GAZA CITY, Gaza Strip - Two years after Hamas seized power, the Gaza Strip is a jumble of absurdities: an economy sustained by smuggling through tunnels, a civil service that gets paid - on condition it doesn't work - and a population no longer fearful of gangs but feeling muzzled under the thumb of Hamas.

Under a border closure enforced by Egypt and Israel, the United Nations says, shampoo can come in but conditioner cannot. Nor can toys or candy.

The blockade was imposed on Gaza to drive the Islamic militants from power by cutting off all but basic humanitarian needs. Instead it has entrenched their power while forcing hundreds of thousands deeper into poverty and making Gaza more of an obstacle to any Israeli-Palestinian peace deal.

Voices calling for new thinking are growing louder, with the Obama administration arguing that squeezing ordinary Gazans is a recipe for instability. But there is no clear path forward, since opening the borders would require engaging Hamas, whom much of the world shuns.

Meanwhile, the closure is making it impossible to rebuild Gaza after Israel's devastating winter offensive.

It is also deepening the rift between the two territories that are supposed to comprise a future Palestinian state, with Hamas running Gaza while Western-backed President Mahmoud Abbas rules the West Bank.

With each passing day, more jobs and hope are lost.

"The pace of the downward spiral has accelerated so much and it's going to places where it will not be recoverable," said John Ging, the head of the U.N. agency whose food handouts sustain more than two-thirds of Gaza's 1.4 million people.

The Gaza Strip is surrounded by fences and a heavily patrolled coast, and Gazans are not free to leave.

For all the negative effects of the blockade, there seem to be just enough escape valves to allow Hamas to sustain itself.

While Iran spends millions of dollars to keep Hamas afloat, the Abbas government has its influence: It pays tens of thousands of Gaza civil servants' salaries, provided the bureaucrats do not work for the Hamas government.

The main reason the boycott has failed to weaken Hamas is that ordinary Gazans blame Israel, not the militants, for their predicament - though it is unclear how Hamas would fare if elections were held today.

The group has been able to keep smuggling weapons and cash through the tunnels to finance its operations, and now has 23,000 civil servants on its payroll.

Hamas has restored a sense of security, ending months of clan feuds and militia rule. Beaches are full, cops keep traffic flowing smoothly, and Hamas police have replaced gunmen who controlled the streets.

But Hamas' brand of order comes at a price. Human rights activist Khalil Abu Shammala said seven people have been killed and hundreds more tortured in Hamas custody since the war with Israel ended in January.

Abu Shammala, who lives in Gaza City, said Hamas has set up a network of neighborhood "monitors" to spy on ordinary people, who are increasingly afraid to speak their mind. With Hamas in control of the guns, a popular uprising against the group seems unlikely.

Most of the estimated 250,000 people whose homes were damaged or destroyed have been unable to rebuild.

Five months after Israel launched its offensive to halt Hamas rocket fire, the Abed Rabbo neighborhood close to Israel's border looks just as it did on the day fighting stopped: mountains of rubble.