* Military officer upbeat on wall stopping Gaza smuggling
* Newspaper says wall would flood Palestinian tunnels
By Dan Williams
JERUSALEM, Dec 30 (Reuters) - An underground wall that Egypt is building along its border with the Gaza Strip will significantly stem Palestinian arms smuggling when is completed, an Israeli military officer said on Wednesday.
It may be months before it is finished, however, the officer said.
Cairo has played down the scope of the dig on the 14-km (8-mile)-long frontier but Gaza’s Islamist Hamas rulers condemn it as a "wall of death" that could seal an Israeli-led blockade by smothering smuggler tunnels from the Egyptian Sinai.
"The wall definitely has the potential to make things difficult, though it (smuggling) won’t stop hermetically," an Israeli military officer briefed on Gaza intelligence said.
"There has certainly been an effect already. It’s driving Hamas crazy."
Israel has long lobbied Egypt to tackle the cross-border smuggling, which supplies Palestinians with both munitions and basic commercial goods lacking in Gaza. Asked when the Egyptian wall might be finished, the officer, who spoke to Reuters on condition of anonymity due to the sensitivity of the issue, said: "If they work 24/7, it will still take a protracted period — months."
Egyptian officials have said steel tubes were being placed at several points along the frontier to form a barrier, but have not elaborated on its purpose. Unlike Israel, Egypt maintains relations with Hamas and has an Islamist opposition movement.
Citing an unnamed Egyptian intelligence source, Israel’s biggest newspaper Yedioth Ahronoth said the wall would run as deep as 30 metres (yards) and would be rigged with sensors and pressurised hoses to flood tunnels with seawater.
Tunnel-builders say some 3,000 of the underground passages were operational before Israel launched a three-week Gaza offensive a year ago, but only 150 were still functional following the conflict and subsequent Israeli air raids.
The Israeli officer said Hamas, using the tunnels, had replenished its rocket and small-arms arsenal since the war.
While Israel believed that Hamas had expanded the reach of the short-range rockets and acquired anti-tank and anti-aircraft missiles since the war, the Israeli officer said this did not constitute a major qualitative military gain.
"In terms of the weapons they have, I would characterise it as ‘more of the same’. What is new is that Hamas is trying to improve its professionalism and the way it operates against our forces."
(Writing by Dan Williams; editing by Angus MacSwan)