Hamas leaders in Gaza declared victory over Israel on Thursday, and thousands of flag-waving supporters rallied in celebration as the battered territory entered its first day of calm under an Egyptian-brokered truce that ended the worst cross-border fighting in four years.
Eight days of punishing Israeli airstrikes on Gaza and a barrage of Hamas rocket fire on Israeli ended inconclusively. While Israel said it inflicted heavy damage on the militants, Gaza's Hamas rulers claimed that Israel's decision not to send ground troops into the territory, as it had four years ago, was a sign of a new Hamas deterrent power.
"Resistance fighters changed the rules of the game with the occupation (Israel), upset its calculations," Gaza Prime Minister Ismail Haniyeh of Hamas, who had attended the rally, said later in a televised speech. "The option of invading Gaza after this victory is gone and will never return."
At the same time, Haniyeh urged Gaza fighters to respect the truce and to "guard this deal as long as Israel respects it."
The mood in Israel was mixed. Some were grateful that quiet had been restored without a ground operation that could have cost the lives of soldiers. Others - particular those in southern Israel hit by rockets over the past 13 years - thought the operation was abandoned too quickly.
Israeli Prime Minister Benjamin Netanyahu said the offensive's aims of halting Gaza rocket fire and weakening Hamas were achieved. "I know there are citizens who were expecting a harsher response," he said, adding that Israel is prepared to act if the cease-fire is violated.
Despite the tough talk, the cease-fire raised hopes of a new era between Israel and Hamas. The two sides are now to negotiate a deal that would end years of Gaza rocket fire on Israel and open the borders of the blockaded Palestinian territory. Talks are supposed to begin sometime after a 24-hour period that began with the cease-fire late Wednesday.
However, the vague language in the agreement and deep hostility between the combatants made it far from certain that the bloodshed would end or that either side will get everything it wants. Israel seeks an end to weapons smuggling into Gaza, while Hamas wants a complete lifting of the border blockade imposed in 2007, after the Hamas takeover of Gaza.
Israel launched the offensive Nov. 14 to halt renewed rocket fire from Gaza, unleashing some 1,500 airstrikes on Hamas-linked targets, while Hamas and other Gaza militant groups showered Israel with just as many rockets.
The eight days of fighting killed 161 Palestinians, including 71 civilians, and five Israelis. Israel also destroyed key symbols of Hamas power, such as the prime minister's office, along with rocket launching sites and Gaza police stations.
In Gaza, the announcement of a truce late Wednesday set off frenzied street celebrations.
"Today is different, the morning coffee tastes different and I feel we are off to a new start," said Ashraf Diaa, a 38-year-old engineer from Gaza City.
Hundreds of masked Hamas fighters, who had slipped out of sight during the offensive, appeared in public for the first time Thursday during a funeral for five of their comrades. The armed men displayed grenade launchers and assault rifles mounted atop more than 100 brand-new pickup trucks.
The latest round of fighting brought the Islamists unprecedented political recognition. During the past week, Gaza became a magnet for visiting foreign ministers from Turkey and several Arab states - a sharp contrast to Hamas' isolation in the past.
Israel and the United States, even while formally sticking to a policy of shunning Hamas, also acknowledged the militant group's central role by engaging in indirect negotiations with them. Israel and the West consider Hamas a terrorist organization.
Israeli Defense Minister Ehud Barak defended his decision not to launch a ground offensive. Barak was also defense minister during Israel's previous major military campaign against Hamas four years ago, which drew widespread international criticism and claims of war crimes.
"You don't get into military adventures on a whim, and certainly not based on the mood of the public, which can turn the first time an armored personnel carrier rolls over or an explosive device is detonated against forces on the ground," he told Israel Army Radio.
"The world's mood also can turn," he said, referring to warnings by the U.S. and Israel's other Western allies of the high cost of a ground offensive.
President Barack Obama had personally lobbied Netanyahu to avoid a ground offensive and give the cease-fire a chance.
