Rice presses Sharon on opening of Gaza crossing

As it became increasingly likely that a deal was not going to be reached, Ms Rice postponed her departure for South Korea until today in the hope that both sides would agree a detailed formula reopening the crossing.

Israel has agreed in principle for goods to pass out of Gaza and Egypt and for Palestinian residents to be able to travel both ways through the southern border town, both under EU supervision. But last night there was still no agreement on Israel's demands that it should have the right to monitor traffic on live closed circuit television for security reasons as it passed through the crossing.

Instead of leaving the region last night as planned, the Secretary of State flew to Amman to express her solidarity with Jordan in the aftermath of last week's triple suicide bombing which killed 57 people.

Leaving senior State Department officials here to continue efforts at brokering a deal on Rafah in intensive talks between the Palestinians and Israel, she was flying back to Jerusalem later last night before finally departing from the region today.

The collapse of the Rafah talks would be a major blow to hopes of a wider deal to secure access for exports and imports across Gaza's borders. The international community sees this as essential to reviving a devastated economy which the Palestinians say has continued to deteriorate since Israel's withdrawal from the Strip in August.

While the issue of the Rafah crossing has great practical and symbolic significance, the two sides are also discussing the economically even more crucial issue of the security bottlenecks at the Karni, the main crossing for goods from Gaza destined for Israel and the West Bank. With the Karni issue lent especial urgency because of the imminent vegetable harvest in Gaza, including the tomatoes, peppers and cucumbers being grown on some 500 acres of hothouses left behind by the departing Israeli settlers, James Wolfensohn, former chairman of the World Bank, has drafted a plan to speed up the number of lorries passing through Karni from 35 to about 150 a day.

Mr Wolfensohn said last night that he did not know whether an agreement would be reached on Rafah and again warned that Gaza would be a "prison" without adequate access for exports and imports. Expressing frustration at the deadlocks on all the main issues in dispute, Mr Wolfensohn, the international community's envoy on post-disengagement Gaza, told the Israel Council of Foreign Relations last night: "I find it very difficult to understand why in 20 weeks of negotiations it has been impossible to bring about more progress."

The fresh round of talks began as sharp differences appeared to open up between the Secretary of State and the Israeli Prime Minister, Ariel Sharon, over Hamas's participation in Palestinian Legislative Council elections scheduled for January.

Though it is strongly opposed to Hamas maintaining political influence within the Council while refusing to disarm, the US administration appears to have accepted - for the time being - the argument of the Palestinian President, Mahmoud Abbas, that a decisive victory against Hamas in unfettered elections would give him the legitimacy to act against the armed factions. The PA believes that it would be a disastrous if Hamas were able to claim that its electoral performance had been hampered by Israel.

By contrast, Mr Sharon said yesterday that while Israel would not "interfere" with the elections, "neither will we co-ordinate the elections with [the Palestinians], and will not allow Hamas people to operate and move around differently from what is happening now".

The foreign ministry spokesman Mark Regev indicated that Israel would continue to feel free if it chose to arrest Hamas officials, "members of what is internationally accepted to be a terrorist organisation", as they passed through checkpoints during an election campaign.

One of Hamas's senior wanted commanders, Amjad Hanawi, 34, was killed yesterday, apparently while trying to escape Israeli troops carrying out a pre-dawn arrest raid in Nablus.