JERUSALEM, June 4 (Tom Perry and Alastair Macdonald - Reuters) - Israel is unlikely to heed calls to lift the blockade of the Gaza Strip but its bloody seizure of a Turkish aid ship has caused international anger and American dismay that is forcing it to seek conciliatory moves.
Israel's leaders have been unrepentant. Prime Minister Benjamin Netanyahu accused Europeans of hypocrisy over efforts to stop Iranian arms reaching Gaza's Hamas Islamist rulers.
But with even vital ally the United States criticising the harm the blockade is doing to the 1.5 million Palestinians in Gaza, and President Barack Obama calling the killing of nine men, including an American, a tragedy, Netanyahu is seeking points where concessions can soak up some of the pressure. At the same time, he will not take any steps that weaken Israel in its confrontations with the Palestinians and Iran.
Cooperating with US demands for some form of international inquiry and agreeing to measures that might ease the embargo for civilians both seem to be areas where Israel may compromise.
George Mitchell, Obama's Middle East envoy, says Washington is working aggressively to ensure supplies for people in Gaza.
While few of Israel's allies dispute that Hamas poses a threat, most now say that the blockade causes unjustified harm and may have bolstered rather than weakened Hamas.
Some form of relaxation is a possibility, a diplomat said. But for political reasons there may be a delay. The Israeli government doesn't want to be seen to cave in immediately.
Ministers have already mooted a role for foreigners in an inquiry, and political sources have said Netanyahu may propose easing the blockade and seeking foreign help in enforcing the arms embargo on Hamas while meeting civilian needs for Gaza.
A key issue for Israel in any international inquiry will be to ensure its case for blockading Hamas and for opening fire on the Turks in self-defence are taken into account. It wants to avoid a repeat of the UN Goldstone report last year, which said its forces should be investigated for war crimes in Gaza.
There's the ghost of the Goldstone report which the Israelis are very keen to avoid, as are various parts of the United Nations, the diplomat said. The Israelis are showing some flexibility for certain reasons.
By conceding, however, Israel will aim to reinforce key policies of crippling Hamas and rallying international support against Iran's nuclear programme. It will also resist changes in its negotiating positions with Palestinian President Mahmoud Abbas, Hamas's rival, in US-mediated peace talks.
Israel's leftish Haaretz newspaper said on Thursday in an editorial that Netanyahu should minimise the damage by investigating the raid and lifting the blockade.
The lethal operation is making it difficult for the US administration to rally a majority in the U.N. Security Council for new sanctions against Iran, it said. (And it) weakens the bargaining ability of Netanyahu vis-a-vis ... Obama and Abbas.
Netanyahu's domestic critics have sounded alarms before now about the right-wing prime minister's clashes with Obama -- notably over Jewish settlement expansion in the West Bank, which Washington and Abbas say is hampering prospects for peace.
This week, as maritime drama and a cancelled Netanyahu-Obama meeting dominated headlines, local media quoted intelligence chief Meir Dagan, a key figure in Israel's drive to halt Iran's nuclear programme, telling a parliamentary committee: Israel is gradually turning from asset to the United States to a burden.
Israel's vocal but politically weak liberals have leapt on the bungled boarding in international waters to lament.
Novelist Amos Oz wrote in the New York Times that the Gaza siege crisis grew out of the mistaken assumption that ... the Palestinian problem can be crushed instead of solved.
Haaretz columnist Gideon Levy wrote of Netanyahu's policies: We'll become an even more despised country and won't have a single friend left in the world, not even the United States.
Less hostile analysts, too, have suggested Israel must take another approach to Gaza in order to defend its interests.
Guy Bechor, writing in Yedioth Ahronoth, said Israel could wrong-foot Western critics and rid itself of its Gaza problem.
The Israeli government must immediately announce that it is willing to lift the naval siege on the Gaza Strip in return for an international supervisory regime, he wrote. Such a move would allow Israel to close its land borders with Gaza, he said.
I prefer Hamas, with which there are no negotiations and which is under a global boycott, over the sterile dialogue with the Palestinian Authority under Abbas, said Bechor.
David Makovsky, a Washington analyst writing in the New York Times, said the blockade was justified for Israel's defence -- Hamas has fired thousands of rockets into Israel over the years.
But bans on, for example, steel and concrete on the grounds Hamas could use them for defences, should be re-examined, he said. To ease tensions with the international community without sacrificing Israeli security, there might be an advantage for Israel to agree to a streamlined dual-use list.
Dov Weisglass, once an adviser to right-wing Prime Minister Ariel Sharon, said the blockade was right. But Israel must avert international criticism of its policies toward the Palestinians.
The siege on Gaza must continue so long as Hamas ... is Hamas in its current format, Weisglass wrote in Yedioth Ahronoth. The more pressing concern that should emerge from the flotilla incident is Israel's increasing political weakness.