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Last week, along with dozens of crude homemade rockets, militants fired a longer-range Katyusha at an Israeli city, and Israel stepped up its retaliation.

``There is no doubt that this constitutes an intensification and escalation in terrorism perpetrated by terrorist organizations in the Gaza Strip,'' Israeli Prime Minister Ehud Olmert said Sunday before his Cabinet discussed the issue. He said his defense minister ``has ordered security forces to intensify the Israeli response.''

Five Palestinians, including two civilians, were killed by Israeli strikes in Gaza Sunday. One man was caught in crossfire, and a woman was killed when a projectile struck a house, witnesses and a Palestinian health official said.

Israel has been waging its military campaign in Gaza while trying to negotiate with the moderate West Bank-based government of Palestinian President Mahmoud Abbas. Leaders of the two sides plan to meet a day before Bush arrives on Wednesday.

Immediately after Islamic Hamas militants seized control of the Gaza Strip in June, Israel sealed its border with the territory, cutting off the flow of all but humanitarian supplies. In October, it began to scale back fuel shipments.

On Sunday, Kanan Obeid, chairman of Gaza's Hamas-run energy authority, said Gaza now has only 35 percent of the power its 1.5 million residents need.

Israel supplies all of Gaza's fuel and 60 percent of its electricity. Even before the latest cutback, blackouts were common in the territory because Israeli strikes have knocked out electrical transformers.

But the impending cutoffs deepened the misery of its impoverished people as winter set in. They directed their frustration at Israel.

``The Israeli policy is not against Hamas, it is against us, the ordinary people,'' said Hassan Akram, owner of a grocery in Gaza City.

Reem Abu Ali, 38, a teacher and mother of four, stopped by the grocery to buy candles.

``This is a crazy life,'' she said. ``My children have exams. How will they study? How are we going to warm our houses?''

Israeli government spokesman David Baker said the fuel cutbacks were ``geared to exerting pressure on the terrorists to cease'' their rocket attacks, but he added Israel would maintain supply of vital goods and services.

Ten human rights groups appealed to Israel's Supreme Court to stop the measure. Sari Bashi, director of Gisha, one of the groups, said in a statement that the fuel reductions ``mean longer and more frequent power outages for hospitals, water wells, and other humanitarian services, in blatant violation of international law.''
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