Hamas says it's back in control of the Gaza Strip

GAZA CITY, Gaza Strip -- Bearded Hamas leaders on Friday delivered an envelope with five crisp $100 bills to a veiled woman whose house was damaged during Israel's invasion of Gaza, the first of promised relief payments by the militant group.

In another part of the territory, a bulldozer filled in a bomb crater where a week before a top Hamas leader had been killed in an Israeli air strike.

Since a truce this week ended Israel's three-week onslaught, Gaza's Hamas rulers have declared victory and gone out of their way to show they are in control.

They have pledged $52 million of the group's funds to help repair lives, the money divvied up by category.

Hamas, which is believed to be funded by donations from the Muslim world and Iran, said the emergency relief would include $1,300 for a death in the family, $650 for an injury, $5,200 for a destroyed house and $2,600 for a damaged house.

A Palestinian man searches through the rubble next to a destroyed mosque in Jebaliya, northern Gaza strip, Friday, Jan. 23, 2009. Gaza residents headed for Friday communal prayers and Israeli naval guns were largely silent as grief and shock began to mix with a palpable sense of relief in the coastal strip pounded by weeks of Israeli airstrikes and ground assaults. (AP Photo/Anja Niedringhaus)

More than 4,000 houses were destroyed and about 20,000 damaged, according to independent estimates.

But Israeli strikes destroyed all of Hamas' security compounds and most government buildings. Its top two leaders, strongman Mahmoud Zahar and Gaza Prime Minister Ismail Haniyeh, have not yet appeared in public.

Israel claims to have killed more than 700 Hamas fighters, while the militants say they lost about 280 armed men, the vast majority members of the police force killed in surprise bombings on the first day of the war.

But beyond the losses, Hamas is wrestling with a fateful choice -- whether to keep fighting and drive Gaza deeper into poverty and suffering or moderate in exchange for open borders and a measure of stability.

Gaza had buckled under a tight border closure by Israel and Egypt for 19 months, suffering increasing shortages, and the war only heightened the misery.

On Thursday, hundreds lined up with blue gas canisters along the main north-south road, near the town of Deir el-Balah, after word spread that cooking gas was being distributed.

Hamad Abu Shamla, 24, waited for seven hours, only to leave empty-handed. The unemployed carpenter -- he lost his job to the blockade -- said he last had cooking gas five months ago, and that he, his wife and four children have mostly been living on canned food and bread since then.

He said he had already promised his family a steaming plate of couscous for lunch, and was sad to return home and disappoint them.

"We build our hopes on God," he said, when asked about his future. "We don't know what to do. We are empty-handed ... and we don't know what to do."

Hamas would need huge sums to fund reconstruction -- some $2 billion according to first estimates -- but the international community for now refuses to funnel the money directly to the militants.

Yet Hamas has rebuffed proposals that it set up a unity government with its moderate West Bank rivals, led by Palestinian President Mahmoud Abbas. It is also cool to demands that Abbas' troops or foreign border monitors be deployed to prevent weapons smuggling into Gaza.

Israel and Egypt, which have kept Gaza's borders closed since Hamas seized the territory by force in June 2007, say they won't open the gates unless Hamas relents.

Before the war, Hamas was able to soften the pain of the blockade because weapons, cash and commercial goods were coming in through hundreds of tunnels under the Gaza-Egypt border. Israel says the shipments included explosives and rockets Hamas has been firing at southern Israel.

Israel bombed many tunnels during the war, though reporters have seen smugglers resume operating in some and rebuild others.

For now, most Gazans seem to rally behind Hamas, united in their anger at Israel, though there are some murmurs of discontent.

"Hamas fought the Israelis. No one else did," said Samir Summad, 66, whose four-story house was damaged during an air strike last week that killed Said Siam, a top Hamas leader.

At the time, Siam was in the house next door, and the massive bomb flattened the building and dug a deep crater into the sandy ground. On Friday, new cinderblocks were already stacked at the scene and a bulldozer pushed aside the remaining rubble.

Summad would not say whether he resented Siam for putting the neighborhood at risk. Siam was visiting a brother at the time of the strike. "If I had known he was there, I would have run away," said Summad, adding that five of his family members were wounded in the attack.

Summad said a government inspector came to his house to assess damage, including blown-out windows.

Hamas officials say the need open borders to rebuild Gaza. Yet they are evasive about how they hope to lift the blockade without easing their demands.

Hamas officials scoff at the idea of giving a foothold to Abbas, who has been increasingly sidelined, in part because he was perceived by many people as too soft on Israel during the war.

"We have a legitimate government in Gaza that came through democratic choice," said a Hamas spokesman, Fawzi Barhoum, referring to Hamas crushing victory over Abbas' Fatah movement in 2006 parliament elections.

Yet Hamas is taking a risk by sticking to a hard line that will likely keep Gaza's borders closed. Popular support could erode quickly, since most Gazans have no more reserves to withstand a continued closure.

Even before the war, the vast majority of Gaza's 1.4 million people were poor. The blockade wiped out tens of thousands of job, most factories closed for lack of raw materials and water, power and sewage systems became increasingly erratic.

Shehadeh Shehadeh, 39, a Gaza City pastry chef who learned his trade in Israel a decade ago, said he voted for Hamas in 2006 but said he believes the group must become more pragmatic.

He sold his last black forest cake a month ago and can't bake anymore because he's run out of ingredients available only in Israel. The windows of his apartment were blown out during the war, in an airstrike on the nearby Hamas government complex.

Shehadeh, like many Gazans, would like to see Hamas and Fatah reconcile and wants open borders. "I want to stop and breathe for a bit, and live," he said. "Until when will we keep saying, we want resistance and we want war?"