By Adam Entous
JERUSALEM (Reuters) - U.S. President Barack Obama's Middle East envoy said on Friday that the new administration's push for Israeli-Palestinian peace after the war in the Gaza Strip faced big hurdles and he warned of setbacks ahead.
The sombre assessment by former U.S. Senator George Mitchell followed two days of talks with Israeli and Palestinian leaders on shoring up a shaky ceasefire that ended Israel's 22-day offensive against Gaza's Hamas Islamist rulers.
In the talks, Israel has balked at fully reopening Gaza's border crossings to allow reconstruction. Washington supports Palestinian President Mahmoud Abbas in his power struggle with Iranian-backed Hamas for control of the passages, Gaza's gateway to the outside world and a major political and economic prize.
Mitchell said consolidating the truce and "immediately" addressing the humanitarian needs of Gaza's 1.5 million residents were the U.S. administration's top priorities.
"Then we must move forward," he added, citing Obama's commitment to "aggressively" seek a peace deal.
U.S.-backed talks between Israel and the Palestinians stalled last year in discord over Jewish settlement expansion and the future of Jerusalem. Diplomats said reviving them after the war in Gaza would be very difficult and would take time.
In keeping with long-standing U.S. policy, Mitchell did not meet during his visit with Hamas, which won a 2006 Palestinian election but has been shunned as a "terrorist" group by Western powers for refusing to renounce violence and recognise Israel.
Israel tightened its blockade of the Gaza Strip after Hamas routed secular Fatah forces loyal to Western-backed Abbas and seized control of the impoverished enclave in June 2007.
"The tragic violence in Gaza and in southern Israel offers a sobering reminder of the very serious and difficult challenges and, unfortunately, the setbacks that will come," Mitchell told reporters after touring a U.N. warehouse in Arab East Jerusalem packed with aid for Gaza's residents.
But he added: "The United States remains committed to actively and aggressively seeking a lasting peace between Israel and the Palestinians, as well as between Israel and its other Arab neighbours."
MORE AID, MORE TRADE
At the U.N. warehouse, Mitchell announced that Obama had approved $20 million in new assistance for Gaza. The money, which will go to two U.N. agencies and the Red Cross, will be used to provide food, medicine and shelter, officials said.
John Ging, who heads operations of the U.N. Palestinian refugees agency UNRWA in Gaza and met Mitchell in Jerusalem, told reporters in New York by videolink that UNRWA would be sending Israel a bill for damage to its buildings. But he said Israel had not responded to previous similar claims.
Israel's goal in launching its offensive on December 27 was to force Hamas to stop firing rockets at southern Israeli towns.
Some 1,300 Palestinians were killed, including an estimated 700 civilians, according to a Gaza human rights group. More than 5,000 Palestinians were wounded and thousands made homeless.
Thirteen Israelis -- 10 soldiers and three civilians hit by Hamas rockets -- were killed before the two sides called a halt to the fighting on January 18.
Tensions remain high. An Israeli soldier was killed in a militant attack this week, and Israel's air force retaliated with a strike that wounded 10. But Israeli Defence Minister Ehud Barak said he believed the de facto truce would hold.
"Hamas sustained a very severe blow. Our deterrence has been greatly enhanced and, in our estimation, we are on course for calm which will, I believe, be realised," he told Army radio.
Israel has, however, refused to open Gaza's border crossings to supplies such as cement, steel and glass needed to repair badly damaged buildings and utilities -- materials it says Hamas can use to build more rockets and arms-smuggling tunnels.
Ahead of a February 10 election, Israeli leaders have said a full reopening of any Gaza crossings would depend on Hamas freeing an Israeli soldier who was captured in 2006.
U.S. officials played down the chances that Israel would open Gaza's border crossings broadly anytime soon.
Israel now allows about 100 to 120 trucks of aid per day to enter Gaza through the Kerem Shalom crossing. More aid, the equivalent of 60 to 80 truckloads, come through conveyor belts at the Karni crossing.
Ging said the mood among Palestinians in Gaza had "moved from one of overwhelming grief to a pervasive sense of anger." He added, "There are more extremists in Gaza today than there were a couple of weeks ago."
(Additional reporting by Douglas Hamilton and Ori Lewis in Jerusalem; Sue Pleming in Washington; Patrick Worsnip at the United Nations; editing by Katie Nguyen and Jackie Frank)