The United Nations on Monday suspended vital construction projects like homes, schools and sewers in the Gaza Strip, blaming shortage of raw materials.

John Ging, director of UNRWA, the UN Relief and Works Agency in Gaza, said a huge number of houses in refugee camps were damaged during months of clashes between Hamas and rival Fatah forces in Gaza, and now his agency can't repair them. Also, he said, school repairs and construction have fallen behind schedule, and Gaza kids might be left on the dusty streets instead of in classrooms.

Some $93 million worth of projects are on hold because cement and other building supplies have run out, Ging said. The agency's construction projects employ 121,000 people, and their halt will deliver another further blow to Gaza's depressed economy, he said.

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In the southern town of Rafah, the concrete skeletons of dozens of partly finished houses sit idly on the sand next to the sea, part of a refugee camp hard hit by Israel Defense Forces operations before 2005 and Palestinian infighting since. Construction has been halted, forcing dozens of families to crowd into tiny houses with their relatives.

Ahmed Ashour, 44, is living with his wife and seven children with his 83-year-old mother-in-law. His house in the Rafah camp was destroyed in an IDF operation in 2003, and UNRWA was building him a new one.

"The house is supposed to be ready in March 2008," he said. They began the project but it has been halted because the border has been closed. In the meantime, he has had to move from house to house seven times, he said.

"Some charities donated furniture," he said, adding, "There are plenty of people worse off than me."

About 1.4 million people are jammed into Gaza, a tiny territory 40 kilometers long and 10 kilometers wide with no natural resources, hemmed in on two sides by Israel, one side by the Egyptian Sinai desert and the other by the Mediterranean Sea.

Ging said the shortages of raw materials were the result of severely limited imports through crossings between Gaza and Israel. Since the Islamic Hamas took control of Gaza last month in a lightning sweep against Fatah forces loyal to President Mahmoud Abbas, Israel has shut down the crossings except for humanitarian assistance, citing security threats. That excludes vital raw materials like cement.

IDF spokesman Shlomo Dror said that some cement is being let in along with the emergency supplies, and other building materials would be added to the next shipment.

"I'm not pointing blame, we just need to redouble efforts," Ging said. There's only one solution, to reopen the borders.

Businessman Ala Araj, an adviser to deposed Prime Minister Ismail Haniyeh of Hamas, said there was enough blame to go around. "I mostly blame Israel for closing the borders completely or partially, he said, but also faulted Palestinian militants for attacking the crossings.

"Palestinians must avoid hitting sensitive places like borders, which offers a pretext to Israel to close them," he said.

IDF sourcs said Palestinian militants hit the Kerem Shalom crossing with a mortar round on Monday.

Sari Bashi of Gisha, an Israeli human rights group, called the border closing collective punishment.

"The rational is to pressure Hamas ... but now it's a quick death blow because the economy is unraveling very quickly," she said.

Besides the schools and homes, Ging said, the UN is working on an emergency waste project in northern Gaza - shoring up a huge cesspool complex where a collapse last March killed five people in a stinking wave of sewage. An even larger pool is in danger of collapsing now.

Ging warned that construction crews are working against the clock, but like the others, the project has been halted.

"It's a disaster waiting to happen, he said. If that goes the same way as the smaller one, it will be a bigger catastrophe," he said.

In another development, Prime Minister Ehud Olmert's office said Monday he will meet Abbas again next week. The two met last month in Egypt, where Olmert pledged to release 250 Palestinian prisoners as a goodwill gesture. The release has not yet taken place.

U.S. Secretary of State Condoleezza Rice is scheduled to visit Israel and the West Bank next week as part of a Mideast tour, but it was not immediately clear whether she would take part in the Abbas-Olmert talks.