(Adds Blair spokesman)
By Adam Entous and Nidal al-Mughrabi
JERUSALEM/GAZA, June 5 (Reuters) - Hamas has seized control of the Palestinian water agency that is spearheading Middle East envoy Tony Blair’s signature project in the Gaza Strip, Palestinian and Western officials said on Thursday.
Hamas’s takeover of the Palestinian Water Authority in Gaza cements the group’s control over the territory and could cast doubt on the future of the North Gaza Sewage Treatment Works project -- a centrepiece of an economic package touted by Blair to try to bolster the chances of a peace deal this year.
The seizure comes ahead of a planned tender by the Water Authority for building a water treatment plant, and amid delicate negotiations with Israel on bringing critical building supplies into Gaza, which Hamas Islamists seized a year ago.
An official with the World Bank, which is coordinating the project, said construction was expected to move forward as planned because the Water Authority officials involved work out of a separate office and still report to President Mahmoud Abbas’s Western-backed government in the occupied West Bank.
"There are, as yet, no adverse implications for the project to proceed," a Blair spokesman said. "We will continue to monitor the situation carefully."
Gazans view the project as urgent -- last year, five people drowned in a wave of raw sewage from a plant in northern Gaza. Israel had argued that equipment needed to repair the sewage system could be used to make rockets that are fired into Israel.
The former British prime minister is the special envoy to the Palestinians from the Quartet of international powers.
Hamas officials had no immediate comment.
The group may see the Water Authority as a source of funding to bypass an Israeli-led blockade of the territory that has sharply reduced supplies of fuel and other essentials. The Water Authority collects fees for wells. With water scarce in parched Gaza and imports restricted, wells are in high demand.
Rebhi al-Sheikh, deputy chairman of the Water Authority, said Hamas gunmen took over the main building at midday on Wednesday, asserting they were acting on orders from Hamas leader Ismail Haniyeh’s cabinet and his Interior Ministry. He said Hamas seized vehicles and keys to the building.
PLAN IN JEOPARDY
Sheikh said a $60 million sewage treatment facility, part of the broader North Gaza sewage project touted by Blair, may now be in jeopardy, citing a U.S.-led boycott on financial dealings with Hamas, which refuses to recognise Israel and renounce violence.
"Coordination with donor countries could be affected because donor parties could question the credibility of the Water Authority now that it has been taken over by Hamas," Sheikh said, adding that Israeli cooperation could also be hindered.
Israel has tightened its cordon of the Gaza Strip since Hamas’s takeover, and it took months of lobbying by Blair and other Western officials to get permission to bring in pipes, wire and other equipment to bolster the crumbling sewage system.
Israeli officials had no immediate comment on the impact of Hamas’s takeover of the Water Authority.
Blair said last month that Israel’s Defence Ministry had agreed to provide a "letter of comfort" to the Water Authority to encourage potential donors to provide funds.
Sheikh said the Water Authority, Blair’s office and the World Bank met Israeli officials earlier this week to work out arrangements to bring in building supplies and other equipment.
"I call upon rational people in Hamas to think of the grave consequences that will affect the water sector and to be aware of the projects with donors that may get suspended," he said.