GAZA CITY, Gaza Strip – Israeli Prime Minister Ehud Olmert stepped up pressure on the Palestinian government Sunday, telling his military to "do all it can" to free an abducted soldier and hinting Israel might arrest more Hamas leaders.
Coming just hours after an Israeli airstrike blasted offices of the Palestinian prime minister, Olmert's threat signaled the government was losing patience with diplomatic efforts to end the crisis and preparing for a possible escalation of its military offensive.
Israel shelled northern Gaza early Monday, slightly wounding one person in a house on the outskirts of the town of Beit Hanoun, Palestinians said. The military confirmed artillery was fired in the area.
Click here to visit FOXNews.com's Mideast center.
The Israeli military said its aircraft also hit a building in Gaza City used by the Al Aqsa Martyrs' Brigades, a violent offshoot of moderate Palestinian President Mahmoud Abbas' Fatah movement. There was no immediate word of casualties in the strike early Monday.
Israeli aircraft, gunboats and artillery have pounded Gaza since troops and tanks took up positions in the south of the coastal strip on Wednesday. The operation is aimed at pressuring Palestinians to free Cpl. Gilad Shalit, the Israeli soldier abducted a week ago. Five Palestinian fighters had been reported killed, four of them on Sunday.
Israel has been massing forces across from Beit Hanoun in northern Gaza. Olmert called off a planned invasion late last week, but there were signs that the military was ready to roll again.
Hamas-affiliated militants holding Shalit have offered to give Israel information about him in exchange for the release of hundreds of prisoners in Israeli jails, a deal Israel rejects.
"These are difficult days for Israel, but we have no intention of giving in to any form of blackmailing," Olmert said Sunday. "Everyone understands that giving in to terror today means an invitation to the next act of terrorism, and we will not act that way."
Secretary of State Condoleezza Rice called Olmert Sunday to discuss the situation, Olmert's office said in a statement. He told Rice Israel would use all means at its disposal to get Shalit released and said there was no humanitarian crisis in Gaza.
Palestinian officials had warned Saturday that a shortage of fuel threatened to shut down generators used to pump water and power hospitals.
Israel reopened the main cargo crossing with Gaza to allow 50 trucks of food, medical supplies and fuel into Gaza from Israel, Israeli officials said. Trucks carrying diesel fuel, gasoline and natural gas also began entering northeastern Gaza through the Nahal Oz border crossing.
"I take personal responsibility for what is happening in Gaza. I want nobody to sleep at night in Gaza. I want them to know what its like," Olmert told his Cabinet. "People are saying it's uncomfortable. It will be uncomfortable, (but) nobody dies from being uncomfortable."
Olmert told the Cabinet he had instructed the military to "do all it can" to get Shalit back safely, but added that the offensive would end immediately if he was released, according to a meeting participant who spoke on condition of anonymity.
Last week, Israel arrested eight Cabinet ministers in the Hamas-led Palestinian government and dozens of other Hamas lawmakers in the West Bank.
Olmert indicated to the Cabinet that more such arrests may be coming in Gaza, Hamas' power base where many of its leaders including Prime Minister Ismail Haniyeh, live.
"I don't promise that the arrests of senior Hamas officials will be limited to Judea and Samaria," Olmert said, according to the meeting participant, using the biblical names for the West Bank. "Wherever there is a proven terror infrastructure, there will be arrests. There will be immunity for no one."
Egypt has been working to broker a compromise to free the soldier and end the standoff, but negotiations were complicated by confusion over who was in charge of Shalit's fate.
The Palestinian government, led by the Islamic militants of Hamas since January elections, said it had no contact with the kidnappers. Israel assumes Shalit's captors answer to Hamas leader Khaled Mashaal, who lives in Syria, but the group's foreign leadership denied having any authority over the matter.
"We have no contact with those holding the prisoner," said Osama Hamdan, a top Hamas leader based in Lebanon.
Egyptian President Hosni Mubarak was trying to enlist Syrian President Bashar Assad's help to persuade Hamas leaders to free Shalit, while Egypt's intelligence chief was talking with Mashaal directly, an Egyptian official said.
Raising the stakes, Israeli aircraft launched two missiles into the Palestinian prime minister's empty office building before dawn Sunday, damaging offices and leaving parts of the building smoldering.
"This is unacceptable," Haniyeh said. "This will not break the will of the Palestinian people."
Abbas, a rival of Haniyeh's from the moderate Fatah Party, surveyed the damage with Haniyeh and called the attack "a dirty, criminal act."
The strike, which came after Israel destroyed the interior minister's office, was a clear signal no one was immune.
"I remain very concerned about the need to preserve Palestinian institutions and infrastructure," U.N. Secretary-General Kofi Annan said Sunday. "They will be the basis for an eventual two-state solution and are thus in the interests of both Israel and the Palestinians. It would therefore seem inadvisable to carry out actions that will have the opposite effect."
Hamas militants said they would retaliate if Israel continued attacking Palestinian institutions. Hamas is responsible for dozens of deadly suicide bombings in Israel.
An airstrike Sunday hit a school in Gaza City and Hamas facilities in northern Gaza, where a Hamas militant became the second Palestinian fatality since the offensive started, Palestinian officials said. The Israeli military said the militant was "planning terror attacks against Israel."
Israeli troops later killed three armed Palestinians, two of whom were carrying explosives belts, near the long-closed airport, the military said.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox