A June truce between Israel and Gaza's Hamas rulers comes up for renewal next month, and it looks as if both sides are trying to dictate more favorable terms.

That would explain why Israel and Hamas have been trading rocket fire and air strikes for two weeks, even as they keep saying they're interested in a continued cease-fire. The attempt to establish new ground rules could easily spin out of control, especially if there are civilian casualties.

Domestic concerns further complicate the situation.

Israel is holding general elections Feb. 10, and the cross-border violence has become campaign fodder.

Over the weekend, the hard-line opposition party Likud predictably portrayed the government as weak for not responding more harshly to the rockets. Put on the defensive, the leaders of the ruling Kadima and Labor parties delivered tough speeches, warning Hamas that Israel would strike a punishing blow if necessary.

Yet a high-risk Israeli offensive in Gaza seems unlikely ahead of the election. Also, at a time of political transition in the United States, Israel might not want to start its relationship with President-elect Barack Obama in crisis mode.

Yet continued rocket fire from Gaza would hurt Kadima's and Labor's election prospects and could turn the public mood against a key election promise of both parties - to keep trying to forge a peace deal with the Palestinians.

Hamas, meanwhile, is trying to fend off criticism at home, particularly from smaller militant factions, that it accepted a bad deal and that the cease-fire hasn't improved life in Gaza. The territory has been under an international blockade since the violent June 2007 takeover by Hamas.

The Egyptian-brokered truce took hold June 19 and was to be renewed after six months. The details were never made public, but the general idea was for Israel to allow more goods into Gaza, which has suffered from chronic shortages under the sanctions.

This was to be followed by negotiations on the release of an Israeli soldier held by Hamas-allied militants and by the eventual opening of the Rafah border crossing between Gaza and Egypt.

The truce largely held, though Israel has closed the borders for brief periods in response to occasional rocket or mortar fire from Gaza. Even when the crossings did open, however, Israel never allowed in more than a trickle of goods. Negotiations over the captured soldier, Cpl. Gilad Shalit, bogged down, and Rafah, Gaza's main gateway, remained closed.

On Nov. 4, this uneasy balance was upset.

Israeli forces moved about 300 yards into Gaza to destroy a border tunnel dug by militants. Israeli Defense Minister Ehud Barak said at the time that militants had planned to abduct Israeli soldiers through the tunnel, similar to the 2006 capture of Cpl. Shalit.

However, defense officials acknowledged that Israel also was trying to send a message that it would not allow Hamas militants to operate close to the border.

Hamas responded with barrages of rockets and mortars on Israeli border communities. Israel, in turn, targeted rocket squads with air strikes, killing at least 15 Palestinian militants, including four on Sunday.

Israel also stepped up pressure by keeping Gaza's borders closed, causing widespread power cuts, disrupting U.N. food distribution to the needy and drawing international condemnation.

Hamas raised the stakes by firing several longer-range Grad rockets at the Israeli city of Ashkelon. By taking aim deeper inside Israel with the deadlier Grads rather than at small border communities with crude homemade rockets, Hamas was trying to boost its powers of deterrence.

The idea is to "force the occupier to respect our people's rights and demand and stop all sorts of aggression against our people," said Hamas spokesman Fawzi Barhoum.

Israeli critics of the truce have warned repeatedly that Hamas is using the cease-fire to amass weapons via smuggling tunnels and that Israel is losing the ability to take the initiative.

Hamas "determines the rules of the game, it determines the pace, it decides when to fire rockets on Israeli citizens and how many," said Gideon Saar, a senior Likud legislator, talking to Israel Radio.

Still, both sides have an overriding interest in a cease-fire.

Hamas needs calm in Gaza as it heads into a political showdown with its rival, moderate Palestinian President Mahmoud Abbas. Hamas contends that Mr. Abbas' term expires Jan. 8 and says it will install its own president at that time, closing perhaps the last door to the elusive possibility of restoring national unity.

Israel, meanwhile, doesn't want to be dragged into a major military offensive in Gaza that would risk the lives of soldiers for uncertain gains.

Reoccupying Gaza would at best bring temporary calm but more likely bog down forces without an exit strategy. It also would distract the military from other key challenges, including the threats from Iran and Lebanon's Hezbollah guerrillas.