* Fuel deal shows challenge of changing Cairo policy
* Hamas, Brotherhood want free commerce with Gaza
* Israel says such a step would up to Egypt
By Tom Perry and Nidal al-Mughrabi
CAIRO/GAZA, March 21 (Reuters) - The Muslim Brotherhood aims to open the Egyptian border with Gaza to commerce, a shift that would transform life for Palestinians there but which is hitting resistance from Egyptian authorities reluctant to change a longstanding policy.
The biggest party in Egypt’s new parliament, the Islamists are not yet in government but have been seeking ways to ease the impact of restrictions imposed by Israel and Egypt on what passes in and out of the territory run by the Hamas group, an idelogical offshoot of the Brotherhood.
Aiming to ease chronic power shortages in Gaza, the Brotherhood recently lobbied the Egyptian government to conclude a deal to supply fuel for the territory’s sole power station.
However, the blackouts still plaguing Gaza several weeks after the deal was declared show that changing policy is easier said than done in Cairo, where government is still largely run by remnants of Hosni Mubarak’s administration.
“It’s the continuation of the Mubarak method in dealing with the Palestinian issue,” said Gamal Hishmat, the deputy chair of the Egyptian parliamentary committee on foreign affairs and a Muslim Brotherhood MP.
The fuel has yet to arrive because of a dispute over how it should be delivered, according to Hamas and Brotherhood MPs familiar with the details. Hamas wants it to come across Gaza border with Egypt, a precedent that could lead to broader trade through the only Palestinian frontier not controlled by Israel.
Egypt had initially backed this but then said it should go via Israel, the Hamas and Brotherhood sources said. Officials at the Egyptian oil ministry could not be reached for comment.
Home to 1.7 million people, Gaza has been under tight embargo since Hamas took control in 2007. Hamas is deeply hostile to Israel, which signed its peace treaty with Egypt in 1979. Under international pressure, Israel eased import curbs on Gaza in 2010 but for the most part businesses cannot export.
Protests organised by Hamas at the border this week over the power crisis have signaled growing impatience with restrictions Palestinians feel should have ended with Mubarak’s rule.
Egypt’s ruling military led by Field Marshal Hussein Tantawi eased restrictions on the passage of travelers last year, but the change fell short of what Palestinians were seeking.
“The Field Marshal of Egypt and the government of Egypt and the whole world stand silent as Gaza remains under blockade,” Mohammed Ashour, a local official in Gaza, told a rally, his voice booming from loud speakers across the frontier.
Commerce has been forced underground into tunnels under the border. Mubarak’s last years in power were marked by suspicion bordering on outright hostility towards Hamas, an ideological cousin of the Brotherhood group that was banned under his rule.
“I want the crossing to open completely, so that whoever wants to travel from Gaza can come to Egypt,” said Mahmoud Ghozlan, spokesman for the Brotherhood. “We support opening the crossing for import and export.”
Hamas wants the same. “We are not happy with the tunnels,” Mahmoud Al-Zahar, a Hamas leader from Gaza, told Reuters.
For the Brotherhood, the first justification is moral. The Gaza blockade is one of the most emotive issues in the Arab world. There would also be an economic benefit for northern Sinai, one of the poorest parts of Egypt.
For Israel, the idea does not appear a cause for concern.
“The Israeli foreign minister has suggested that we do everything we can to help Gaza stop depending on Israel for anything and instead deal directly with Egypt,” an Israeli diplomat said. He added that checks would be needed on the Egyptian side to prevent arms reaching Gaza but said the fuel deal did not raise any alarm.
The Egyptian position has long been shaped by concern Israel would relinquish all responsibility for Gaza were the border with Sinai opened. With the rise of Hamas in Gaza, Cairo was also guided by concern Palestinian militancy could spill over.
A diplomat familiar with Gaza policy said Cairo’s worry was now that yielding to Hamas demands would weaken Egypt’s leverage over the group and undermine efforts to nudge it towards reconciliation with the Palestinian Authority (PA).
Some Palestinians share the fear that opening the border with Egypt would allow Israel to wash its hands of Gaza while also entrenching the divide with the Ramallah-based Palestinian Authority.
Zahar did not expect any serious change in policy until Egypt elects a new president, completing the transition from army rule at the end of June. “In this interim period I do not believe fundamental changes will happen,” he said. (Additional reporting by Crispian Balmer, Maayan Lubell, Ayman Samir and Ali Sawafta; Writing by Tom Perry)