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The Israel Defense Forces hit Hamas positions throughout the Gaza Strip yesterday, after a Grad rocket fired by Gaza militants struck downtown Ashkelon yesterday morning. Meanwhile, Hamas representatives and Egyptian officials continued discussing a cease-fire with Israel in Cairo.

No Palestinians were killed in the IDF attacks, which included Israel Air Force strikes on Hamas positions in Beit Lahiya and Khan Yunis, and on tunnels along the Egypt-Gaza border at Rafah.

Three people were treated for shock after the Grad strike in Ashkelon, which damaged cars in the area.

"Hamas is playing with fire, and if there is an escalation now, Hamas has no one to blame but itself," said Mark Regev, Prime Minister Ehud Olmert's spokesman.

The Grad that struck Ashkelon was the first such rocket to be fired at the city since a cease-fire ended Israel's 22-day offensive in Gaza last month.

"Hamas has deliberately undermined the calm," Regev said.

Ashkelon Mayor Benny Vaknin said the rocket landed in an open area in the city center. "This cannot just slide by," Vaknin said. "This wasn't a mortar shell or a Qassam - this was a Grad rocket."

In Cairo, it was still unclear whether Hamas plans to accept Egypt's proposal for a tahadiyeh, which calls for the partial reopening of the border crossings between the Gaza Strip and Israel in exchange for a Hamas cease-fire.

Salah al-Bardawil, a leading Hamas member in the Palestinian parliament, told the Palestinian Ma'an News Agency last night that there was a positive atmosphere at yesterday's talks.

"Hamas addressed the Egyptian proposal for a cease-fire with Israel positively. However, Hamas asked for explanations of some Israeli proposals, especially the objection to allowing certain materials to the Gaza Strip that Israel claims are used to make weapons," Bardawil told Ma'an.

According to Bardawil, Israel is offering to allow in 75 percent of the goods it currently bans from entering Gaza in exchange for the release of captive Israeli soldier Gilad Shalit.

The remaining 25 percent are goods Israel says could be used to make weapons.

"We have no objection to a cease-fire in exchange for lifting the siege and opening crossing points," Ma'an quoted Bardawil as saying. "We don't oppose addressing the Shalit case in tandem with cease-fire negotiations, but we asked for explanations about the nature of the material Israel won't let in."

Bardawil said his movement would be ready for a prisoner exchange with Israel starting today. He added that Hamas would, as part of a cease-fire, agree to stop firing projectiles into Israel, and said Hamas had asked for Egypt's help in convincing other factions to show restraint.

'Hamas is not a state'

With regard to Israel's demand that Hamas stop smuggling through tunnels under the Gaza-Egypt border, he said Hamas' response is that Hamas is not a state and would need the cooperation of states to clamp down on smuggling. However, he said, "Hamas won't agree to stop smuggling weapons into Gaza because that would mean the end of resistance."

Meanwhile, in a visit to the site where the rocket struck Ashkelon yesterday, Likud chairman Benjamin Netanyahu vowed to "topple the Hamas regime" in Gaza if elected prime minister.

"When we said a few years ago that missiles would reach Ashkelon, Tzipi Livni and Kadima mocked us," Netanyahu said.

"In recent years, Kadima's policy of blindness has brought us to where we are today. Ashkelon residents cannot trust Kadima. We need a change in policy."

Netanyahu said the rocket threat demands a military response. "We need to topple the Hamas regime in Gaza," Netanyahu said. "Likud, led by me, will bring down Hamas and end the missile threat on the south."

On Monday, 10 mortar shells landed in open areas in the western Negev, while a Qassam exploded near a kindergarten in the Eshkol regional council area.

In response, IAF aircraft hit a vehicle carrying members of a launching cell in Rafah. One was killed and two were seriously wounded. A few passersby sustained mild injuries.