After Gaza: with Israel out of Gaza, the Palestinians face critical challenges and tough choices about their future.

Roughly 8,500 Jewish settlers have packed up their lives and left Gaza, where many had lived for three decades. The pullout in mid-August came a year and a half after Israeli Prime Minister Ariel Sharon declared his intention to withdraw from this narrow strip of land on the Mediterranean, captured by Israel from Egypt during the 1967 Arab-Israeli war. After years of bloody conflict between Israelis and Palestinians, Sharon's initiative to "disengage" from Gaza signifies one of the most important developments in the Middle East in recent years.

GIVING BACK LAND

This was not the first time Israel had ceded territory captured in the 1967 war. Following the 1973 Yom Kippur War, Israel returned part of the Golan Heights to Syria, and in 1982, Israel completed its return of the Sinai Peninsula to Egypt. But the Gaza pullout marks the first time that Israel has withdrawn from land that Palestinians want for an independent state.

The evacuation of Jewish settlers from Gaza divided Israelis, with about 60 percent supporting the withdrawal. About two thirds of the settlers left Gaza peacefully, but thousands defied the government's order to leave by the August 14 deadline, after which Israeli soldiers began to forcibly remove resisters from their homes. While Gaza's evacuees are entitled to compensation from the Israeli government, for those who believe that Gaza is a part of biblical Israel, the money means little.

By September 12, the Israeli military had demolished the settlers' empty houses and left Gaza as well. Palestinians celebrated by shooting off fireworks and, in some instances, setting fire to synagogues in the abandoned settlements.

While the Palestinians now have control over more territory than they have ever held, many question whether this will lead them to an independent state or a dead end.

"This is a test," says Basil Eleiwa, a Gaza businessman. "Either we prove to the entire world that we deserve to have an independent state in Gaza, the West Bank, and part of Jerusalem, or we prove the exact opposite."

Palestinian Authority President Mahmoud Abbas faces several challenges. One is stopping Palestinian terrorism: Suicide bombings have killed nearly 1,000 Israelis since the latest Palestinian uprising began in 2000. Abbas is also faced with reviving Gaza's economy and negotiating with Israel about the future of the West Bank and the 240,000 Jewish settlers there. He has urged Palestinians to take immediate advantage of Israel's withdrawal. "Today, we should start working hard to rebuild our country, to rebuild our institutions, our economy, so that we can build a noble life in peace, in security," Abbas said as the Israelis withdrew.

WHAT WILL CHANGE?

Palestinian officials insist that their options depend partly on what Israel does. Little has changed so far for Palestinians in Gaza: Israel still controls Gaza's border with Israel, its coastline, and its airspace.

Abbas also faces a threat from the militant group Hamas, which is challenging his Fatah faction in January elections. Hamas, Islamic Jihad, and other militants take credit for forcing Israel out of Gaza. They argue that Palestinians will still have to fight for more territory.

Abbas, also known as Abu Mazen, has not yet tried to collect the militant groups' weapons. He wants to incorporate groups like Hamas into the Palestinian Authority and the political process. But some Palestinians are calling him weak--the label Israel has long applied to him.

"I believe Abu Mazen doesn't have the determination to take action," says Naser Alewa, a political analyst in Gaza.

Abbas is likely to have help from abroad, including money from donors in Europe, the U.S., and Persian Gulf countries. There are already plans for a coastal highway and a new seaport that could generate thousands of new jobs.

At least a third of Gazans are unemployed. Assia Mtawa, 40, lives with her husband and seven children near the former Jewish settlement of Netzarim. She says that Israeli soldiers used to raid her house at night. "They brought dogs," she says. "It's hard for my kids to sleep."

She says she can't afford milk for her year-old son, Barah, because her husband has no work. "If the seaport means a job for my husband," she says, "I will be very happy."

Reported from Gaza by James Bennet and Greg Myre of The Times.