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Hamas is regarded as a terrorist organization by Israel, the U.S. and many other Western nations. But in the Gaza Strip, the Palestinian land along the edge of the Mediterranean, between Israel and Egypt, Hamas is also a government. It has controlled Gaza for the past three years since the group ousted the rival Fatah movement, which now controls Palestinians only in the West Bank.

Israel has tried to undermine the Hamas government with a punishing blockade, as well as a recent military operation.

But in the latest installment of our series on the Gaza Strip, NPR's Lourdes Garcia-Navarro reports that Hamas seems to be entrenching its rule.

LOURDES GARCIA-NAVARRO: So the sun has just gone down and all around me are families sitting at tables or bobbing in the waves. This is one of the many Hamas-funded beach resorts that have popped up along the Gaza coast this summer. Most of the people here cannot leave this coastal enclave and so clubs like this, for about $3 per person, have become popular escapes.

Mr. AHMED QADDURA: (Foreign language spoken)

GARCIA-NAVARRO: Ahmed Qaddura is a manager of one of the beach clubs. It's run by the Islamic Association, a Hamas-linked charity

Mr. QADDURA: (Through Translator) This is a joint venture between the government here and businesspeople. There are two reasons: One is to make a profit, but the other is to ease the difficult life of the people in the Gaza Strip. So it's good for everybody.

GARCIA-NAVARRO: The investors have paid a lot of money, he says, to get the building materials smuggled in through tunnels that run underneath Gaza's border with Egypt.

The beach clubs are not the only new Hamas-linked businesses that dot the landscape; wedding halls, a shopping center, the raft of new ventures has some calling the Islamist movement Hamas Inc.

Mr. OMAR SHABAN (Economist; Director, PAL-Think): There's a new group is emerging within Hamas. This is what we call the businesspeople.

GARCIA-NAVARRO: Omar Shaban is a Gaza-based economist who has investigated Hamas' financial dealings. He says Hamas has a lot of cash and it's using it to acquire assets.

Mr. SHABAN: And this business group may have made a lot of profit out of controlling the economy. And this group is gaining more power every day over the movement.

GARCIA-NAVARRO: It's another sign that Hamas is adapting and embedding itself more deeply into Palestinian life in Gaza.

Hamas was founded in 1987 as an offshoot of Egypt's Muslim Brotherhood. Its military wing has been responsible for rocket fire on Israeli communities, suicide bombings and the kidnap of an Israeli soldier who's still being held. Its political wing won Palestinian legislative elections in 2006 after popular discontent with the rival Fatah movement which dominates the Palestinian Authority.

Just over a year later, lingering tensions between the two groups burst into violence here. Fatah was expelled from Gaza after a brief but bloody Palestinian civil war. Ever since, Gaza has lived under one government and the West Bank under another.

(Soundbite of music)

GARCIA-NAVARRO: Just ahead of the holy month of Ramadan, the streets of Gaza were alive with the sound of wedding ceremonies. Trumpets, drums and flutes played while young men in shiny suits danced around a grinning bridegroom.

(Soundbite of music)

GARCIA-NAVARRO: Before the Hamas takeover, Gaza was virtually lawless. Kidnappings, murders and thefts were rife. These days, Hamas' control has vastly improved security. But not everyone is pleased with Hamas rule.

Sitting outside on a warm summer evening, a young medical student who does not want her name used, because she fears repercussions, tells me that Hamas cares only about Hamas.

Unidentified Woman: All the hospitals of Gaza are all - are now managed by people that are related to Hamas. All other doctors, even if they are qualified, they are removed because they are not Hamas.

GARCIA-NAVARRO: The student says she's apolitical, but she worries that without the right political connections she won't be able to practice medicine in Gaza. But she says she doesn't dare complain.

Unidentified Woman: We are afraid to speak in front of anyone that is related to Hamas because they will say that those people are talking about Hamas.

GARCIA-NAVARRO: In recent months, Hamas has put in place a series of new rules that mainly target women. The latest, a ban on displaying women's underwear in local shops.

Mr. SAMER SALEH: (Foreign language spoken)

GARCIA-NAVARRO: Samer Saleh tells me that four men came into his shop and took him to the police station where they made him sign a paper promising not to showcase the items, either outside or inside the store. Women have also been barred from smoking in public and riding motorcycles.

Dr. MAHMOUD AL-ZAHAR (Foreign Minister, Hamas): I think the most important point to me is the understanding of the West toward the real attitude of Hamas.

GARCIA-NAVARRO: A doctor by training, Mahmoud Zahar is now Hamas's foreign minister. He says Hamas does not discriminate against women.

Dr. ZAHAR: You cannot compare between us and Taliban. We educated our people -our children, our women equally.

GARCIA-NAVARRO: Some here feel the new rules are aimed at bolstering Hamas' Islamist credentials. New groups have emerged in Gaza over the past few years with the objective of creating an Islamic caliphate. Some of them are inspired by al-Qaida. These militants see Hamas as too soft and too narrowly focused on the Palestinian cause.

Since a punishing war with Israel a year and a half ago, Hamas has been observing a ceasefire. Palestinian rocket fire that used to rain down on Israeli communities near Gaza has largely stopped.

Zahar defends the agreement.

Dr. ZAHAR: We are not interested to have every day war.

GARCIA-NAVARRO: Analysts say, though, that Hamas is keeping quiet because it was severely weakened in the recent conflict with Israel, both militarily and in terms of its support in Gaza. The blockade of Gaza has only increased people's disaffection.

The latest blow to Hamas' popularity here, a burgeoning electricity crisis.

(Soundbite of children)

GARCIA-NAVARRO: It's a sweltering evening and this family is about to break the daily fast Muslims undertake during the holy month of Ramadan. Iyad al-Jalous(ph) walks around the room lighting candles, while his six small children crouch on the floor waiting for dusk and the evening meal. There is no electricity.

The shortage is the result of a continuing dispute between the Palestinian Authority in the West Bank and Hamas. Each side blames the other for the outages. The Palestinian Authority is responsible for electric power in both the West Bank and Gaza. It says Hamas isn't contributing its fair share of costs. Hamas says the PA is engineering the power cuts to embarrass its rival.

The two movements have tried repeatedly to reconcile, but officials in both Gaza and the West Bank say talks are stuck. The practical implications of the impasse are playing out in this small, dark concrete house.

Like many Gazans, al-Jalous is too poor to own a generator. At the moment, the family has electricity only every other night.

Mr. IYAD AL-JALOUS: (Through Translator) It's unbearable. I have to go and sleep by the door when the electricity switches off. We are so bathed in sweat, it's like we are in a soup.

GARCIA-NAVARRO: Al-Jalous says he holds Hamas responsible for the blackouts.

Mr. AL-JALOUS: (Foreign language spoken)

(Soundbite of laughter)

GARCIA-NAVARRO: Two things make my life this Ramadan impossible, he says with a wry laugh: fasting and Hamas.

Lourdes Garcia-Navarro NPR News.

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