OTTAWA - Secretary of State Condoleezza Rice suggested Tuesday that Israel must loosen controls at border crossings to allow freer passage for Palestinians and economic development in areas that would one day be an independent Palestinian state.
Rice spoke in the Canadian capital a day after reports that a top Mideast envoy had criticized Israel for moving too slowly on negotiations to open borders around the Gaza Strip.
Israel withdrew troops and settlers from Gaza over the summer after nearly 30 years. The territory, now under Palestinian control, is on the other side of Israel from the larger Palestinian-controlled areas of the West Bank, and Palestinians must cross Israel or go through Egypt to pass between the two areas.
"It is very clear that the crossings issues need to get resolved," Rice said.
She did not specifically call on Israel to change its border policies, but did not dispute the findings of envoy James Wolfensohn that Israel was stalling in the restoration of movement across the borders.
Wolfensohn, the former World Bank president now working as a special envoy on behalf of the United States and other foreign mediators, said the delay was preventing him from moving on to larger reconstruction efforts, such as tourism, agriculture and industrial projects.
Borders "need to get freed up so that the kind of economic program we all want to see in the Palestinian territories" can begin, Rice said.
Wolfensohn is "simply asking the parties to do everything they can now that the Israelis are out of the Gaza to make sure that the Gaza is going to be a place where Palestinians can see a different kind of life and therefore start to build the foundations for a Palestinian state," she said.
In an Oct. 17 letter to the U.N. secretary-general obtained by The Associated Press, Wolfensohn said Israel was behaving almost as if the withdrawal from the Gaza Strip never happened.
Without dramatic progress soon, a rare chance to revive Gaza's shattered economy - and the peace process - will be lost, he said.
Israel closed the Rafah crossing into Egypt, Gaza's main link to the outside world, shortly before it withdrew from Gaza. It also has severely restricted the passage of Palestinian laborers and goods in and out of Israel, the main Palestinian export market, since a wave of rocket attacks right after the pullout.
Israeli officials say the measures are solely because of security considerations.
Wolfensohn acknowledged such concerns but said Israel and the Palestinians should be able to quickly resolve differences over borders.
On another subject, Rice said in Canada that the United States wants to resolve a long-standing trade dispute over Canadian lumber.
Canadian Prime Minister Paul Martin said Monday he was willing to negotiate a lumber agreement if Washington returned $3.5 billion in contested duties, and he threatened to sue if the United States wouldn't budge.
"I think it's extremely important not to speak in apocalyptic language on this," Rice said at a press conference with Canadian Foreign Minister Pierre Pettigrew.
Pettigrew blamed the U.S. timber industry for pressuring the Bush administration.
"It is a very tough lobby. You have my sympathies, Condi," Pettigrew said.
Rice smiled but did not respond.
The United States accuses Canada of sending millions of board feet of lumber from government-owned timberlands across the border at low prices, making it tough for U.S. companies to compete.
North American Free Trade Agreement panels ruled in favor of Canada and said $3.5 billion in U.S. tariffs and duties collected on Canadian lumber were not justified. The United States claims the tariffs are legal.