Israel withdraws the last of its troops

Gaza: Israel withdrew the last of its soldiers from the Gaza Strip, three days after declaring a unilateral cease-fire, and warned that it was prepared to react if fighters resumed firing rockets at southern cities.

"Obviously, we will maintain a high state of alert," said Mark Regev, spokesman for Israeli Prime Minister Ehud Olmert. "If Hamas acts to undermine the ceasefire, we are ready."

The Israeli troops moved to positions on their side of the border with Gaza. Israel began pulling out its soldiers on January 18, ending a 22-day offensive that Gaza hospital officials said left more than 1,300 Palestinians dead. The Islamic Hamas movement declared a ceasefire shortly afterward.

Palestinian resistance fighters fired 12 mortar shells on Tuesday, several of which landed within Gaza while a few struck open fields on the Israeli side of the border, said Israel's army spokeswoman, Major Avital Leibovitz. Israel said its military operation in Gaza was aimed at ending rocket attacks on its southern cities and towns.

Word of the Hamas ceasefire "might not have reached all the operatives and some independent organisations," Leibovitz said. "We are taking a few days to carefully assess the situation."

Hamas has called for an end to Israel's economic blockade of Gaza, which was imposed after the movement won Palestinian elections three years ago and has been gradually tightened.

The war in Gaza may have ended but the territory remains under Hamas rule and strict Israeli sanctions, which could hinder international efforts to rebuild the devastated coastal enclave. It is not yet clear whether the US and the European Union - which blacklisted Hamas as a terrorist organisation - can carry out reconstruction projects in a territory ruled by a Hamas-appointed government.

"For a reconstruction you also need on the other side an interlocutor," EU Commissioner for External Relations Benita Ferrero-Waldner told reporters in occupied Jerusalem this week.

"So how will this be done? Is there a reconciliation process in the meantime? What will be done? All that is open. "It is very important that Gaza is open, that the crossings are opened, so that the help the international community is willing to give can arrive," EU foreign policy chief Javier Solana told reporters yesterday. EU foreign ministers were to press Israeli FM Tzipi Livni to open the border posts.

Israel prevented the Western-backed Palestinian National Authority from transferring cash to the Gaza Strip to pay its workers and others hard-hit by war, Western and Palestinian officials said yesterday.

While Israel has allowed hundreds of shipments of food and medicine into Gaza, it may not be as willing to permit much-needed building materials like concrete and metal pipes, which are also used to make home-made rockets.

Construction materials have not been allowed into the territory in 18 months. The war has caused damage estimated at around $1.9 billion (aboutDh7 billion) to Gaza's already beleaguered economy and infrastructure, according to the Palestinian central bureau of statistics.

Its figures show that since the start of Israel's offensive on December 27, around 4,100 dwelling places have been destroyed as well as 48 government offices and buildings, 31 police stations and 20 mosques.

The list also catalogues damage to roads, schools, the electricity grid and the water network, with some 14 per cent of all the buildings in the battered territory having been either damaged or destroyed. The conflict inflicted $1.9 billion worth in damage on Gaza and cost Israel $1.5 billion, said Yoram Gabai, chairman of the Pe'ilim fund-management unit of Bank Hapoalim and a former Israeli Finance Ministry official.

Arab nations failed to come up with a commitment to help reconstruction in Kuwait.

Their leaders pledged 'all forms of support for the reconstruction of Gaza' but did not agree a specific fund. It is so far unclear what role, if any, the Western-backed Palestinian National Authority headed by president Mahmoud Abbas will have in Gaza, where his forces were ousted by the violent Hamas takeover in 2007.