Fifty international aid groups and U.N. agencies on Thursday urged Israel to open Gaza's borders, saying its border blockade violates international law and indiscriminately harms Gaza's 1.6 million people.

The appeal was issued on the fifth anniversary of the imposition of the blockade, triggered by the violent takeover of Gaza by the Islamic militant Hamas in June 2007. Two years ago, Israel started allowing imports of most consumer goods, but continues to ban virtually all Gaza exports and travel through Israeli crossings.

Israel has said the blockade is meant to prevent Hamas from building up its military arsenal and Gaza militants from carrying out attacks on Israel. The Hamas founding charter calls for the destruction of Israel, and over its 25-year history, the group has killed hundreds of Israelis in shootings and bombings.

However, international aid agencies say the blockade mainly punishes ordinary Gazans by crippling the territory's economy, forcing foreign donors to spend money on humanitarian relief instead of investing in the economy.

"What Gaza needs is real development, but because of the blockade we are obliged to concentrate on humanitarian work," Filippo Grandi, head of the U.N. Relief and Works Agency, told reporters in Gaza on Thursday. UNRWA is Gaza's biggest foreign agency, supporting some 1.2 million refugees and their descendants in the territory.

Spending on emergency needs, such as food and medicine, does not address fundamental problems, Grandi said. "In fact, it's a waste of money, but a waste we are obliged to make because of the blockade," he added. He said his agency is running low on funds and, among other things, had to cancel its popular summer camps for tens of thousands of Gaza children.

In its six-decade history in Gaza, UNRWA's main roles have been supplying refugees with basic food products and operating schools.

One-third of Gaza's labour force is unemployed, and exports are at only 5 per cent of what they were in 2007, he said.

The easing of import restrictions spurred some growth, but mainly because Gaza started from a very low baseline, Grandi said, noting that the per capita GDP in 2011 remained at 10 per cent below the 2005 level.

About 60 per cent of Gazans are under 18 and youth unemployment stands at 51 per cent, according to U.N. figures.

Israeli government spokesman Mark Regev said restrictions remain in place because Hamas has not dropped its violent agenda. Over the years, Gaza-based militants have fired thousands of rockets at southern Israel, though since a major round of fighting more than three years ago, Hamas has largely held its fire. Smaller groups, however, continue to fire rockets sporadically into Israel.

Israel's government holds Hamas responsible for all violence from Gaza.

"The fundamental reason for the lack of economic development in Gaza is that the extremist Hamas regime puts its jihadist radical agenda above and beyond the interests of the people of Gaza," Regev said.

Israel withdrew soldiers and settlers from Gaza in 2005, but maintained control over access to the territory by sea and air and through Gaza-Israel land crossings. In June 2006, after Hamas captured an Israeli soldier, Israel began tightening restrictions before the full blockade was imposed a year later.

Egypt went along with Israel until the fall of President Hosni Mubarak last year. Since then, Egypt has allowed more Gazans to enter through its border crossing, but continues to impose some restrictions.

Among the signatories of Thursday's appeal were 43 aid groups and seven U.N. agencies, including the World Health Organization.

News from © The Associated Press, 2012