Despite international and Arab protests, Prime Minister Ehud Olmert has indicated Israel will keep up its pressure on the Gaza Strip in an effort to force Hamas and other Palestinian militias to stop their cross-border rocket attacks on Israeli civilians.

But Israel relaxed its blockade somewhat on Tuesday after masses of Palestinians tried to cross the Gaza-Egypt border. On Wednesday, the crowds succeeded in knocking down the border fence, and thousands of Palestinians streamed into Egypt to stock up on supplies before returning to Gaza.

Israel's blockade of the Gaza Strip could have some major positive policy ramifications. It aims to make a decisive impact on the seven-year-long cross-border war of attrition, it could weaken Hamas' hold on Gaza and it could influence the Annapolis peace process.

It also has reinvigorated international condemnation of Israel, which was widely criticized for closing border crossing points to Gaza last week and reducing diesel fuel supplies used to produce electricity. Critics charge that shortages of electricity, food and medicine could cause a humanitarian crisis among Gaza's 1.5 million inhabitants.

Though Israel countered that Hamas is making the situation look worse than it is to arouse international sympathy and says no humanitarian crisis is in the offing, Israel decided on Tuesday to allow fuel, food and medicine to enter the strip. The fuel included enough industrial diesel to power Gaza's lone electricity plant for a week. The plant had shut down on Sunday, plunging much of northern Gaza into darkness.

The European Union, which sponsors the plant, said Israel has agreed to restore weekly fuel shipments. Israel said the imports were subject to weekly reviews.

In a phone conversation Monday with Egyptian President Hosni Mubarak, Olmert indicated there would be no change in Israeli policy until the Palestinian cross-border rocket attacks ceased. Mubarak had called to urge Olmert to lift the closure to avert a looming humanitarian crisis.

Olmert replied that Israel would not allow anything like that to happen because it would play into Hamas' hands, but he insisted Israel would not ease the pressure.

The situation on the perennially tense Israel-Gaza border escalated sharply last week after Israel killed 19 mainly Hamas operatives in a cross-border raid, and Hamas retaliated by stepping up the shelling of Sderot and other Israeli towns and villages near Gaza.

Over the next few days, Palestinian militias fired more than 200 Kassam rockets and mortar shells at Israeli civilians -- more in three days than in all of December.

Israel retaliated by targeting more militiamen, bombing a building that once served as the Palestinian interior ministry and closing the border crossing points between Gaza and Israel. It was the last step that drew intense international criticism from Europe, the United Nations and the Arabs.

The criticism highlights the dilemma Israeli decision-makers face: How to stop a nonstate authority that cannot easily be deterred from firing rockets at civilians without incurring international opprobrium or heavy military losses.

Basically, three major options are available:

* A large-scale ground operation and reoccupation of Gaza for at least several months.

The advantage would be to give the Israel Defense Forces the kind of control it has in the West Bank, enabling the IDF to prevent missile launches, destroy missile workshops and arrest militia operatives. In other words, to deal the Hamas military infrastructure a devastating blow.

There is a downside: Taking Gaza and then maintaining an Israeli presence would probably entail heavy IDF casualties; the move would not play well in the court of international opinion; and it could also stymie peace talks with the more moderate West Bank Palestinians under Mahmoud Abbas.

Defense Minister Ehud Barak argues that this step will eventually have to be taken and says that army units are training intensively for it.

* Negotiating a cease-fire.

That would be the most effective way to stop the Kassams -- for now. A cease-fire, however, would enable Hamas to build up its military capabilities, making an Israeli attack several years down the road far more difficult. Although some ex-generals advocate this course, the government now is strongly against it.

* Keeping up strong military and economic pressure, including targeted killings of Hamas operatives, pinpoint ground raids to keep the militiamen off-balance, and reducing fuel and other supplies to the civilian population without causing a humanitarian crisis.

The problem with this route -- the one the government has adopted – is that it will inevitably run into international criticism and rather than getting the beleaguered civilian population to press the militiamen to stop firing, it might actually unite Gazans around Hamas.

