Warplanes bombed militant training camps and artillery rounds were fired within earshot of Gaza Strip Wednesday as Israel kept up the pressure on Palestinian militants to release a captured Israeli soldier.
Palestinians filled up on basic supplies after warplanes knocked out electricity, raising the specter of a humanitarian crisis. The Hamas-led Palestinian government warned of "epidemics and health disasters" because of damaged water pipes to central Gaza.
They responded to the Israeli incursion by calling for a prisoner swap to solve the crisis.
Militant groups holding the Israeli soldier had proposed an exchange for the release of Palestinian prisoners, but it was the first time the government had made such a request.
It is "natural logic" to carry out an exchange, a statement released by the Information Ministry said.
"This has been exercised by previous Israeli governments with Hezbollah and the PLO, and this is what other countries do in conflict situations," the statement said.
Israeli Prime Minister Ehud Olmert said there will be no negotiations and called for the unconditional release of the soldier, 19-year-old Cpl. Gilad Shalit. Olmert said Israel did not intend to reoccupy Gaza but would not balk at "extreme action" to bring home Shalit, who was captured in a cross-border raid on Sunday.
But if Israelis do not negotiate a swap, Palestinian militants will conclude "that they should capture more soldiers," Hamas' representative in Lebanon, Osama Hamdan, told The Associated Press.
"The message for the resistance is to kill soldiers, even if they have the opportunity to capture them," he said.
Palestinians readied weapons and fortified positions in preparation for a major strike after Israel sent troops and tanks across the border just after midnight local time. No casualties have been reported since the offensive began.
Tension rose as Israel artillery units opened fire near Gaza City, causing loud explosions but no injuries or damage. The Israeli Defense Forces (IDF) said the units were test-firing the weapons and had not fired at a specific target.
Residents of northern Gaza, preparing for what they feared could be a long military operation, stocked up on food, candles and batteries for radios as a minister warned of a "humanitarian crisis."
The White House continued pressuring Hamas, saying it was the responsibility of the Palestinian government to "stop all acts of violence and terror." But the United States also urged Israel to show restraint.
"In any actions the government of Israel may undertake, the United States urges that it ensures that innocent civilians are not harmed, and also that it avoid the unnecessary destruction of property and infrastructure," White House press secretary Tony Snow said.
It was Israel's first ground offensive since pulling its soldiers and settlers out of Gaza last summer.
Palestinian President Mahmoud Abbas deplored the incursion as a "crime against humanity," and a leading Hamas politician issued a call to arms against the Israeli troops.
Meanwhile, concerns about the fate of a missing West Bank settler grew after militants claiming to hold him displayed what they said was a copy of his identification card.
Also, a group affiliated with Abbas' Fatah party claimed to hold a third Israeli and threatened to attack an unspecified Israeli embassy within days.
Israeli Troops Enter Gaza With 'One Objective'
Israeli tanks and soldiers began taking up positions east of Rafah overnight under cover of tank shells, witnesses and Palestinian security officials said. Capt. Jacob Dallal, a military spokesman, said troops moved a mile inside the coastal strip.
He said the army was prepared for a long operation, and "everything is on the table."
Israeli warplanes fired at least nine missiles at Gaza's only power station, cutting electricity to 65 percent of the Gaza Strip, engineers at the station said. The station's three functioning turbines and a gasoline reservoir were engulfed in flames.
Wasfi Kabha, the Palestinian minister of prisoner affairs, said the Israeli attacks were creating a "humanitarian crisis."
"They hit the bridges, they hit the power station, so there will be a problem in water supply and health services," he told the British Broadcasting Corp.
Areas in northern Gaza that receive electricity from Israel still had power, and generators relieved darkness in other places.
The Israeli military said three bridges were attacked "to impair the ability of the terrorists to transfer the kidnapped soldier." Knocking down the bridges cut Gaza in two, Palestinian security officials said.
Witnesses reported heavy artillery shelling near the long-closed Gaza airport outside of Rafah. Warplanes flew low over the strip, rocking it with sonic booms and shattering windows.
Fighter jets repeatedly fired missiles at open fields in northern and southern Gaza in a show of force, the military said. Two missiles hit empty Hamas training camps, witnesses said. Separately, Israel attacked a rocket-making factory in the area.
"We won't hesitate to carry out extreme action to bring Gilad back to his family," Olmert said. "All the military activity that started overnight will continue in the coming days.
"We do not intend to reoccupy Gaza. We have one objective, and that is to bring Gilad home."
Shalit was captured Sunday during an attack on a southern Israeli military post by militants affiliated with the Palestinians' ruling Hamas party. Israel believes the group's Syria-based leaders ordered the operation.
Hamas' Syria Political Chief Faces Reprisal; Warplanes Fly by President's Home
Israeli Justice Minister Haim Ramon said Hamas' Syria-based political chief, Khaled Mashaal, was "not immune" from Israeli reprisal.
"Khaled Mashaal, as someone who is overseeing, actually commanding the terror acts, is definitely a target," Ramon told Army Radio. The station interpreted his comments as meaning Mashaal was a target for assassination.
