Tony Blair returned to the Middle East yesterday to confront a deepening crisis, as Israel threatened to turn off all power to the Gaza Strip after an Islamist rocket strike that narrowly missed a crowded nursery.

Since Mr Blair’s last visit two months ago Israel has faced an increasing military threat from the Hamas rulers of Gaza, who are trying to turn their guerrilla force into an army, and who are at war with Fatah, their West-ern-backed secular rivals in the West Bank.

Haim Ramon, the Israeli Deputy Prime Minister, threatened to cut off power and water to 1.5 million Palestinians living in the Gaza Strip after months of daily rocket barrages on Sderot, close to the Gaza border.

“It is unthinkable to continue to furnish Gaza with electricity, water and fuel while Israeli citizens are targets of these rockets,” Mr Ramon said. “We have to draw a line. We have to make it be known that for any rocket fire we will cut for two or three hours the supplies of water, electricity and fuel to the Gaza Strip.”

Mr Blair, who flew into Israel after talks in Cairo with President Mubarak of Egypt, is charged with building up Palestinian institutions and the economy but has remained deliberately vague about the limits of his mandate as international envoy to the Middle East. Diplomats say that he may try to use his clout as former Prime Minister to facilitate peace talks between the Palestinians and Israelis, although Washington has insisted that such a political role is reserved for Condoleezza Rice, the US Secretary of State.

Mr Blair’s efforts will be hampered because he has no mandate to talk to Hamas, the Islamist movement that took over Gaza in heavy fighting with Fatah in June, and which is listed by Israel, the US and Europe, as a terrorist organisation.

Fears are growing that Hamas could try to repeat its uprising in the West Bank, where a frail Government dominated by Fatah - seen widely as corrupt - has a fragile grip on power. The division between Hamas and Fatah has led to two Palestinian entities, with each side waiting for the other to be toppled by a popular revolt.

Hamas officials have said that if Mahmoud Abbas, the Palestinian President, does not agree to talks to rebuild a failed national unity government with the Islamists, his administration could fall. “President Abbas and his Government were manufactured by the Americans, who made this puppet Government to deny Palestinian legitimacy,” said Fawzi Bar-hoom, a Hamas spokesman. A senior Israeli army officer said that the Palestinian Authority had ramped up its security coordination with the Israeli occupation in the West Bank since Hamas’s June attack, keen to win concessions that could lead to a political breakthrough and stymie the Islamist model of permanent armed resistance.

“These days, Fatah, the Palestinian Authority, got a slap directly in the face, understanding that if they go on the way they’ve been going, they’re going to lose the West Bank like they lost Gaza,” said the Israeli officer, who asked not to be named.

He said that without an Israeli presence in the West Bank, Hamas could easily try to make a bid for power. “I heard this from a Palestinian colleague: ‘The minute you [the Israeli army] leave I’m going to buy a ticket to Amman. I have nothing else left here, because really it’s a matter of days until Hamas is going to take over’. Hamas have unlimited resources, and he spoke about money, and money buys weapons,” he said. This week Marwan Barghouti, a Fatah leader jailed by Israel for his role in bomb-ings, said that the Hamas threat in the West Bank was real. “It would be a mistake if the Palestinian Authority doesn’t take this possibility seriously,” he said. Mr Abbas is pinning his hopes on a regional peace conference to be held in the US in November. But many commentators say that if Mr Abbas fails to win serious concessions from Israel the talks will collapse. That could force Fatah back into negotiations with Hamas, at which point Israel and the West would freeze relations with all Palestinian factions.

Mr Abbas has voiced concerns that if no framework agreement is mapped out before the meeting, the talks will be perceived as a failure.

Ehud Olmert, the Israeli Prime Minister with whom he has held several meetings since the loss of Gaza to Hamas, said this week: “If we can achieve a draft by November, we will achieve it, but I am not sure we will be able to do that.”

Hope and frustration

Previous Middle East envoys include:

Jimmy Carter

As US President he assisted in the signing of the Camp David accords in 1978, bringing peace between Egypt’s President Sadat and Israel’s Menachim Begin. He continues to visit the region to promote peace and has monitored elections in the occupied Palestinian territories

James Wolfensohn

Blair’s predecessor as envoy for the Quartet of the US, Russia, the EU and the UN, appointed in 2005. He resigned last year, blaming the US for undermining his efforts

Sadat, left, Begin, centre, and Carter Terje Roed-Larsen

The UN’s peace envoy to the Middle East was banned in July 2004 from entering the Palestinian Territories after criticising Yasser Arafat

Alvaro de Soto

The UN’s next envoy stood down in May 2007 and was highly critical of the Quartet. In a confidential report leaked in June, he accused it of losing its impartiality in the face of US support for Israel

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