Hamas has seized control of the Palestinian water agency that is spearheading Middle East envoy Tony Blair's signature project in the Gaza Strip, Palestinian and Western officials said today.
Hamas's takeover of the Palestinian Water Authority in Gaza cements the group's control over the territory and could cast doubt on the future of the North Gaza Sewage Treatment Works project - a centrepiece of an economic package touted by Mr Blair to try to bolster the chances of a peace deal this year.
The seizure comes ahead of planned tender by the Water Authority for building a water treatment plant, and amid delicate negotiations with Israel on bringing critical building supplies into Gaza, which Hamas Islamists seized a year ago.
An official with the World Bank, the Washington-based international lending agency which is coordinating the project, said construction was expected to move forward as planned.
Gazans view the task as urgent - last year, five people drowned in a wave of raw sewage from a plant in North Gaza. Israel has argued that equipment needed to repair the sewage system can be used to make rockets that are fired into Israel.
Mr Blair's office had no immediate comment on the day's developments. The former British prime minister is the special envoy to the Palestinians from the Quartet of international powers. Hamas officials also had no immediate comment.
Hamas may see the Water Authority as a means to raise funds to get around an Israeli-led blockade of the territory that has sharply reduced supplies of fuel and other essentials. The authority collects fees for wells. With water scarce in parched Gaza and imports restricted, wells are in high demand.
Israel has tightened its cordon of the Gaza Strip since Hamas's takeover, and it took months of lobbying by Mr Blair and other Western officials to get permission to bring in pipes, wire and other equipment to bolster the crumbling sewage system.
The project is largely contingent on cooperation from Israel, which controls Gaza's commercial crossings. Mr Blair's office said last month that Israel's Defence Ministry had agreed to provide a "letter of comfort" to the water authority in order to encourage potential donors to provide funds for the project. It is unclear if Hamas's actions would get in the way of that plan.