Israel has declared that it will not open Gaza's blockaded borders until Hamas militants free a captured Israeli soldier, dealing a blow to Egyptian efforts to broker a long-term cease-fire between the two enemies.
The decision drew condemnations from Hamas, which is desperate for the blockade to be lifted in order to start repairing destruction from Israel's military offensive in Gaza last month.
In parallel, Palestinian Prime Minister Salam Fayyad of the rival government in the West Bank announced a plan that would stream reconstruction money directly to the people of Gaza. That would effectively sideline Hamas.
The Israeli decision yesterday means border crossings with Gaza will remain mostly closed until Sgt Gilad Schalit is released. Israel allows only vital humanitarian supplies to enter. Israel's 11-member Security Cabinet unanimously endorsed the new condition, set down by Prime Minister Ehud Olmert this week.
The soldier was captured in a 2006 cross-border raid by Hamas-linked militants who attacked an army base, killing two other soldiers.
In return for the soldier, Hamas is demanding the freedom of hundreds of Palestinian prisoners, including dozens of convicted killers, and insists the prisoner exchange should be handled separately.