Crushed: the farmers caught between the Israeli army and Hamas

"We have lost our livelihood. We have lost our orange gold," said Maher al-Shawwa, walking through his ruined citrus groves. "Each tree is like my baby."

Israeli tanks pulled out of Beit Hanoun in the Gaza Strip yesterday, after what was deemed a "successful" five-day operation to stop Palestinian militants firing rockets into Israel. The withdrawal was seen by some as a positive sign towards possible implementation of the "road-map" to Middle East peace. But first, the Israelis bulldozed Mr Shawwa's 6,000 orange and lemon trees "to prevent Hamas militants using them as cover". Touching one of his toppled trees, Mr Shawwa said: "I took care of it for 15 years. It produces at 15. When it is 40, I can make a profit." He estimated his loss at hundreds of thousands of dollars, adding: "I have been set back 40 years."

Mr Shawwa, 42, is from a wealthy landowning family. One of his workers, Ibrahim Hussein, 59, was sleeping outside his small home in the midst of the groves when the bulldozers arrived. "They fired three shots at me and told me to stay inside," he said. "I saw five bulldozers."

As the farmworkers gathered fallen oranges from the crushed green branches, he went on: "They destroyed the farm. I have lost my salary, and so have 20 other farmers." Around him lay ripped irrigation pipes, flattened fences and a heavy iron gate, bent by the blade of a bulldozer.

Mr Shawwa, Mr Hussein and the rest of Beit Hanoun's 35,000 people are caught helplessly between the shadowy activists of Hamas and Israeli retaliation. During the five-day army occupation, seven people were killed, 15 houses were demolished and the local economy was destroyed, according to the town's inhabitants. "But will it stop rockets being fired?" asked Beit Hanoun's mayor, Sufian Hamad. "Absolutely not."

Beit Hanoun lies at the northern end of the Gaza Strip. Last week, the Israeli Prime Minister, Ariel Sharon, meeting the Palestinian Prime Minister, Mahmoud Abbas, also known as Abu Mazen, proposed putting the area under the full responsibility of Palestinians for a month, during which the Palestinians should stop rockets being fired at Israel.

"Abu Mazen accepted that. But he told Sharon that he should first accept the road-map," said Brigadier Mohammad al-Masri, head of political security in the Palestinian intelligence organisation. The same day, the Israeli army moved into Beit Hanoun. The meeting between the leaders ended on Saturday without agreement or a date for another meeting, although Mr Sharon's staff say talks will continue.

"We cannot stop all the attacks of the militants in all areas without Israel stopping its assassination assaults and military raids," Brigadier Masri said. "The Palestinian people will not support us cracking down on the militants if Israel does not stop its aggression."

Israel says lifting its closure of the Palestinian territories would trigger more suicide bombing attacks, after a spate of at least five in recent days killed 13 Israelis. But Brigadier Masri said: "If you want to make peace, you cannot expect a dramatic halt of all hostilities. You have to take one bullet here and one bullet there."

A Palestinian security official inspecting the damage at the citrus farm said: "It is a ping-pong between the Israeli army and the Hamas extremists. We have clear orders to stop the Hamas militants, but we cannot fire at them. We have no orders to commit a massacre."

Three weeks ago, the officer said, the Palestinian Authority's forces spotted more than 10 Hamas militants in two trucks east of Beit Hanoun. "We told them, 'You cannot fire. It is against the law.' They drove away, but they fired from another area. Last night [on Sunday], they fired from east of Jabalya. Israel will destroy the citrus there sooner or later."

The Israeli army had fired at Palestinian policemen who set up checkpoints at the orchards to stop rocket attacks, said the officer. Three policemen had been killed. "We have been caught between Hamas extremists and the oppressing policies of Ariel Sharon," he said. "Hamas refuses to give Abu Mazen a chance, and the Israeli army fires at our policemen, who are protecting the security of Israel."

None of this does anything to contain the simmering anger in Beit Hanoun, where fresh graffiti on the walls proclaims: "We will not drop our weapons. Our only option is the jihad [holy war] of al-Qassam" - the military wing of Hamas.

Hisham al-Shanbari, a 37-year-old sports instructor, was sitting outside the ruins of his house, bulldozed because his brother Mahmoud was among four people from Beit Hanoun on a wanted list. "My brother works in Palestinian intelligence," he said. "They came to arrest him several times. On Thursday, two bulldozers knocked the house down."

Mr Shanbari said none of his family was involved in rocket attacks, but added: "Rockets filled with explosives are not effective today. But tomorrow they will be filled with chemicals."

The two-roomed house next door was also bulldozed. "I pulled my three children quickly out of the way as the jaws of the bulldozer hit the wall," said Said Nusseir, 38, who is unemployed. "This is a crime. Why are they punishing me?"

Another neighbour, Nabil al-Zaneen, was mourning his 14-year-old son, Muhammad. "I was painting a wall on the first floor," he said. "I asked Muhammad to bring me a bucket of paint. He went a few metres and stooped to pick up the bucket when he was hit in the head by a bullet fired from a building 50 metres away, which was occupied by the army. He fell on the ground. My brother, who is a nurse, tried to make him breathe, but he died.

"Is he a terrorist? Is he a rocket shooter? Why did they kill him?"

The worst collective punishment on Beit Hanoun, however, is the destruction of more than 70 per cent of its citrus groves since the beginning of the uprising 32 months ago. In the latest occupation 300 hectares were bulldozed, bringing the total to 1,000 hectares.

"Will this stop terrorism?" asked Mr Shawwa. "It is leading to the opposite.

"I, my uncle and my two aunts have lost 2,500 citrus trees. [This] is more than a catastrophe. It is real terrorism. It will generate terrorism."