The Homecoming

"I cried in blood," Fawzi al-Kafarneh told me as we walked through the ruins of his brick factory in Gaza, "all my savings of 20 years are blown away."

Unshaven and disheveled, the 58-year-old Palestinian man talked ceaselessly to himself in a low voice yesterday, sweating profusely under his flowing, tan-coloured shirt.

The Israeli army wrecking crews left his factory in smithereens as they left, much like the orange groves, homes and other factories that used to line the main road into Beit Hanoun in northern Gaza. Finally, after months under curfew - which kept workers from their jobs, farmers from their fields and children from schools - the relief is palpable.

After 1,000 days of fighting and intermittent occupation, Israeli and Palestinian commanders shook hands as bulldozers dismantled checkpoints allowing Palestinian traffic to flow freely again in the Gaza Strip. The pullback - first in Gaza, and in Bethlehem and other West Bank towns later this week, is part of the American-backed peace plan, which has gained momentum since the Iraq war.

Today the Israeli Prime Minister, Ariel Sharon, will meet his Palestinian counterpart, Abu Mazen, to discuss further confidence-building measures.

But it is a bitter return to normal life for the Palestinians. Just nine months before the start of the latest uprising, Mr al-Kafarneh invested $300,000 (£180,000) to build his factory. He now has late-onset diabetes and high blood pressure and sees no prospect of rebuilding his life, along with that of his four sons, who worked with him. "Now my family - 37 people - will eat bread and drink water. We have no livelihood," he said.

The factory, two houses and other farms are adjacent to Salah Eddin road where Israeli tanks and army vehicles have been in occupation since 15 May. The troops frequently moved in and out to try and stop militants from firing home-made rockets over the fence at the Israeli town of Sderot, less than 2km away.

As the Israelis packed up and left, the Palestinian police arrived in a convoy of blue Landcruisers only to be abruptly stopped at the outskirts. They could not proceed into the town because the Israeli troops had ripped up the main roads and destroyed three overpasses, cutting off the town from the rest of Gaza.

"You were late," Mohammed Shabat, 65, told the police taking over the Israeli positions. "But, God willing, we will bring this town back to the old days."

A bulldozer was called in to carve a path toward a nearby industrial zone, so that Palestinians could get to their jobs for the first time in two months.

The damage from seven military incursions in 33 months had left a wide swath on each side of the highway which Israel said was done to remove cover for militants firing rockets.

But their action falls foul of the Geneva Conventions which declares that: "It is prohibited to destroy ... agricultural areas for the production of foodstuffs, crops, livestock, drinking water ... for the civilian population."

Ali Zaaneen, 35, stood in the ploughed-up fields where he and his seven brothers grew cucumbers, tomatoes and okra. His four-acre farm was levelled, and nothing remains of his glasshouses. "Now I am able to go every day to my farm," he said, "but I will find nothing to harvest ... and to take to the market. What is the guarantee they will not change their minds and come back again?" he asked of the departing Israelis. "They are not far away."

Along with the plots the troops destroyed dozens of buildings, thousands of trees and a 5km stretch of road connecting the town to Gaza City. Sufian Hammad, a spokesman for the Beit Hanoun municipality, said many thousands of orange trees had been uprooted.

As the last tanks pulled out of town, two boys emerged from a house and planted a Palestinian flag in the sand.

"I hope that this will be the last time we see them as invaders," said Rafet Jamal, 45, watching from a balcony with his 12-year-old son. "It's time to rebuild our nation, our society, and replant the roots of peace." His farm had also been bulldozed by Israeli troops.

The Palestinian police, toting Kalashinkov rifles now roam the city or sit in green tents beside the rubble of their destroyed headquarters and among the ruined orchards.

As far as the eye can see around this city of jerry-built houses, the fields are empty. Palestinian vehicles move freely on the Salah Eddin road throwing up clouds of dust.

And to the north, where the tanks have withdrawn to, Colonel Asef Abu Ayman of Force 17 spoke of his intention to hunt down militants who fire their Qassam rockets onto the nearby israeli town. His men had found an old rocket on a hill overlooking the city and were blowing it up. "We will do our best to arrest those who shoot at Israel," he said.

Peter Hansen, a senior UN official said that 1134 homes had been demolished in the Gaza Strip. "The victims are simply people living in the wrong place at the wrong time," he said.