NEVE DEKALIM, Gaza Strip (Reuters) - Israel lowered its flag over the Gaza Strip on Sunday, clearing the way to complete a troop pullout and hand the territory over to the Palestinians on Monday after 38 years of occupation.
Their bases dismantled and the Jewish settlements they guarded in ruins, several thousand remaining soldiers moved quickly into the final stages of a withdrawal that will leave the Palestinians with a volatile testing ground for statehood.
As the sun set, the Israeli army carried out a symbolic flag-lowering ceremony at Neve Dekalim, one of the 21 Gaza enclaves evacuated and demolished under Prime Minister Ariel Sharon's plan to disengage from conflict with the Palestinians.
"Tomorrow, Monday, September 12, 2005, the Israeli army's 38-year presence in the Gaza Strip will come to an end," Lieutenant-General Dan Halutz, the military's chief of staff, said at the ceremony. "We are leaving with our heads high."
Thousands of Palestinians waited to pour into Neve Dekalim.
"We are full of happiness and impatient to see the Israelis rolling out of our area for good. It will be our happiest day in decades," said one of those in the crowd, Sami Abu-Akar, 35.
As the crowd pressed to enter the abandoned settlement, Israeli troops shot and wounded three Palestinians, witnesses said.
The clash occurred near a fence where Israeli troops remained on guard as commanders carried out the flag-lowering ceremony nearby.
While welcoming the pullout, the Palestinian Authority fears Sharon is trading Gaza, home to 1.4 million Palestinians, for permanent hold on larger areas of the occupied West Bank where 245,000 Jewish settlers live isolated from 2.4 million Arabs.
Like most twists in the Israeli-Palestinian conflict, the impending pullout, hailed by the United States as a chance to resume peacemaking, was marred by dispute and recriminations.
The last obstacle to the army's exit was cleared when Israel's cabinet decided not to level 19 settlement synagogues, unlike settlers' homes demolished in last month's evacuation, and leave their fate to the Palestinians.
The Palestinian Authority accused Israel of trying to saddle it with the blame internationally if Jewish houses of worship were defaced by Palestinian crowds targeting hated symbols of the occupation of the tiny coastal territory.
"Isn't the Israeli government, in such a decision, trying to put us in a corner? Damned if we do, damned if we don't?" said Palestinian chief negotiator Saeb Erekat.
The cabinet, including Sharon himself, reversed an earlier decision to raze the synagogues after rabbis said destroying them would be a greater sin than their possible desecration by Palestinians.
"The cabinet has unanimously approved...the formal cancellation of the military government in Gaza," Sharon's office said in a tersely worded statement.
AWAITING THE ORDER
Troops were waiting in and near their armoured vehicles for the order to roll into Israel overnight in a pullout security sources said could be completed in 12 hours.
The withdrawal is likely to win Sharon international accolades when he addresses the U.N. General Assembly in New York on Thursday.
Palestinian cabinet member Mohammed Dahlan said, however, that Israel was deluding itself if it believed it was totally ending its occupation of Gaza while continuing to control the tiny territory's border crossings, air space and territorial waters.
Sharon stoked Palestinian anger when he reiterated in a Washington Post newspaper interview that, despite U.S. objections, Israel would keep building in West Bank settlement blocs it intends to keep under any future peace deal.
In a sign of tension, the army called off a handover ceremony at the Gaza border on Sunday after Palestinians said they would boycott it in anger over Israel's failure to agree on allowing freedom of movement to and from the strip.
Palestinian security forces in riot gear prepared to take up positions inside the settlements.
"I can see tears in my men's eyes. It is our big day, the day of every Palestinian," said Maher Zeyara, head of the national security forces in the southern Gaza town of Rafah.
The Palestinian Authority's official festivities will have to compete with parades by militants claiming victory over the Jewish state.
Armed factions are largely observing a truce that Palestinian President Mahmoud Abbas engineered with Israel, whose leaders have called on him to show he can rein in gunmen and assert control over land Palestinians want as part of a state.
Sharon's critics on the right call the Gaza pullout a betrayal of Jewish claims on biblical land and a reward for a Palestinian uprising.
Palestinians say occupation of Gaza will not truly be over unless Israel relinquishes control of border crossings with Egypt, allows unimpeded travel to and from the strip and lets them operate air and sea ports, issues still under discussion.
The Israeli cabinet's decision to leave the synagogues intact heeds religious sensitivities and could help Sharon face down a revolt by right-wingers inside his Likud party seeking to topple him as chairman before the next election.
Polls show most Israelis backed removal of Gaza's 8,500 settlers.
(Additional reporting by Jeffrey Heller and Allyn Fisher-Ilan in Jerusalem, and Nidal al-Mughrabi in Gaza)
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