A Palestinian woman carrying her daughter arrives at the Rafah border crossing in the southern Gaza
A Palestinian woman and her daughter arrive at the Rafah border crossing in the southern Gaza Strip hoping to cross into Egypt on June 1, 2010. Photo by Reuters
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United Nations envoy to the Middle East Tony Blair on Wednesday joined growing international calls on Israel to end its embargo on the Hamas-run Gaza Strip, saying it was "counter-productive".

The call comes amid widespread international condemnation over nine deaths aboard a Turkish ship which tried to run the blockade of the Palestinian enclave on Monday.

"The policy of Gaza is counter-productive and what [Israel] should be doing is allow material in to rebuild homes and sanitation and power and water systems and allow business to flourish," Blair told Reuters in an interview in Bethlehem.

The embargo was not helping Israel recover a soldier held captive by Hamas since 2006, he said. "Nor do we in fact do damage to the position of Hamas by harming people in Gaza."

"People are harmed when the quality of service is poor and people cannot work," said Blair, envoy to the Palestinians for the Quartet of international powers seeking Middle East peace.

Of Egypt reopening its border, he said: "They recognize the human case for making greater use of Rafah crossing."

British Prime Minister David Cameron made a similar call on Wednesday, and called Israel's raid of the Gaza flotilla "completely unacceptable." Cameron told lawmakers in the House of Commons that the years-long blockade has only strengthened Gaza's Hamas rulers.

Members of the United Nations Human Rights Council on Wednesday included the same demand as they passed a resolution to send an international committee to investigate the circumstances of the raid which left nine foreign activists dead.

The United Nations says the blockade has led to a humanitarian crisis for Gaza's 1.5 million Palestinians. But Prime Minister Benjamin Netanyahu insisted on Wednesday the embargo was necessary to keep Hamas from getting weapons.

Israel denies there is a humanitarian crisis in Gaza, saying it lets through food and medical supplies, while barring goods it fears Hamas may use for war -- including concrete and steel.

The former British prime minister called on the Hamas Islamist group to end "terrorism coming out of Gaza".

Blair was attending an investment conference in Bethlehem, where Hamas's secular rivals in the Israeli-occupied West Bank hold sway. The organizers hope to attract foreign investment in small- and medium-sized business projects.

"It sends a message of confidence and belief and allows outside investors to realise that it is possible to come and invest in Palestine and do well," Blair said, while cautioning against an approach espoused by Netanyahu that gives priority to fostering economic growth over reaching a final peace deal.

It should not be a "substitute to the politics", he said, but was "an important part to make the politics work".

Among deals announced at the conference, the Palestinian Authority said local and Middle Eastern investors had agreed to build a power station in the northern West Bank with capital of about $300 million. At present, the West Bank depends entirely on imports from Israel and from Jordan for electricity.

U.S. aid agency USAID pledged $75 million to support public infrastructure in the West Bank and Gaza Strip, and a further $25 million to improve private sector competitiveness.