Olmert cuts energy to Gaza Strip in reply to rocket fire

Israel's security cabinet has declared the Gaza Strip, which is controlled by Hamas, to be "hostile territory" and formally endorsed a policy of cutting fuel and electricity supplies to the Strip in response to continued rocket attacks by Palestinian militants.

The move yesterday was the latest effort to step up the pressure on Hamas as Israel seeks to reach an accord with Mahmoud Abbas, the Palestinian President, and the emergency government he set up in the West Bank after Hamas's bloody takeover of Gaza in June.

While Israel insisted it intended to avoid a humanitarian crisis, cuts in fuel and power – for which no date was set yesterday – would exacerbate the mounting problems of Gaza's 1.5 million inhabitants, already facing an economic lockdown after the total closure of the main cargo crossing at Karni three months ago.

The decision, which was publicly condemned as "oppressive" by Mr Abbas and as "collective punishment" by the aid group Oxfam, was taken as the US Secretary of State, Condoleezza Rice, arrived in Israel to encourage the government of the Israeli Prime Minister, Ehud Olmert, and Mr Abbas's Ramallah-based administration to agree a document outlining the basis of a two-state peace settlement.

Invited to say whether she backed the move at a news conference yesterday, Ms Rice did not answer directly, but affirmed: "Hamas is a hostile entity to the United States as well." She added: "We will not abandon the innocent Palestinians in Gaza, and indeed will make every effort to deal with their humanitarian needs."

While food and medical supplies are passing through two crossings, nearly all other goods, including those vitally needed by Gaza's now almost completely shut down industrial sector, have been halted.

A statement issued by the Israeli Prime Minister's office after yesterday's meeting, said: "Hamas is a terrorist organisation that has taken control of the Gaza Strip and turned it into hostile territory. This organisation engages in hostile activity against the state of Israel and its citizens, and bears responsibility for this activity ... Additional sanctions will be placed on the Hamas regime in order to restrict the passage of various goods to the Gaza Strip and reduce the supply of fuel and electricity."

The decision is another step in a process which began last month when the Israeli cabinet decided against a full-scale military invasion of Gaza but to examine ways of cutting utility supplies. The cabinet decided yesterday against cutting water supplies.

But Ehud Barak, the Defence Minister, was quoted by Ha'aretz as telling ministers at the meeting that a large-scale military operation in Gaza was a live option. "Every day that passes brings us closer to an operation in Gaza," he said.