Israel believes the restrictions will give it leverage to pressure Hamas to free Gilad Shalit, a captured Israeli soldier. Diplomats and aid agencies say the restrictions will doom Gaza's reconstruction, estimated to cost at least $2 billion.
Olmert's adviser said Israel's underlying goal was to deny Hamas control over border crossings that could help it cement its hold on power. "If opening the passages will strengthen Hamas, we won't do it," he said.
European powers have called on Israel to reopen the border crossings fully.
The adviser said he doubted Hamas would agree to let Abbas's security forces, backed by international observers, return to the border crossings, as Israel and Egypt have proposed.....
Israel Prevents Abbas from Bringing Cash to Gaza Reuters, January 21, 2009 - ....Israel is preventing the Western-backed Palestinian Authority from transferring cash to the Gaza Strip to pay its workers and others hard-hit by war, Western and Palestinian officials said on Wednesday.
Israel has told the United Nations and other aid groups planning for the rebuilding they must apply for project-by-project Israeli approval and provide guarantees none of the work will benefit Hamas.
Israel had no immediate comment on why the Palestinian Authority's post-war cash shipments were being blocked. The restrictions were put in place long before fighting broke out on December 27, with Israel arguing that Gaza had enough cash in circulation and that some of the money could end up with Hamas.....
Reconstruction largely hinges on convincing Israel to lift restrictions on imports of cash and building materials, like steel and cement. Israel has long argued that such imports can be used by the Islamist group to rearm.
"The Gaza Strip was almost destroyed and it needs everything," said Nabil al-Zaeem, head of the Palestinian Commercial Service Co., one of Gaza's largest cement importers.
He said rebuilding will not happen "if things did not change regarding the flow of cement and other construction materials."....