The Southern Command official said the structure was at the forefront of a new effort meant to rob Hamas of one of its most potent weapons.
During a 2014 war, Hamas militants on several occasions made their way into Israel through a tunnel network, though they did not manage to reach civilian areas. Israel destroyed 32 tunnels during that conflict, and since then has made neutralising the tunnel threat a top priority.
In recent weeks, Israel is believed to have begun work on a 60-kilometer (40 mile) underground barrier expected to stretch dozens of meters (yards) deep. Work crews have been spotted digging trenches and installing infrastructure in the ground.
In a briefing with reporters today, the Israeli official showed video footage of heavy machinery raking the sandy border area, a series of holes drilled deep into the ground, a stretch of land the army has flooded, and some controlled explosions. The army also showed photos of simulated tunnels where soldiers train for subterranean combat.
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"It will take time to build it. It's a big project. But it is a main goal," he said.
Since the war, Israel has announced the discovery of several more tunnels. Israel has already surrounded Gaza with a sophisticated above-ground fence fortified with sensors, cameras, barbed wire and watch towers.
During the 2014 fighting, the group fired several thousand rockets and missiles into Israel. More than 2,200 Palestinians, over half of them civilians, were killed in the fighting, along with 73 people on the Israeli side.
The official said Hamas has been steadily rebuilding its capabilities since the fighting, though Israeli officials do not believe the group is looking for another round of hostilities for the time being.
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