When Palestinians toppled a metal wall separating the Gaza Strip from Egypt Wednesday, many expected Israeli officials to howl over Egypt allowing Hamas "terrorists" to rearm. After all, a cornerstone of the current peace process was supposed to be isolating Gaza.

But the Israeli response has been surprisingly muted. In fact, some Israeli officials see some advantage in the breach.

Israel, which occupied the Gaza Strip in 1967, has since then clamored, intermittently and often privately, for Egypt to assume greater responsibility for the impoverished coastal strip, or even for Cairo to take control of Gaza. By breaking down the wall and sending Egypt a tidal wave of people pressed to stock up on everyday necessities, Hamas militants – who have been planning the break for weeks, according to local media reports – may have inadvertently brought Israel closer to this goal.

At the same time, the sight of thousands of Palestinians streaming south, keen to stock up on food and fuel, and the international criticism over a building humanitarian crisis calls into question whether the recent push to isolate Hamas as part of a US-sponsored peace process has a realistic chance of success.

"It seems to just confirm the sheer desperation and the failure of the policies on all sides. International policy appears to be largely stuck in a confused series of corners, and we don't see any prospect of a route out," says Robert Lowe, the director of the Middle East Program at Chatham House in London, also known as the Royal Institute of International Affairs. "Despite Bush's visit, despite Annapolis, there's no real sign of optimism."

Although Israeli officials have registered disappointment with Cairo's shortcomings in policing their border with the Gaza Strip, there has also been an equally palpable touch of relief in their words, as if the break in the wall effectively re-attaches Gaza to Egypt, which governed it until the Arab-Israeli conflict of 1967.

Egyptian officials balk at this idea. Asked if Egypt would consider taking responsibility for Gaza, Foreign Ministry Spokesman Hossam Zaki is unequivocal: "Certainly not. We have no interest in doing that, and we won't."

"That seems to be wishful thinking on Israel's part," Mr. Lowe says. "And if the international community sticks their heads in the sand, wishing it away, it's the same as the Israeli approach. It doesn't work because Israel does still have effective control over Gaza, and the ability to operate an economy with any minute degree of success is impossible as long as Israel is in control of Gaza's borders."

In light of the break, however, Israel has tried to underscore the extent to which, when it said it was disengaging from the Gaza Strip, it meant it. Following its removal of settlers and soldiers from Gaza in August 2005 and the Strip's declaration as a "hostile entity" – militants have launched more than 200 rockets from Gaza into Israel in the past week alone – Israel says it is no longer occupying Gaza and should not have to provide services to it.

"We need to understand that when Gaza is open to the other side we lose responsibility for it. So we want to disconnect from it," Deputy Defense Minister Matan Vilnai told Israel's Army Radio on Thursday.

"We want to stop supplying electricity to them, stop supplying them with water and medicine, so that it would come from another place," Mr. Vilnai said.

Only weeks ago, there were back-channel discussions of Israel and Hamas reaching some kind of a prisoner exchange, in which Israel might release several hundred jailed Palestinians in exchange for Cpl. Gilad Shalit, who was captured by Hamas gunmen who had tunneled into Israel from Gaza in June 2006. Some hoped a cease-fire might follow. Now, that possibility seems more distant.

"Why should we stop the rockets while the Israelis are still occupying our land in Gaza and the West Bank," says Fawzi Barhoum, a spokesman for Hamas in Gaza. "Mahmoud Abbas has been trying for a long time to gain Palestinian rights, but they are not giving him anything. Negotiations have proven a failure. These rockets are messages for the Israelis that there is a people suffering in Gaza, and they have to stop their violence against the Palestinians."

From the Israeli side of the fence, however, the arguments sound different. There is a sense of frustration at having tried to leave Gaza, only to have an increase in rocket attacks on Israeli citizens. Having a Gaza Strip that turns to Egypt for support bolsters an oft-heard Israeli argument: that sending supplies to a territory one is at war with can't work.

"This basically helps promote what was the Israeli objective for a long time," says Mark Heller, the director of research at the Institute for National Security Studies at Tel Aviv University.

"There is a bit of downside," Dr. Heller says. "It will make some marginal difference [because] it's a little bit freer to bring in weapons, explosives, and terrorists, but they were coming through the tunnels anyway. To the extent that there was a policy to weaken or undermine Hamas, it gives them a lifeline. But it is functionally handing Gaza over to Egypt. And it will be harder to find the excuse for blaming Israel for Gaza's troubles."

All of this, he suggests, is a watershed for Israel's presumed responsibility for Gaza. "It shifts the thinking. There is a border with Egypt, so let them decide when to open it," Heller posits. "The only problem is more of what existed before, in the form of what goes over the Israel-Gaza border. We might see more long-range rockets getting into Gaza. But it will be easier to identify the source and harder to justify criticism of the Israeli response."

Other analysts wonder if the policy of isolation of Hamas – and by default, the 1.5 million residents of Gaza – may have to be rewritten, before it rewrites itself. Since it took over the Strip in a violent coup last June, the international community has hoped that, by denying it legitimacy and giving a boost to Palestinian President Mahmoud Abbas, something would change. Either Hamas would collapse under the economic pressure, or would buckle politically and become more moderate. Neither seems to have happened, with Hamas even looking victorious this week in the eyes of many Palestinians.

"It's hard to see how a policy of simply bolstering Abbas and [Prime Minister] Salam Fayyad is deeply realistic," says Lowe, of Chatham House. "There were hints from within the organization that they were willing to make concessions. It wasn't clear that given the right carrot, they might not have come around. But perhaps there were too many sticks."

Lowe says that perhaps an Israeli gesture, such as a move to dismantle illegal settlement outposts, could open the door for a more cooperative stance. "There would have to be some clear movement on the Israeli side for Hamas to give anything up. Without that, it's hard for them to explain any change to their own hard-liners."

And the US position on the Gaza breach? Nicholas Burns, the US Undersecretary of State for Political Affairs, at a briefing Thursday with reporters in Jerusalem said: "Obviously, we want to be supportive of the Egyptian government's efforts to regain a measure of control over that area.... We see the residents of Gaza as victims of the poor leadership of Hamas."

Asked whether restoring order meant resealing the border, Mr. Burns said he would not want to "give advice" to "two friendly governments," Israel and Egypt, which are struggling to deal with a "chaotic and dangerous situation."