Israel may keep options open on Gaza ceasefire

JERUSALEM (Reuters) - World powers are pushing for a lasting ceasefire to stop the bloodshed in Gaza but some Israeli leaders are looking at a less binding option that would give them a free hand to hit Hamas again in future.

Israel's seven-day-old air campaign has so far killed 424 Palestinians. If a ground offensive is launched and causes heavier casualties, Israel expects international pressure for an end to the fighting to intensify.

Officials close to the deliberations said a consensus has yet to be reached between Prime Minister Ehud Olmert, Foreign Minister Tzipi Livni and Defence Minister Ehud Barak on whether to pursue a ceasefire that would bind Israel and Hamas or to seek a more open-ended solution.

"Israel wants to have as free a hand as possible. So a diplomatic solution, given the mistrust that there is, doesn't seem very realistic," a senior European diplomat said.

Livni, a leading candidate to replace Olmert as prime minister in an election on February 10, has privately advocated a more unilateral approach under which Israel would step up the offensive and decide when to stop firing without the need for any binding, internationally recognized ceasefire.

Under this scenario, Hamas Islamists would be "dissuaded" from launching more cross-border rockets because of the threat of Israel launching more strikes in future, a senior official said on condition of anonymity.

"We would tell them, 'Next time, think twice'," he said.

This option has gained some traction within the Israeli government in recent days because it would keep Hamas on the sidelines, rather than confer legitimacy on the Islamist group as a formal ceasefire might.

It would not bind Israel to hold its fire in future -- an advantage, advocates say, given that the current military campaign aims to weaken, rather than topple, Hamas's government in the Gaza Strip.

It would also allow Israel to maintain full control of Gaza's border crossings, whereas a formal ceasefire would likely require the Jewish state to agree to keeping them open more often, one of Hamas's main objectives.

"A ceasefire would provide them (Hamas) with an achievement. Why do it?" asked Dov Weisglass, former Prime Minister Ariel Sharon's longtime chief of staff.

"You don't need an agreement to create a balance of power that they will understand: every aggressive attempt from their side will be answered very forcefully."

Nicolas Pelham, a senior analyst with the International Crisis Group, countered: "Israel went to war proclaiming it would end in a new paradigm. But this would leave Gaza and the region very far from that, with all the ingredients for instability still in place."

People close to Defence Minister Barak, whose left-leaning Labour party has made gains in recent days but still trails in opinion polls, advocate a more formal internationally backed ceasefire agreement, officials said.

Olmert's spokesman, Mark Regev, declined to comment on the outgoing prime minister's position.

Hammering out a ceasefire agreement would be complicated by the fact that Hamas and Israel do not recognize each other and do not talk directly.

NO ROLE FOR CAIRO?

Spiraling tensions between Hamas and Egypt over the Israeli offensive may also preclude Cairo playing a key mediator role as it has in the past.

Israel could turn to Mahmoud Abbas, the Western-backed Palestinian president, as representative in any ceasefire agreement. But Hamas, which trounced Abbas's secular Fatah faction in a 2006 election and then took over the Gaza Strip 18 months later, would probably resist being sidelined.

A Western diplomat said Israel was playing for time and was wary of proposals that would restrict its room to maneuver.

With an election fast approaching, "Israel wants to have as free a hand as possible. What if they agree to a diplomatic initiative but the rockets start falling again? That would be political suicide," the diplomat said.

Israel also favors some form of international monitoring, though it is unclear what form it might take.

Israel does not consider an international peacekeeping force a realistic option at this time because countries are unlikely to offer troops given the risk of further violence in the coastal territory, the officials said.

European monitors had been stationed at Rafah, the Gaza Strip's only border crossing with Egypt, until Hamas's takeover of the territory in June 2007. Israel said that mission was flawed because the monitors lacked enforcement powers to prevent smuggling of arms and money.

(Editing by Angus MacSwan and Janet McBride)