THE Sunday suicide-bomb attack by Islamic militants -- another blow to the Mideast peace process -- has renewed calls from Israeli politicians for stricter separation between Israel and Palestinians in the new self-rule areas.
The bomb attack, which killed seven Israelis and injured 34 others, came two months after a similar attack near Tel Aviv inside Israeli borders. That attack pushed the government to bar Palestinian workers from entering Israel from the Gaza Strip and the West Bank.
Because Sunday's double bombings took place in Gaza near a well-guarded Israeli settlement, officials found some comfort in their new antiterror measure.
''The fact that the attacks took place in Gaza proves that the closure policy helps to prevent attacks inside Israel,'' Prime Minister Yitzhak Rabin said.
He added that the attack will not disrupt talks with Palestinian leaders but that he expected them to ''prove their control'' of Gaza and the other self-rule area, the West Bank town of Jericho.
But many Palestinians in the Gaza Strip, suffering under the hardship of three months of closures, will likely see the two recent suicide bombers as new heroes to be added to a list of martyrs fighting to end Israel's occupation of the West Bank and the presence of some 4,000 Jewish settlers in Gaza.
At the Erez checkpoint into Gaza, a daily saga of congestion and chaos has played itself out for the past three months as trucks ferrying materials for development in Gaza stand backed up for hundreds of yards.
Palestinian workers, desperate to return to their jobs in Israel, join long lines hoping they can get through.
''This place is a prison,'' says Jaber Hassoona, who normally would work in a Tel Aviv butcher shop but now battles to feed his family after months of unemployment.
''Who do we call on? We can't call on Israeli leaders, and our leaders can't do anything,'' says Mr. Hassoona, shouting in the apparent hope that someone in authority might hear him.
Hassoona says that the first priority for Palestinians should be to reopen the crossing into Israel.
''This is a siege situation. America supports Israel and gives them everything. But we are being driven off our lands. What are the Jewish settlers doing in Gaza?''
Israel's policy of closing the Erez crossing, the main checkpoint between Israel and Gaza, each time Islamic extremists strike against Israelis has taken a heavy toll on what was intended to become the showcase of the first stage of Palestinian self- rule.
Losing $2 million a day
United Nations officials and economists estimate that the beleaguered economy of Gaza is losing $2 million a day -- or about $600 million a year -- in an economy with an estimated gross domestic product of $3 billion a year compared with Israel's $63 billion GDP.
The flow of an estimated 70,000 Palestinian workers who passed through Erez daily when restrictions were not in force, has been whittled down to about 15,000 by the closure restrictions.
The Palestinians have been replaced by an estimated 30,000 foreign migrant workers from countries like Thailand and Romania.
This has added to the resentment of Palestinians toward the Israelis and toward Yasser Arafat's Palestinian Authority (PA), his self-appointed body that administers limited self-rule under the 19-month-old Israeli-Palestinian peace accord.
United Nations officials in Gaza say that the situation is becoming desperate and that the closure of Gaza has brought the peace process to the point of crisis.
''We are coming to the crunch point,'' a senior UN official in Gaza says. ''The closure has driven the whole thing backwards. If Israel just shuts Gaza down every time there is an attack, this process is not going to work.''
He adds that Erez, rather than a crude military checkpoint, should be turned into a proper border post with sophisticated surveillance equipment so that the flow of traffic could be maintained along with effective security.
Rabin's view of physical separation between Israel and the Palestinian self-rule areas is being challenged increasingly by voices from within the Israeli military and political establishment.
Israeli Energy Minister Yossi Sarid, a member of the left-of-center Meretz Party, said on the eve of Sunday's attack that remaining Jewish settlements in Gaza like Netzarim should be evacuated.
Brig. Gen. David Agmon, a retired officer of the Israel Defense Force, said yesterday that the closures of Gaza were counterproductive, but he called for talks with Palestinians to be suspended until Mr. Arafat's PA had shown that his police could control Islamic militants.
''Closures only create bitterness. I don't think that a closure prevents terrorist attacks, but it does create great damage among the Palestinian population,'' General Agmon said.
''The population has to make a living, and the closure pushes them into the arms of Hamas [the Islamic Resistance Movement],'' he said, stressing that pressure should be applied to Arafat's authority and not to the Palestinian people.
Israelis want separation
Recent Israeli polls show that up to three-quarters of Israelis still see physical separation as the best chance of improving personal security, even if this sets back the peace process.
Arafat responded to the latest attack by arresting some 150 members of Hamas and the Islamic Jihad, the two militant Islamic groups that are opposed to peace with Israel and who claimed responsibility for Sunday's attacks.
Late Sunday night, Palestinian police also rushed through the first sentence against an Islamic militant in a hastily convened security court that has been condemned by Palestinian rights activists as ''undemocratic.''