Defense Ministry objections are torpedoing a Foreign Ministry recommendation to accede to Egyptian requests to deploy an additional 750 soldiers along the Gaza-Egypt border, government officials said Wednesday, following an informal meeting on the border situation in the Prime Minister's Office. The officials said that while Foreign Minister Director-General Aharon Abramovitch presented his ministry's position that Israel should agree to Egypt's request to deviate from the terms of the 1979 peace treaty if it came with guarantees of a stricter Egyptian regimen along the border, the Defense Ministry remained opposed, believing the Egyptians could do more with their forces already in the area. Egyptian Intelligence chief Omar Suleiman, who is Israel's main interlocutor on the issue, is expected to visit soon to discuss the situation. Prime Minister Ehud Olmert, Defense Minister Ehud Barak and Foreign Minister Tzipi Livni held an informal meeting on Wednesday in which they were briefed on the security situation in the South. Reportedly, they decided construction needed to begin immediately along parts of Israel's 230-kilometer border with Egypt. Although no formal announcement was made, it is believed that work will begin near Nitzana in the northern region of the border, and in Eilat at its south. Barak had already spoken of the need to begin building the fence in those areas at Sunday's cabinet meeting, before the suicide bombing in Dimona on Monday. His call came in response to recent assessments that large numbers of terrorists from Gaza have infiltrated Sinai through the breach in the Gaza-Egypt border wall over the last two weeks, hoping to enter the Negev to carry out attacks. The construction is expected to take several years and may force across-the-board budget cuts of an estimated NIS 1 billion. Also on Wednesday, the situation in Gaza was raised during a meeting Quartet envoy Tony Blair held with President Shimon Peres. Beforehand, Blair - in the region for his monthly meetings - said that despite the Kassam rocket fire from the Gaza Strip, Israel and the Palestinians needed to focus on joint economic projects. Many industrial projects were making progress, he said. "There's an awful lot we can do. None of it is a substitute for political negotiations and the political process, but economic progress can supplement the political process." Peres said he was very pleased that Blair was back in the region to aid the economic effort. "There's very little we can do in Gaza, but a lot which we can do in the Valley of Peace, where a great deal of investment can be injected," he said, referring to an economic project he has championed in the Dead Sea area to increase regional stability and cooperation. "We must turn the [planned industrial zones in the West Bank] into a pilot that will demonstrate how economic initiatives can be advanced in conjunction with upholding security," Peres said. Blair also met separately with Olmert and Barak. Greer Fay Cashman and Itamar Sharon contributed to this report.