GAZA CITY, Gaza Strip — Egypt's army on Wednesday launched helicopter missile attacks in the Sinai Peninsula, killing as many as 20 suspected terrorists in a lawless region where a military crackdown on smuggling routes into the Gaza Strip is worsening an energy crisis and heightening violence in the area.
The airstrikes -- the first in the Sinai since 1973 -- were carried out as part of an offensive to restore control of the peninsula after the killings of 16 Egyptian soldiers Sunday at the Kerem Shalom crossing linking Egypt, Israel and Gaza.
In a statement read aloud on state TV, the military said it has begun a joint military and police ground operation in Sinai, backed by warplanes, to "restore stability" of the Sinai, the Associated Press reported.
Egypt's military, which blames Palestinian militants across the border for Sunday's lethal assault, for several weeks has been filling in tunnels between Gaza and the Sinai that have long served as routes for smuggling people, fuel and goods -- including weapons from Libya.
"Palestinian-Egyptian relations are facing serious problems," said Hany Habib, a political scientist at Al-Azhar University in Gaza City. "The Egyptian authorities will certainly change the way they deal with the Gaza Strip concerning politics, security and even economics [because of the attack]."
Since Egyptian President Mohamed Morsi took office June 30, relations have warmed between Hamas, the Islamist militant group that governs Gaza, and Egypt's Muslim Brotherhood, which has gained political power in the wake of dictator Hosni Mubarak's ouster last year, and the movement of goods and people across the border has become easier.
But Egypt's military has been tightening security in the Sinai, where lawlessness has redoubled since last year's Arab Spring revolution left a power vacuum and al Qaeda-inspired militants have secured a foothold to launch rockets at Israel.
Analysts say most of Egypt's power still resides not with the elected Islamist-led government, but with the military, whose leaders ruled Egypt after Mubarak's overthrow and stripped the presidency of powers, which they have kept for themselves.
"What has happened in the last year and half since the revolution began in Egypt [is that] the Sinai Desert completely descended into chaos," said Yossi Mekelberg, associate fellow on the Middle East and North Africa Program at London-based think tank Chatham House. "[The crackdown on smuggling] might also be an attempt by the army to assert their authority. It says that, 'Whoever is now president, we are the ones calling the shots.'"
Sunday's violence prompted Mr. Morsi on Wednesday to fire his intelligence chief, Gen. Mohamed Murad Mowafi, and to ask his defense minister, Field Marshal Mohamed Hussein Tantawi, to replace the commander of the military police. Other top officials, including the governor of Northern Sinai, also were fired.
Analysts say Gaza is the region's real powder keg.
Israel has blockaded Gaza since 2007 to prevent militants from getting materials to launch attacks, and Gaza has relied on tunnels into the Sinai to smuggle fuel and goods. After Israel eased the blockade in 2010, the Palestinian territory began to see some economic growth.
But during Egypt's political turmoil, Gaza has struggled to cope with power shortages, and the closure of its smuggling routes threatens its frail economy.
"The situation is getting worse every day, and the lack of fuel and electricity is destroying our weak economy, which mainly depends on small- and medium-sized businesses," said Alaa Al Den Al Rafati, minister of economy for the Hamas government.
According to figures from the Gazan Ministry of Economy, three-quarters of businesses there are small- or medium-sized enterprises with little capital to cope with fuel costs, which have doubled since January. Many business owners are forced to wait in line for hours to buy a gallon of gasoline or diesel fuel, and prices fluctuate wildly from day to day.
What's more, these businesses can't afford to run generators during blackouts that often last for eight to 10 hours a day.
"Our production has decreased by half because there is no electricity," said Abdullah Al Hales, who owns a carpentry workshop in the center of Gaza City. "I can't use an electric generator anymore since the price of fuel is increasing, and I can't afford such additional costs.
"Every so often, my two sons and I have to wake up in the middle of the night to start working in order to benefit from the electricity," he said.
Agriculture is suffering because of shortage of power to pump water for irrigating crops. Manufacturing has been hit hard. Several factories have had to shut down, and those that remain struggle to maintain production.
That has led to a sharp increase in the price of food: A loaf of bread today costs about 15 percent more than it did in January.
Analysts worry about the growing desperation of the more than 1 million Palestinians in Gaza. Unemployment is at 60 percent, and 80 percent of residents live below the poverty line.
Israel took steps to alleviate the crisis by allowing some fuel through the Kerem Shalom crossing earlier this year. But the Gaza Chamber of Commerce said imports via that route have been halved since April.
"Israel is in a conundrum here because, on the one hand, they want to keep the siege on Gaza to weaken Hamas," Mr. Mekelberg said. "They don't want Gaza to prosper under Hamas because it goes against what the Israeli government declares are its interests. On the other hand, there is always the fear that Gaza will descend into a humanitarian disaster."
That is what makes the Israeli and Egyptian handling of Gaza so risky, analysts say.
"In the long term, it's a big mistake, it's a mistake on the Israeli side, a mistake in the way that Egypt dealt with it under Mubarak," Mr. Mekelberg said. "Gaza is a poor place, with high levels of unemployment, high levels of poverty. This only leads to problems and trouble and eventually to violence."
• Ruby Russell in Berlin contributed to this report.