Olmert issues "last-minute" warning to Hamas

By Adam Entous and Ari Rabinovitch

JERUSALEM (Reuters) - Israeli Prime Minister Ehud Olmert on Thursday issued a "last-minute" appeal to Palestinians in the Gaza Strip to reject their Hamas rulers and stop rocket fire at Israel, warning them he would not hesitate to use force.

His comments were the clearest indication yet that Israel was preparing a possible Gaza offensive which could result in heavy casualties on both sides and fuel a humanitarian crisis.

Israeli political sources said Olmert's security cabinet approved a "staged" military escalation, beginning with air strikes against a wider range of Hamas targets in the densely-populated enclave.

A large-scale operation has yet to be authorized but could get a green light depending on Hamas's response, the sources said.

In Gaza, Hamas spokesman Fawzi Barhoum said Israel would "pay the price" for any attack.

Olmert told Al Arabiya television, an Arab broadcaster widely watched in Gaza: "I didn't come here to declare war."

"But Hamas must be stopped -- that is the way it is going to be. I will not hesitate to use Israel's might to strike Hamas and (Islamic) Jihad. How? I will not go into details now," Olmert said, according to a statement issued by his office.

Olmert has resisted calls within Israel for a major military operation against Hamas, but rocket and mortar fire from the coastal enclave since a six-month truce brokered by Egypt expired last week has increased pressure on him to act.

Israeli Foreign Minister Tzipi Livni, a leading candidate to replace Olmert in a February 10 election, held emergency talks with Egyptian President Hosni Mubarak, in Cairo, who cautioned against an escalation.

ROCKET FIRE "UNBEARABLE"

Livni said Hamas had to pay for "unbearable" rocket fire, declaring: "Enough is enough."

Adding to the saber-rattling, army chief Gabi Ashkenazi said Israel would have to act with "all our force to hurt the terrorist infrastructure and change the security reality."

In a sign any fighting with Gaza ran the risk of igniting a wider war, Lebanese troops dismantled eight rockets set up for launch at Israel in a border village. Israel fought an inconclusive war with Hezbollah guerrillas in Lebanon in 2006.

Egypt appealed to Hamas leaders after the talks with Livni "to calm the situation so as to avoid an Israeli military escalation," a Palestinian official said in Gaza.

In response to world appeals and a reduction in rocket fire from Gaza, Israel agreed later to let about 100 trucks carrying food, humanitarian aid, grain and animal feed travel into Gaza on Friday through two crossings, officials on both sides said.