Defense Minister Shaul Mofaz last week, under mounting American pressure, surrendered the demand that the crossing be used only for people crossing from Gaza into Egypt. Israel had insisted that passage from Egypt to Gaza be allowed only through the Kerem Shalom crossing in the western Negev next to the Gaza region.
Mofaz was originally opposed to the Palestinian Authority (PA) demand for granting the European Union observer status but backed down Monday night, according to German and French news agencies.
The PA dropped its demands that it supervise the border without outside observers, and hopes the compromise will be a step towards turning the Rafiah passage into the main entry for people and merchandise.
Quartet envoy James Wolfensohn has publicly criticized Israel for allegedly delaying the re-opening of the crossing. PA minister Ghassan Khatib charged that Israel's demands for live cameras and the right to ban the entry of suspected terrorists represent a "refusal to coordinate in good faith."