Israel should ease its Gaza blockade further and allow Palestinians to resume exports from the territory, the European Union's High Representative for Foreign Affairs and Security Policy Catherine Ashton said on Sunday during a visit to the Hamas-controlled enclave.

Open gallery view EU foreign affairs chief Catherine Ashton visiting a UN-run summer camp in Gaza July 18, 2010. Credit: Reuters

"The position of the EU is very clear: We want the opportunity for people to be able to move around freely or to see goods not only coming into Gaza but exports coming out of

Gaza," Catherine Ashton told a news conference.

Israel relaxed its land blockade of the Gaza Strip, where its Islamist Hamas enemy rules, after an international outcry over its deadly raid on a Gaza-bound aid flotilla on May 31. But it still bans exports from the territory.

Ashton said she would discuss the issue later in the day with Prime Minister Benjamin Netanyahu. "At the moment, there is no proposal on the table to open a port," she said. "The best option seems to be, and that is the most supported by Palestinians, is to open the land crossings, and that's what we're working on."

In Gaza, Ashton visited UN facilities and was due to meet local businessmen. She had no plans to see leaders of Hamas, which the EU and the United States regard as a terrorist organization.

"I hope that following the visit of the European foreign minister in Israel, she will understand that there is no humanitarian crisis in Gaza," said Information Minister Yuli Edelstein. "We have opened all we can and we have gone a long way toward the civilian population."

The EU plans to offer 22 million euros in grants to some 900 Gaza businesses to help them start up again.

Ashton visited two of the aid recipients on Sunday, Megapharm and a concrete-mixing factory.

"Megapharm was shut down for 2.5 years because of the blockade. Since the embargo was eased, production has reached about 50 percent of capacity, but potential for further growth is limited because exports remain banned," company official Husam Zendah said.

The owner of the concrete mixing factory, Teissir Abu Eida, said his factory is working at 5 percent capacity because the raw materials he needs are on the restricted list. Abu Eida produces just enough concrete to supply two international aid projects, including the repair of a Gaza hospital.

Open gallery view Palestinian Prime Minister Salam Fayyad greets EU's High Representative for Foreign Affairs and Security Policy Catherine Ashton in Ramallah July 17, 2010. Credit: Reuters

"Unless the limitations on the entry of raw materials are lifted, the easing of the blockade is meaningless," he said.

His factory was destroyed during Israel's military offensive against Gaza 19 months ago, and Ashton inspected the wrecks of cement trucks and other vehicles parked in his compound.

It was Ashton's second visit to the Gaza Strip in four months.

On Saturday, Ashton met with Palestinian Prime Minister Salam Fayyad in Ramallah.

Ashton is set to meet Netanyahu, Defense Minister Ehud Barak and Foreign Affairs Minister Avigdor Lieberman late Sunday.

Israeli media reported this week that Lieberman would be ready to make a proposal to Ashton in order to hand over security inspections of goods and people entering Gaza by and and sea to the international community.

Ashton will visit again the West Bank city of Ramallah on Monday to meet the Palestinian President Mahmoud Abbas.

The EU foreign policy representative is visiting the region as US special envoy George Mitchell is attempting to get the Palestinian and Israeli governments to move from the current indirect peace talks to direct negotiations.