RAFAH, Gaza—It's a clear sign that an industry is well established when cafes spring up to cater to the workforce. In the best of times, Café Abou el Nour relied on just this business model, supplying a place to rest and talk for the busy workers in Gaza's tunnel industry. The smuggling zone extends across both sides of the border separating Egypt and Gaza, and is split down the middle by a low Egyptian border fence outfitted with manned guard towers several hundred meters apart.

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Once, there were more than a thousand tunnels on this patch of land. These days, however, squeezed by the Egyptian and Israeli governments and the easing of the Gaza blockade, the tunnels have dwindled to as few as 200, according to tunnel workers. Café Abou el Nour also sits empty, save for a 10-year-old worker snoozing in the corner, a few stray cats looking for a handout, and the establishment's preoccupied owner, Ahmed Abou el Nour. "There is no work these days," he says, "because the tunnel business has been very bad."

Khaled Baraka, a 20-year-old native of Rafah, was one of the workers who benefited during the tunnels' boom time, which began in 2007 following Hamas's armed takeover of the Gaza Strip. Neither the Israelis nor the Egyptians had cracked down on the industry yet, and the Israeli blockade imposed after Hamas seized power guaranteed that the tunnels would be Gazans' primary lifeline for basic necessities.

Hamas nurtured the tunnel industry and continues to view it as an important source of revenue. The party issues licenses for the tunnels, charging Gazans up to $6,000 for the privilege of beginning construction. It then taxes each tunnel $200 per month, according to Baraka and another tunnel worker. In return for these fees, the municipality of Rafah oversees the tunnel trade -- helping to resolve disputes between tunnel owners, imposing labor laws, and providing emergency rescue support in the event of a collapse.

When Baraka began his career in the tunnels as a digger, he was working three or four days a week and making up to $200 per day. While the volume of goods passing through the tunnels made the industry seductively lucrative to Gazans, workers lived in fear of tunnel collapses, Israeli airstrikes, and Egyptian military raids. He quickly rose to the position of tunnel manager, overseeing workers in a tunnel. In the middle of 2009, he purchased a 20 percent stake in the tunnel, paying for his portion largely in labor.

But the industry had already begun its decline. After its nearly monthlong war with Hamas concluded in January 2009, Israel managed to convince Egypt that the success of its strategy to isolate Hamas depended on Egyptian help in shutting down the Islamist party's primary source of goods and weapons. In response, Egypt ramped up its efforts: Over the last year and a half, workers say, Egypt has been responsible for far more tunnel closures than the Israeli air raids.

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