U.S. urges easing Israeli cordon

JERUSALEM (Reuters) - The United States has told Israel it favors opening some of Gaza's border crossings to commercial as well as humanitarian supplies in a move that could ease an Israeli-led blockade of the Hamas-run territory.

Aid groups said in a report released on Thursday that the blockade of the Gaza Strip has created the worst humanitarian crisis since the Israeli occupation began in 1967, a charge Israel dismissed as exaggerated.

A senior U.S. official in the region, speaking on condition of anonymity, said of the aid groups: "I don't really challenge their conclusion that it's worse than they've seen it before."

Israel closed its border crossings with Gaza to all but humanitarian supplies in June as part of a U.S.-backed strategy to isolate Hamas after it routed rival Fatah forces loyal to Palestinian President Mahmoud Abbas.

The Islamist group also stepped up rocket attacks on Israel, which on Monday ended a five-day Gaza offensive that killed more than 120 Palestinians in a declared bid to curb the strikes.

Speaking after a visit by Secretary of State Condoleezza Rice, the U.S. official said Washington's main objective was to "calm the situation" in Gaza. Abbas said doing so was key to advancing U.S.-backed peace talks.

"But it's important that we move beyond that as well, and begin to look at issues like the crossing points," said the U.S. official.

"We would like to see a situation where Gaza is not entirely a humanitarian problem and that there can be some commercial activity as well, so that the people can support themselves. And that will require a conversation about how to reopen some of these crossing points," the official said.

Though firm in its refusal to talk to Hamas, Washington's shifting position on the blockade could make it difficult for Israel to maintain a cordon that is increasingly unpopular in Europe and the Arab world.

Israeli defense officials said they could agree to the reopening of the Rafah border crossing between Gaza and Egypt to travelers and some goods as a way of furthering Israel's strategy of detaching itself further from the territory.

But they have been adamant about keeping Gaza's main economic lifeline -- the Karni commercial crossing on the border with Israel -- closed, citing security reasons. "There's a limit to U.S. influence," an Israeli official said.

Rice dispatched a top envoy, David Welch, to Cairo to take part in the negotiations. Washington and the European Union, which shun Hamas as a "terrorist" organization, want Abbas's government to run Rafah.

But Hamas, which blasted open the Rafah border in January to allow hundreds of thousands of Palestinians to stock up on goods in short supply, has demanded a role at the frontier as a way of gaining international legitimacy.

As part of any deal, Israel wants Egypt to boost efforts to halt smuggling through tunnels. "The moment Egypt ... will use all its abilities to prevent smuggling of weapons and reduce terror, it will have a tremendous impact" on Hamas's ability to fire rockets, Israeli defense official Amos Gilad said.

As part of the renewed peace process, launched at a conference in Annapolis, Maryland in November, Middle East envoy Tony Blair and major Western powers promised to bolster economic activity in the occupied West Bank, where Abbas and his Western-backed government hold sway.

The U.S. official said of those efforts: "It's not having enough of an impact on the ground and we want to see more."

(Additional reporting by Brenda Gazzar; Editing by Richard Williams)