Gaza's smugglers are going legit: The owners of hundreds of tunnels running under the Gaza-Egypt border have registered with the Hamas authorities, signed pledges to pay workers' compensation and hooked up their underground operations to the local electricity network.

The once clandestine business has come out into the open in recent months. Dozens of large tents, each marking a tunnel work site, have been pitched along the border, just yards from Egyptian watchtowners.

With Gaza's borders virtually sealed by Israel and Egypt for the past 16 months, the tunnels are now one of the territory's main lifelines and are seen as key to keeping Hamas, the Islamic militant group, in power.

The underground imports — from refrigerators, food and clothes to fuel and anti-tank rockets — prevent Gaza's economy from collapsing, reduce the risk of bread riots and help beef up Hamas' weapons arsenal.

"The tunnels have become the main source of commodities in Gaza, and every day the closure continues, the importance of the tunnels increases as well," said Gaza economist Omar Shaaban.

Israel has long complained that Egypt is turning a blind eye to the smuggling. Under U.S. pressure, Egypt has been trying harder to clamp down.

Egypt says it has destroyed scores of tunnels since Hamas' violent takeover of Gaza in June 2007 and has stepped up the pace after getting $28 million of U.S. detection equipment four months ago. But critics argue Egypt could do far more.

The Palestinian smugglers say the demolitions disrupt business, but don't halt it. Most tunnels have several exits, like branches on a tree, and operators say they can quickly dig new openings.

On the Egyptian side, criminal gangs exact fees from tunnel operators, and there are reports of death threats against Egyptian police who work against the tunnels. Egypt denies that government officials are involved in the tunnel business.

Hamas is treading carefully, keeping the tunnels operating but trying not to be too brazen so as not to provoke Egypt, a key link to the Arab world. Egypt is aware of the Hamas involvement but so far has not made it a central issue in its contacts with the Gaza rulers.

Hamas legislator Mushir al-Masri noted that the tunnels are key to easing shortages. "The tunnels solved some of the problems we face due to the Israeli blockade regarding basic life," he said.

Smuggling began in the 1980s, after the town of Rafah was split between Egypt and Gaza as part of an Israeli-Egyptian peace deal. Homes on opposite sides of the border provided ideal cover for tunnel openings.

As long as Gaza's main cargo crossings with Israel were open, smugglers mainly brought weapons, cash and illicit drugs into Gaza. The tunnel trade intensified after the outbreak of the second Palestinian uprising in 2000. At the height of the fighting, Israel troops razed rows of houses in Rafah in search for tunnels.

Smugglers continued to keep a low profile after the Israeli pullout in 2005 when forces loyal to Palestinian President Mahmoud Abbas took up positions along the border. However, the business changed two years later, after Hamas defeated Abbas' forces and the borders slammed shut. Smugglers increasingly brought in consumer goods, along with weapons, and worked more openly.

During a recent visit, a tunnel work area on the edge of Rafah was bustling with activity. It looked like a mix between a camp ground and a construction site, with tents pitched just a few yards (meters) from each other, in between piles of sand. Three diggers on a break lay on one of the sand mounds, smoking cigarettes. The humming of motorized pulleys signaled the arrival of goods, and trucks rumbled across the bumpy terrain to pick up merchandise.

Inside one tent, a vertical shaft had been dug about 35 feet down, then ran horizontally for about half a mile to the Egyptian side, said Abu Nafez, a foreman at the site who quit his job as a taxi driver more than a year ago. Declining to give his full name, the 33-year-old said he's now making enough to feed his seven children and even put money aside, but is also suffering from swollen knees as a result of crawling in cold, damp soil for long periods.

The workers used a blue seat of a children's swing, attached to a motorized sling hanging from a metal tripod, to lower themselves into the tunnel. They haul cargo — most recently chocolate and cigarettes — with an electrical pulley system. Hamas inspectors are notified of each delivery and check it on site, Abu Nafez said.

Tunnels are dug with electrical drills and are just high enough to enable workers to move on all fours.

Abu Nafez said his tunnel was dug a little over a year ago. Eventually, he said, the owner was told he had to obtain a permit from the Rafah municipality. The owner complied and the tunnel now receives power from the local electricity company, which even installed a meter.

Municipal officials confirmed they supervise tunnel operations.

In late September, following a series of tunnel deaths, Hamas summoned owners to discuss workers' compensation. Forty-five tunnel workers have been killed this year, both in accidents and Egyptian anti-smuggling operations.

Owners were asked to sign a promise to pay the Islamic "diyeh," or blood money, to the family of each worker killed, said an Interior Ministry official, speaking on condition of anonymity because he was not authorized to discuss details of the tunnel business. The compensation for accidental death amounts to about $28,000.

Despite the dangers, tunnel work is sought after because of high unemployment. An 18-year-old, in the business for four years, said he'd rather do something else — he was once trapped underground for an entire day by a partial collapse — but his family needs the money. He said he makes $28 a day, more on busy days.

Thousands of Palestinians live off the tunnels, from the diggers to shopowners selling the smuggled merchandise, and profits are huge. Some young men, whose families struck it rich in the tunnel business, are seen cruising around still largely impoverished Rafah in luxury SUVs.

Near the border area, Ashraf Hamed, 31, sells tunnel digging supplies, such as wheelbarrows, shovels, buckets and ropes, because the closure dried up his traditional business in building materials. "If it wasn't for the tunnels, I would have closed," he said.

Even a former policeman, who used to chase tunnel diggers before Hamas came to power, is getting in on the action. Nabil Ajaideh, who hasn't worked since the Hamas takeover, bought an Egyptian motorcycle last month for $1,500 and had it delivered — in pieces — through the tunnel.

"It's an alternative," he explained. "We are forced to do it because the borders are closed."