Egypt, meanwhile, emerged as the pivotal mediator, raising its stature as a regional power.
Egyptian President Mohammed Morsi will now have to assume a more direct role as a referee between Israel and Hamas, at a time when he faces many domestic challenges, including reviving a faltering economy.
Hamas leader Khaled Mashaal and the head of the smaller Islamic Jihad militant group Ramadan Shalah met with Egypt's intelligence chief Thursday as the follow-up talks geared up.
Reaching a deal on a new border arrangement for Gaza would require major concessions from both sides.
Hamas wants both Israel and Egypt to lift all border restrictions.
In 2007, Israel and Morsi's pro-Western predecessor, Hosni Mubarak, sealed the territory, banning virtually all travel and trade. Israel eased its restriction somewhat in 2010 in response to international pressure, allowing Gazans to import consumer goods, while barring virtually all exports and travel. Gaza's battered economy recovered slightly, but the ban on exports prevented it from bouncing back fully.
After Mubarak's fall last year, Egypt eased travel through its Rafah crossing with Gaza. However, Morsi has rebuffed Hamas demands to allow full trade ties with Gaza, in part because of fears this would give an opening to Israel to "dump" Gaza onto Egypt and deepen the split between Gaza and the West Bank.
Palestinians hope the West Bank and Gaza, which lie on opposite sides of Israel, will one day make up the bulk of a Palestinian state. Israel has barred most travel between them during the past decade and closer ties between Egypt and Gaza could exacerbate the division.
Egypt is unlikely to implement major changes at the Rafah crossing, said a senior member of a Palestinian Islamic faction involved in the truce talks in Cairo.
Both Morsi and Hamas belong to the region-wide Muslim Brotherhood, but during the truce talks, Morsi acted more like a mediator than a fellow Muslim Brother, said the Islamist, who spoke on condition of anonymity because he was not authorized to discuss the details of the closed-door meetings with reporters.
Israel, meanwhile, wants Egypt to halt weapons smuggling across its Sinai region into Gaza, through smuggling tunnels under the border.
Hamas has been able to significantly boost its arsenal in the past four years, largely with weapons from Iran, according to Mashaal, who thanked Tehran for its support late Wednesday.
The Palestinian negotiator said Iran sent Russian-made anti-tank missiles to Gaza after the last Israeli offensive, and claimed that these weapons helped deter Israel from launching a ground offensive.
As part of the cease-fire, Israel received U.S. pledges to help curb arms shipments to Gaza.
The fighting gave a major boost to Hamas' popularity, not only in Gaza, but also in the West Bank, where the Islamists' internationally backed rival, Palestinian President Mahmoud Abbas, oversees a self-rule government.
Abbas, the leading Palestinian proponent of non-violence and negotiations with Israel, was forced to watch from the sidelines as his bitter rivals scored political points by using rocket fire on Israel as leverage.
A senior Abbas aide, Nabil Shaath, stood alongside Hamas leaders during Gaza City's victory rally Thursday. Despite the symbolism, it was not clear whether the two sides would be able to mend their rift.
Within hours of the truce, life regained a degree of normality after fighting that pinned down hundreds of thousands of people in their homes on both sides of the Gaza-Israel border.
In Gaza, men swept streets and bulldozers removed debris and fallen trees, remnants of the airstrikes. Shoppers crowded outdoor markets to stock up on fresh fruits and vegetables. During the night, gunmen fired into the air in joy, and one man was killed and three wounded by the random celebratory fire, a health official said.
"We are back to business," said Iyad Radwan, a 23-year-old employee in a Gaza City window repair shop that had received 60 orders by mid-morning to fix damage. "Now it's time for rebuilding."
In southern Israel, schools remained closed as the region slowly came back to life.
In the hard-hit border town of Sderot, which has suffered years of rocket fire, few people were outdoors and most businesses remained closed. The coastal city of Ashkelon was closer to normalcy. Businesses were reopening, but suffered from shortages of supplies and staffers who had fled.
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