (yards) deep and then stretch about 600 meters underground to reach Egypt.

Before the Israeli offensive, some 90 percent of all products entering Gaza each month --as much as $40 million worth of contraband -- came through the tunnels from Egypt, Omar Shaban, an economist who runs a consulting group in Gaza City said. The underground network was a crucial source of revenue and weapons for Hamas, which charged a one-time digging fee of 11,000 shekels ($2,750) for each tunnel.

Abu Jabal, 40, who had a crew of workers today trying to dig out a destroyed tunnel, said he suffered at least $100,000 in lost business because of the bombing.

“If the blockade continues, I’m going to dig another tunnel,” he said, “whatever it costs.”

To contact the reporter on this story: Jonathan Ferziger in Gaza at jferziger@bloomberg.net; Saud Abu Ramadan in Rafah through the Tel Aviv newsroom.

Last Updated: January 21, 2009 11:36 EST