With little fanfare, Israel ratcheted up the military pressure a few weeks ago. Since the beginning of the month, more than 70 militants have been killed in targeted airstrikes and pinpoint land operations.

On Jan. 17, the government added the civilian component, closing all the crossings to Gaza and significantly reducing fuel supplies.

The moves -- fully consistent with the government's policy of changing political realities in Gaza through pressure on Hamas -- sparked a fierce propaganda war.

Palestinians claimed there was no electricity in Gaza, with children carrying candles marched through the darkness to make the point. They also claimed that at least six people had died in hospitals because there was no electricity to power their life-support systems.

On Wednesday, apparently because of the blockade, tens of thousands of Palestinians forced their way across the Gaza border into Egypt. Gunmen blew up sections of the barrier separating Gaza from the Sinai, allowing the Palestinians to surge across as Egyptian police watched without intervening.

Many of the Palestinians who entered Egyptian territory quickly stocked up on supplies before returning home.

Israeli spokesman insist Hamas is faking the consequenes of the blockade.

Col. Nir Press, the head of the IDF's Coordination and Liaison Administration, pointed out that Israel is still supplying 70 percent of Gaza's electricity and it is Hamas that decides how to ration it. There was no need for a total blackout in Gaza or for hospitals to be running on generators, he said.

Nevertheless, to ensure that it could not be blamed for any hospital deaths, Israel renewed the diesel supplies. Israeli officials said the decision came following a cessation of rocket fire on Sunday.

"We hope Hamas got the message," said foreign ministry spokesman Arye Mekel.

International criticism of Israel throughout has been harsh. For example, John Holmes, the United Nations' emergency relief coordinator, lambasted the closure on Gaza as collective punishment.

"This kind of action against the people of Gaza cannot be justified even by these rocket attacks," he declared.

On Tuesday, members of the U.N. Security Council in an emergency meeting discussed a resolution that called on Israel to end its blockade of Gaza and ensure "unhindered access for humanitarian assistance to the Palestinian people," according to a text obtained by Agence-France Presse.

Israel directed its U.N. mission to oppose a the resolution, which has Arab League support.

"A situation in which the Security Council debates the plight of the residents of Gaza while completely ignoring the situation of Israelis living under the constant threat of Kassam rockets is totally unacceptable," said Aaron Abramovich, director-general of Israel's Ministry of Foreign Affairs.

Zalmay Khalilzad, the U.S. ambassador to the United Nations, told reporters that the text was "unacceptable" because "it does not talk about the rocket attacks on innocent Israelis."

Israel responds to international criticism by saying that keeping supplies to an enemy population to a bare minimum is far more moral than the random shelling of Israeli civilians by Hamas.

To highlight what he sees as a double standard, Cabinet Minister Haim Ramon asks critics what they would do if one of their cities was shelled.

"When put like that, they smile and say, 'we would do much worse things,' " Ramon said.

Perhaps most important, the Gaza crisis highlights the difference between two Palestinian approaches to the conflict with Israel: the moderate Fatah's peace negotiations vs. Hamas-style resistance.

Partly to press his claim to represent all Palestinians, including those in Gaza, and partly to demonstrate clout with Israel, moderate Palestinian Authority President Mahmoud Abbas threatened to call off peace talks in protest of the Gaza closure. Abbas described the Israeli blockade of Gaza as an "inhuman and unjust siege policy."

Olmert was unswayed, however, telling his Kadima faction, "As far as I'm concerned, all of Gaza's residents can walk and go without gas for their cars because they have a murderous, murderous, terrorist regime that doesn't allow people in the south of the country to live in peace."

Israeli newspapers showed public opinion strongly behind a goverment that had been lambasted previously for failing to stop the shelling of Sderot and other communities outside Gaza.

Paradoxically, the Gaza showdown could benefit the peace process.

The success of Israel's Gaza strategy -- forcing Hamas to stop its rocket fire -- could greatly facilitate the Annapolis talks with the moderates.