U.S. Secretary of State Condoleezza Rice will hold talks on Thursday with Palestinian President Mahmoud Abbas in an effort to revive the peace process between Israelis and Palestinians and bolster the moderate government of Mr. Abbas. Mr. Abbas's Fatah forces lost control of the Gaza Strip in June, after Islamic militants of Hamas seized power in the territory. Fatah now controls only the West Bank. Since then, Gaza's economy has been virtually shut down because Israel, citing security concerns, has closed the borders to the strip. VOA's Jim Teeple recently visited Gaza where he filed this report on an economy under siege.

Life is hard and getting harder in the Gaza Strip. Some street vendors are protesting that Hamas Islamic militants put them out of business as part of a crackdown on illegal activities in Gaza. Hamas seized power in June. Since then order has prevailed on Gaza's once chaotic streets. But many residents complain that the cost of security is too high.

In addition, Israel closed its borders with Gaza because Israel, like much of the international community, considers Hamas a terrorist organization. Gaza's borders with Israel have been closed to everything except humanitarian assistance.

Since the Hamas takeover, economic life has ground to a halt in much of Gaza. More than 70 percent of Gaza's factories have closed since Hamas took over. Nasser el Helu is one of Gaza's most prominent businessmen. He says soon Gaza's private sector will be gone - and with it, a rare pillar of stability in the volatile strip.

"We as businessmen in Gaza, together with the businessmen in Israel, represent the last bridge that can keep the relationship between these two nations," he said. " So if the economy in Gaza collapses, this bridge will be removed from the map. This should not be done and avoided in order to keep the last thread between the two nations."

Just a few weeks ago, Hamas fighters and gunmen belonging to the Palestinian faction Fatah, battled it out across Gaza. Now Fatah has retreated to the West Bank.

With Hamas in control of Gaza and the factional fighting over, people there can once again venture out. But few have any money to spend. More than 68,000 people have lost their jobs, and unemployment is reaching record levels. Eighty percent of Gaza's residents now receive emergency food aid from the United Nations.

Ahmed Yousef is a senior Hamas leader in Gaza. He warns there will only be more instability if Gaza's borders are not reopened. He says, for now, Hamas will not recognize Israel or renounce violence which the international community is demanding as a pre-condition for opening relations with the group.

"I hope that the U.S., Israel and the world community will learn from what happened in Afghanistan, Iraq and other places where you have occupation and where you have people resisting occupation. As Palestinians, we have been under this kind of pressure for six decades now," said Yousef. "If the world will help us to end the occupation that is fine, but if not we will stick to our resistance."

Palestinians carry flour outside a United Nations food aid distribution center in the Jebaliya Refugee Camp, northern Gaza Strip, 18 July 2007

The Palestinian business community is not alone in complaining about Gaza's borders being closed. A number of Israeli businesspeople who import large quantities of agricultural commodities from the Gaza Strip have called on their government to reopen the main cargo crossing point known as Karni. Non-governmental organizations like the Israeli human rights group, Gisha, have also called on Israel to reopen Karni. Sari Bashi, Gisha's executive director, says reopening Karni would be easy.

"Israel has legitimate security interests in protecting its personnel at Karni crossing, but those security interests are being used as a pretext to keep Karni closed. Karni can be opened; people in the private sector have offered to secure the crossings to coordinate re-opening the crossings but they need Israeli cooperation in order to do so," said Bashi. "Israel needs to make a declaration that it intends to open Karni and once it does that there will be plenty of people to cooperate."

But Israeli officials disagree. Mark Regev, spokesman for the Israeli Foreign Ministry, says Israel is making sure that plenty of humanitarian assistance is reaching Gaza, but he says it is unrealistic to think that Israel will reopen the crossings to commercial activity at the present time.

"We would like to have all the crossings up and running. We've got no interest in seeing any economic hardship in Gaza. Unfortunately, one day we woke up in the morning and we didn't see Palestinian security on their side of the crossing," said Regev. "We saw armed Hamas gunmen, a lot of them in ski masks. And the idea that a terrorist group [Hamas] that holds an Israeli soldier hostage, a group that shoots rockets into Israel, that sends suicide bombers into Israel would be in charge of security is something that is totally unworkable. "

Regev says Israel is looking for solutions to the problem, such as getting a third party involved in managing some the crossings, including Karni. But he says that as long as Hamas remains in control of Gaza, Israel will not change its policy of keeping the crossings closed to all but humanitarian traffic.