Israel tried to kill Mashaal in a botched attempt in Jordan in 1997. Two Mossad agents injected Mashaal with poison but were caught. As Mashaal lay dying in a Jordanian hospital, King Hussein forced Israel to provide the antidote in return for releasing the Mossad agents.
Ramon told Israel Radio in a separate interview that he believed diplomacy had run its course.
Abbas deplored the Israeli invasion, calling it "collective punishment and a crime against humanity," and he urged the United States and other international negotiators to intervene, according to a statement.
An aide said Abbas called Syrian President Bashar Assad to ask him to persuade Mashaal to free the soldier. Assad promised to do so, the aide said on condition of anonymity because he was discussing private talks.
Israeli warplanes on Wednesday buzzed Assad's summer residence, military officials said, in a message aimed at pressuring the Syrian leader to win the release of the captured Israeli soldier.
The officials said Assad was targeted because of the "direct link" between Syria and Hamas.
Deputy Prime Minister Nasser Shaer of Hamas said his government, too, was trying to resolve the situation diplomatically.
"We call for an immediate halt to the invasion, and urge that the soldier's life be spared," Shaer said.
Strike Leaves Empty Streets; Dozens Seek Sanctuary
The normally bustling streets in southern Gaza, where the invasion was launched, were eerily deserted, with people taking refuge inside their homes. The Rafah crossing between Gaza and Egypt — Gaza's main link to the outside world — has been closed since Sunday.
Israeli troops, backed by tanks, took over the Gaza airport. Dozens of people living near the airport left their homes, seeking sanctuary in nearby Rafah.
A small grocery near the airport was open, but no one was inside except owner Allah Abu Jazr.
"We want the soldier to return home, just as we want our prisoners to come home," Abu Jazr, 45, said.
Militants said they fired rockets early Wednesday at several Israeli targets, including Nahal Oz, the Israeli forces' staging area.
Kidnappings Aggravate Tense Relations
Shalit's abduction has threatened to turn devastated relations between Israel and the Hamas-led government into all-out war. Hamas took over the Palestinian Authority after winning parliamentary elections in January and has been under international pressure to renounce violence and recognize Israel.
Complicating matters was a new claim by the Popular Resistance Committees, one of the three groups that carried out Sunday's assault, that it had also kidnapped a Jewish settler, 18-year-old Eliahu Asheri, in the West Bank.
Outside a Gaza City mosque, PRC militants displayed what they said was a copy of Asheri's ID card and reiterated threats to kill him if Israel did not end the invasion.
The group also warned that it had just begun its campaign to seize soldiers.
"The operation of kidnapping soldiers has started and is in a countdown," spokesman Mohammed Abdel Al said.
Separately, a statement obtained by the AP and signed by Abu Fouad, a spokesman for the Al Aqsa Martyrs' Brigades in Gaza, said the group was holding an unidentified 62-year-old Israeli from Rishon Lezion.
The statement said the man was kidnapped Monday and that more evidence would be released later.
Israeli police spokesman Micky Rosenfeld said police had a missing persons report concerning a man identified as Noah Moskovitch.
Palestinians Call for Prisoner-Swap, Laud Abductions
In a separate statement, Al Aqsa said it planned to attack an unspecified Israeli embassy soon.
Despite the ground and air assault, many Palestinians in Gaza said they saw the kidnapping of the Israeli soldier as a military action and expressed the feeling that he should not be released without major concessions from Israel.
"Even if they slaughter 100,000 Palestinians, this is a chance that can't be lost. It's the only way the prisoners will be able to get out," said Bassem al Khoudry, 35, owner of a fast food stand in Gaza City. "If they release him with nothing in return, they would betray their nation, their prisoners."
Abdel Fatah al-Aila, a 61-year old engineer in Gaza, called the abduction a "courageous" operation that followed Israeli attacks that killed Palestinian civilians. Israel has been shelling northern Gaza and carrying out airstrikes targeting militants in response to a wave of rocket attacks into Israel, and some civilians have been killed.
"This is not kidnapping, but a military operation against a military target," al-Aila said.
Palestinians said they were confused by Israel's refusal to negotiate an exchange.
Palestinian prisoners are no less "precious" than Lebanese prisoners, said Nihaya Armelad, a 31-year-old mother of five who lives in the southern town of Rafah, which would likely be the front line of any Israeli ground assault.
"They have to exchange him for [Palestinian] prisoners," Armelad said. "They haven't seen their children in years. We are [humans] just like the Israelis."
Since the abduction, prisoners' relatives have marched through Gaza's streets demanding their family members be released in exchange for his freedom.
Sanaa Hirz, 44, said she was willing to weather attacks from Israel if it would bring the release of her husband, a Fatah activist who has been in prison for 22 years.
"Gazans are used to missiles, assassinations, artillery. Every day there is death. Death is a natural thing," she said. "Let it come ... it is better with honor."
The Associated Press contributed to this report.