Hamas and Israel hold fire

GAZA (Reuters) - Israeli forces were pulling out of the Gaza Strip on Monday following a tentative truce with Hamas that allowed Palestinians to take stock of the devastating three-week war.

Bulldozers cleared rubble from streets in the Hamas-ruled territory and the Palestinian Central Bureau of Statistics said more than 22,000 buildings were damaged or destroyed, estimating a total repair bill in the enclave of at least $1.9 billion.

Military officials said troops and tanks that had poured into the Gaza Strip on January 3 as part of an offensive to counter Palestinian rocket attacks were gradually leaving, though they remained ready to tackle any flare-ups in fighting.

Israel and Hamas separately declared ceasefires on Sunday, to the relief of Western powers that, while publicly sympathetic to the Jewish state's security concerns, were alarmed by the mounting humanitarian toll in the impoverished territory.

The crisis clouded the last days of the Bush administration. It spelled Middle East challenges that U.S. President-elect Barack Obama, who is to be sworn in on Tuesday, may find no less insurmountable than those faced by his predecessors.

Palestinians emerged from hiding, agape at the killing of more than 1,300 fellow Gazans and at the widespread destruction of homes and government infrastructure.

Gaza medical officials said the Palestinian death toll included at least 700 civilians. Israel, which accused Hamas of endangering non-combatants by operating in densely populated areas, said hundreds of gunmen were among the dead. Hamas's armed wing challenged the figure, saying it lost 48 fighters.

Ten Israeli soldiers were killed as well as three Israeli civilians hit by rockets, Israel says.

Ismail Haniyeh, the head of the Gaza-based Hamas administration claimed a "popular victory" against Israel.

"The enemy has failed to achieve its goals," Ismail Haniyeh said in a speech.

Hamas's truce decision, conditioned on Israel withdrawing within a week, was "wise and responsible," he said.

Abu Ubaida, a spokesman for Hamas's Izz el-Deen al-Qassam Brigades, said "all options would be open" if Israel did not meet the group's pullout deadline.

Israel launched its air, ground and sea assault on December 27 vowing to "change the reality" for southern border towns that, since 2001, had taken fire from Hamas and other Palestinian factions armed with mostly improvised short-range rockets.

WEAPONS

Though there were sporadic salvoes on Sunday, Israeli Prime Minister Ehud Olmert declared the mission accomplished -- noting a flurry of diplomatic efforts by the United States, Egypt and European countries to prevent Hamas rearming.

That would mean as yet unspecified measures to stop Hamas smuggling weapons across the Egypt-Gaza frontier, a sensitive matter given Cairo's past efforts to play down its scope.

"Do whatever you want, bringing in and manufacturing the holy weapons is our mission, and we know how to acquire weapons," Abu Ubaida told a news conference.

Israeli Internal Security Minister Avi Dichter threatened a military response to any renewed flow of arms into the Gaza Strip, saying Israel would view such smuggling as an attack on its territory.

"That means, if smuggling is renewed, Israel will view it as if it were fired upon," Dichter told Israel Radio.

For now, Gaza's situation looks much as it did before the conflict -- armed standoff and a dim future for the 1.5 million people fenced inside the strip by a blockade aimed at punishing Islamist Hamas for rocket fire and ambitions to destroy Israel.

"I don't know what sort of future I have now -- only God knows my future after this," said Amani Kurdi, a 19-year-old student, as she surveyed the wreckage of Gaza's Islamic University, where she had studied science.

French President Nicolas Sarkozy -- joined on Sunday by leaders of Germany, Britain, Spain, Italy and the Czech Republic as current president of the EU for talks with Olmert -- called on Israel to open Gaza's borders to aid as soon as possible.

On Monday, Israel opened three border crossings to shipments of food and other basic necessities. Mark Regev, a spokesman for Olmert, said "enormous amounts" of aid could be allowed in if the quiet holds.

In Israel, the offensive was popular and bolstered the prospects of Foreign Minister Tzipi Livni and Defence Minister Ehud Barak before a February 10 election.

Yet opinion polls still predict an easy win for right-wing opposition leader Benjamin Netanyahu, who had opposed Israel's 2005 withdrawal from Gaza after 38 years of occupation, arguing that it would embolden hardline Palestinian Islamists.

(Additional reporting by Yannis Behrakis on the Gaza-Israel border, Adam Entous, Luke Baker, Alastair Macdonald, Alistair Lyon, and Ori Lewis in Jerusalem and Alaa Shahine in Cairo; Writing by Dan Williams and Jeffrey Heller; Editing by Samia Nakhoul)