Abbas signs historic agreement for control of Gaza settlement areas

After an operation whose speed and bloodlessness - so far - has boosted Ariel Sharon's standing, the Palestinian leadership is now confronting politically charged decisions over what to do with the 70 prime square kilometres left behind.

With 2,500 houses, along with the synagogues in each settlement, to be destroyed by the army, the infrastructure including utilities, along with all secular public buildings, will be handed over to the PA.

But that leaves big questions over the best ways of using the land to regenerate Gaza's devastated economy and infrastructure with its chronic housing shortages and badly depleted water supply. There is also the need to demonstrate that the PA can manage the handover in the interests of its mainly poverty-stricken 1.3m population.

The Israeli army has begun digging eight-metre trenches round the largest Gush Katif settlement block to help to prevent premature encroachments by celebrating or land-hungry Palestinians. PA sources said they did not expect a formal handover for another month as the army bulldozes the homes and itself withdraws from the area.

PA officials complain that the planning task has been severely hampered by Israel's refusal so far to allow experts into the settlement areas to conduct land-use feasibility studies. But Netzarim, the settlement just to the south of Gaza City, has already been earmarked for storage facilities for an adjacent seaport. And Morag, the settlement in southern Gaza, is the proposed site for a probable $100m (£56m) project, financed by the United Arab Emirates President, Sheikh Khalifa bin Zayed Al Nahyan, to rehouse Gazans whose homes have been destroyed by the Israeli army in the conflict.

Experts also say that much of the territory will have to be used for agriculture and nature reserves around the sand dunes to preserve the aquifer, which is in severe need of repair because of unrestricted use of it by the settlements with resulting seepage of salt water and even sewage into Palestinian supplies.

Amid widespread relief that the armed factions did not carry out feared attacks on the settlements as the disengagement took place, Mr Abbas has secured the participation of both Hamas and Islamic Jihad in a political committee which will monitor the PA's distribution of resources.

The formation of the joint committee is likely to ease fears of a land grab by Hamas to prove it will be fairer than the PA in allocating land. At the same time, Mr Abbas last week authorised the highly popular - if symbolic - bulldozing of a villa built illegally on PA land by a senior and much feared security official. It was a sign that he means what he says about the PA controlling new territory for the benefit of the people.

While international diplomats believe that much more of the new territory will be subject to private Palestinian ownership claims than the 3 per cent estimated by the PA, Mr Abbas promised in meetings with officials last week that any documented private claims to land left by the settlers would be considered by the courts.

After saturation coverage of last week's evictions, sceptical Gazans have become more optimistic. So much so that Saleh Abdel Shafi, a prominent independent economist who is a consultant to the pre-disengagement commissions set up by PA minister Mohammed Dahlan, said if anything he was concerned that expectations may actually now be too high given the time it will take for the economy to improve. "I am not pessimistic," he said. "But I am not euphoric either. We can't expect miracles here."

Mr Abbas will be hoping for at least some improvement by 25 January, the date he announced yesterday for postponed legislative council elections. But Mr Abdel Shafi says that to overcome Hamas's new campaigning message ("Four years of resistance defeated 10 years of negotiation"), Mr Abbas will need both a post-disengagement return to a peace process and the clearance of still substantial deadlocks in the current talks with Israel over vital outside access for goods and people.

The main obstacles remain a dispute over Israel's determination to maintain a presence at the point where goods cross to and from Egypt, the speed of security scanning of goods passing between Gaza and Israel, and the means of allowing individuals "safe passage" between Gaza and the West Bank. And while Israel wants to halt the daily passage of around 4,500 Palestinians with jobs in Israel from 2008, James Wolfensohn, the former head of the World Bank, is trying to persuade Israel to extend the period - and increase the numbers to around 15,000.

"Safe passage" to and from the West Bank could be crucial to another use of Gaza's assets. The coast could once again become a magnet for West Bank Palestinians and Israeli Arabs - provided they could get here.

Mr Abdel Shafi points out that big investors will remain wary as long as doubts remain about Gaza's economic strength and security. The seizure last week of a French-Algerian journalist is worrying because, unusually, there is no word of him or his captors.

All of which means those Gazans with a sober view of the future may have it right. Munir Dweik, 43, who worked in Tel Aviv before becoming a taxi driver here, was prudent in his aspirations. "One: there are 1.3 million of us and we need more space. Two: hopefully now there will be calm. Three: the checkpoints will be gone and we can travel through Gaza easily, which will be better for my work."