JERUSALEM, Oct 29 (Reuters) - The European Union cautioned Israel on Monday against imposing "collective punishment" against the 1.5 million Palestinians in the Gaza Strip by reducing the territory's fuel supplies. The protest came one day after Israel began reducing fuel supplies as part of a new sanctions policy in what Israel says is a response to Palestinian rocket fire on Israeli towns from the Hamas-controlled coastal enclave. "I think collective punishment is never a solution," Benita Ferrero-Waldner, the EU's commissioner for external relations, told reporters in Jerusalem. She said she would raise the issue in meetings with Israeli leaders during her visit. Israeli defence officials said fuel supplies would be reduced by up to 14 percent, depending on the type of fuel. Electricity cuts would be limited to about one percent for 15 minutes a day in certain areas. There was no obvious impact immediately on Gaza's electricity supply. But Palestinian officials said on Sunday that deliveries of fuel oil for Gaza's power station, as well as of diesel and petrol, were being cut from a quarter to a half. An official from the European Union, which funds fuel oil to Gaza's only electricity generating plant, said deliveries to the plant were down by about a quarter on Sunday but that it still had stocks for some seven days of operation. Israeli defence officials said the power plant would receive enough fuel to continue operating. Hamas, which seized the Gaza Strip by force from rival Fatah in June, condemned what it called Israel's "blackmail" and forecast an "explosion" that would have an effect across the Middle East. Israeli Prime Minister Ehud Olmert, weakened by last year's war in Lebanon, faces opposition within his cabinet over peace talks with Palestinian President Mahmoud Abbas, whose secular Fatah faction remains in power in the occupied West Bank. "What is the alternative?" Infrastructure Minister Binyamin Ben-Eliezer told Israel Radio. "Our duty first and foremost, despite all the name-calling, is to protect our people." Makeshift rockets have killed two Israelis this year. Palestinians argue that, as Israel continues to control Gaza's frontiers since withdrawing troops in 2005, it still has the obligations of an occupying power under international law to ensure the welfare of the population. Olmert has said he will not allow a "humanitarian crisis". Officials said the fuel cuts were designed not to affect medical and other vital facilities in Gaza, which Israel last month declared to be an "enemy entity". (Additional reporting by Dan Williams)
