Panic buying as Gazans fear increased isolation

GAZA, June 17 (Reuters) Long lines formed at fuel stations in the Gaza Strip following rumours Israel might cut off supplies after the armed takeover by Hamas.

''Are we going back to the age of the donkey cart?'' shouted a motorist as he surveyed dozens of cars in front of him at one station in the Palestinian enclave.

Fears of a tightening of a Western economic embargo and of another spasm of violence are gripping Gaza's 1.5 million people following the rout of Fatah on Thursday.

''We are destroyed. My sons are at home because I am afraid to let them go out,'' said housewife Umm Rami yesterday, whose husband is a colonel in one of the Fatah-dominated security forces.

Gaza's economy is almost entirely dependent on Israel. ''Even our oxygen comes from Israel,'' Umm Rami said.

Israel has said it has no intention of cutting off food, power and other humanitarian essentials it allows to pass through the security cordon it has maintained on the 40-km stretch of coast since its troops pulled out in 2005.

However, the fighting between the Islamist Hamas movement and the secular Fatah faction of the Western-backed President Mahmoud Abbas has increased people's anxieties about living under religious rulers treated as pariahs by many states.

''I've had no sale since morning,'' butcher Abu Sharif said.

''People are afraid the fighting will start again and above all, they have no money. No one is selling, no one is buying.

''What is worrying us is that the situation could get worse and worse.'' Key transit points with Israel and Egypt, notably the main freight crossing from Israel at Karni, remained closed amid confusion over who is in charge. Israel refuses to countenance any contact with Hamas until it renounces violence against it.

United Nations aid officials say there are several weeks worth of food supplies in the Gaza Strip, where much of the population depends on aid.

Government salaries look increasingly in doubt because of the schism between Gaza under Hamas and Abbas's Fatah-led administration in the larger West Bank.

''My husband is now sitting at home, just like his children,'' Umm Rami said. ''If salaries stop, I will go begging in the street.'' FEARS OF TIGHTER EMBARGO The United States, Israel and European Union are preparing to lift year-old sanctions on Abbas's Palestinian Authority in response to his dismissal of Hamas from government. But in Gaza, many fear that could mean an even tighter embargo on them.

Some shops had nothing to sell and many had no customers because people were staying home.

Fighting has subsided but police chiefs loyal to Abbas refused to deploy, leaving the streets to Hamas gunmen.

In the U.N.-run Beach refugee camp, home to 90,000 people tracing their roots back to those who fled lands incorporated into Israel at its foundation in 1948, Umm Rami said: ''I feel lost. I cried yesterday as I walked in the street.'' Speaking just a block from the home of Hamas leader Ismail Haniyeh, who is refusing to accept his dismissal as prime minister by Abbas, she recalled how her family came to Gaza in 1995 with many others who had spent years in foreign exile.

Then, after the Oslo peace accords and the return of Yasser Arafat with promises of a Palestinian state in the West Bank and Gaza, the Strip seemed a promising place to live -- fertile land, some industry and beachfront access to the outside world.

Now, for many, it has become an imprisoning slum.

Many Fatah supporters have been trying to get out of Gaza and some Palestinian officials said hundreds had succeeded despite the closed border posts. Dozens of Fatah fighters reached Egypt on Friday aboard a fishing boat.

TRUST IN GOD -- AND THE UN Hamas's welfare programmes in Gaza, modelled on those of the Iranian-backed Lebanese Hezbollah group, helped secure it the votes that won it control of parliament last year. Now many in Gaza wonder what a future under Hamas rule alone may mean.

''It is a change. But God knows whether for better or worse,'' Abu Sharif said. ''The economy is finished and people are afraid Israel will close the crossings and make things worse. But we need to be steadfast. We will not die of hunger.'' Another woman braving the streets to find supplies for her family was also defiant. ''So let Israel shut everything down.

God created us and he will not forget us,'' Umm Ahmed said.

''We used to live on UN sacks of flour. We will go back to that.'' Like many of the four million Palestinians divided between the West Bank and Gaza, she found the rivalry between Fatah and Hamas perplexing and removed from her daily concerns. For her Israel remains the enemy for making her family refugees: ''I'm just a beggar. All the Palestinian people are beggars.

Gaza is not our home. Our home is over there,'' she said of the Jewish state. ''The dogs took it from us.'' REUTERS NY RK0908