Where discs cost $3.50 and scofflaws have an edge

The shelves of Internet Hut are stocked with a bit of everything the digital world loves about America: compact discs of Whitney Houston and the score from "Titanic," Microsoft and IBM programs on CD-ROM, and useful standards like Collier's Encyclopedia.

In largely impoverished Gaza, the elite find that buying music and software comes cheap: No disc costs more than $3.50.

Of course, none of the boxes are sealed in plastic, the handsome faces of Leonardo DiCaprio and Kate Winslet have been dulled in the process of being photocopied, and you can't depend on calling the help line if your copy of Windows 98 doesn't click.

The owners of this tidy new computer shop near Gaza's beachfront - a Palestinian-ruled area - coolly confirm that every CD in the store is an unlicensed copy.

Internet Hut owner Ehab Arafat, a young entrepreneur who has no relation to Palestinian leader Yasser Arafat, says suppliers deliver carloads of Israeli-produced discs to Gaza each week. "We have no problem importing it because there are no laws concerning these things," says Mr. Arafat.

American and Israeli officials say that many of the illegal discs are in fact made in the Palestinian Authority areas, but they are unable to say how many. Regular raids on a CD counterfeiting factory in the West Bank town of Hebron eventually resulted in an agreement with its owner to produce licensed CDs. Other outlets, investigators say, reportedly exist in Ramallah and Gaza.

But Palestinian security officials deny that any significant portion of counterfeiting is done here. "Most of it comes in from Israel because we're a good market for them," says Mr. Arafat.

Law-enforcement officials say this is just one of several areas where Palestinian and Israeli criminal circles enjoy high levels of cooperation. Police, in fact, joke that Palestinian and Israeli scofflaws have long since reached their own private peace accord.

The ongoing official peace process has left many ambiguities over trade and law enforcement. The Palestinian areas are still ruled by a hodgepodge of laws inherited from occupying countries.

"There has always been good cooperation on a criminal level, but now of course, they have better incentives. They have somewhere to hide," says an official in the Israeli Interior Ministry, speaking on condition of anonymity. Israeli police cannot enter areas under full Palestinian control unless they have special permission, while Palestinian police have control in only 3 percent of the West Bank and most of Gaza.

"They are really exploiting the loopholes very well, so from the criminal point of view, it's probably easier to get away with things," the official adds. "We have much to do in improving cooperation between Israel and Palestinian police."

(c) Copyright 1999. The Christian Science Publishing Society