srael labelled the Hamas-controlled Gaza a "hostile entity".

The Islamist movement refuses to recognise Israel arguing that it is an illegitimate state.

Israel intensified the siege last week, saying the move was in response to heavy rocket fire from Gaza into Israel.

Nowadays, Gaza is a territory where the economy has collapsed, power shortages are a daily occurrence, and Israeli air strikes are common.

But how is Hamas faring under this pressure?

One of its leaders, Mahmoud Zahhar, insists that Hamas - which won the Palestinian legislative elections in 2006 - does not need to change its course.

"We are giving all efforts to run a real administration," he told the BBC news website. "We are ready to continue for years."

Options

But there is a major divide within the movement and certainly not all Hamas members are as optimistic.

The hardliners - including Mr Zahhar - believe that the current crisis will do no long-term damage to the movement.

But Hamas moderates are not so sure. They believe that there must be greater debate on how Hamas is to proceed in the future.

Ghazi Hamad, a senior Hamas official widely regarded as a moderate here, says that the movement has not done enough to balance its politics with "the resistance".

"I consider them like the wings of the bird," he said. "You cannot fly without one wing."

He hinted that Hamas should focus more on governance than on resistance.

Even though Gaza is a Hamas stronghold, many Palestinians in the territory are opposed to the movement.

Some belong to Fatah, Hamas's main Palestinian political rival - a secular movement headed by the current Palestinian President Mahmoud Abbas.

Elusive unity

Khimar Abu Sada, a professor of political science at Gaza's al-Azhar University, says there is growing popular pressure against Hamas - and the siege - and there are calls for change.

But he says that the recent Israeli attacks - more than 35 Palestinians, mainly militants but including at least 10 civilians have been killed in the last week - mean that people are less willing to criticise Hamas.

"Israel seems to want to shorten the days of Hamas in the Gaza Strip but this policy is backfiring," he said.

"The Palestinians cannot just stand and watch the killings of their brothers and fellow citizens."

Many Hamas moderates and other Palestinians are stressing the need for national unity.

They believe that a reconciliation between Fatah and Hamas - a government of national unity collapsed between the two parties earlier this year - would greatly improve the situation in Gaza and possibly lift the siege.

But as a precondition of negotiations, Fatah leaders are demanding that Hamas reverse its gains in Gaza that it made in June.

The bitterness runs deep, and at the heart of their disagreement is recognition of Israel - Fatah does and Hamas does not.

Exclusion

President Abbas is currently engaged in a new peace initiative with Israel. Hamas has been excluded from these talks.

But some senior Fatah officials warn that the situation in Gaza is embarrassing the Palestinian leader while, in turn, strengthening Hamas.

"Israel is strengthening the people that aren't convinced that negotiations can get us our rights," says Dr Faisal Abu Shahla, a senior Fatah official in Gaza.

For now, Hamas officials seem to be pinning there hopes that Arab countries such as Egypt and Saudi Arabia will work to get the siege lifted - but that is a long shot.

Some Hamas officials admit that they siege could go on "for many years".

But they insist that it will not break the movement.