PALESTINIANS-ISRAEL/BLAIR

JERUSALEM, June 8 (Reuters) - Middle East envoy Tony Blair's signature project in the Hamas-controlled Gaza Strip could collapse because of Israeli restrictions on bringing in equipment, an internal World Bank memo obtained by Reuters said.
The $75 million north Gaza sewage treatment project was the centrepiece of an economic package spearheaded by the former British prime minister to try to boost Israeli-Palestinian peacemaking.
In a June 4 memo to donors, the World Bank said Israel has prevented delivery of critical equipment to the project since March.
The equipment included pipes, cement and spare parts.
Attempts to hire building contractors failed last year.
No bid was submitted as the bidders did not want to run into the security risk in Gaza, the World Bank said. The failure of attracting bidders in the second round will be devastative to the project.
International donors and Gaza residents view the sewage project as urgent. In 2007, a flood of raw sewage from a plant in north Gaza killed several people.
But like other Western-backed infrastructure projects in the territory, Blair's have suffered lengthy delays because of an Israeli-led blockade which was tightened after Hamas's violent takeover of the Gaza Strip in 2007.
Israeli officials had no immediate comment on why equipment slated for the sewage project was being blocked. The World Bank said items were approved in a series of coordination meetings.
The sewage project was damaged earlier this year during Israel's military offensive in the Gaza Strip.
Since the offensive ended in late January, Israeli-controlled border crossings have remained closed to steel, cement and other goods Gazans need to rebuild the thousands of homes that were destroyed.
Israel has long asserted that Hamas could use the supplies to build more weapon and bunkers.
But Israeli officials, who spoke on condition of anonymity, said Prime Minister Benjamin Netanyahu was considering easing the cordon to allow in supplies for some Western-funded rebuilding projects.
U.S. President Barack Obama has urged him to do so.
In addition to nearly $20 million from the World Bank, the sewage project is funded by France, Sweden, the European Union, Belgium and other donors. (Reporting by Adam Entous; Editing by Jon Hemming)

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