Israel said it completed a troop pullout from the Hamas-ruled Gaza Strip yesterday, starting its relationship with US President Barack Obama by quitting Palestinian land devastated by its 22-day offensive.
"As of this morning, the last of the Israel Defence Forces soldiers have left the Gaza Strip and the forces have deployed outside of Gaza and are prepared for any occurrences," an army spokesman said, about 13 hours after Mr Obama's inauguration.
Israel had withdrawn most of its forces before Mr Obama was sworn in on Tuesday, in a move analysts saw as an attempt to avoid any early tensions with his administration that could cloud the start of a new era in a key alliance.
Addressing concerns in Israel that Mr Obama would soften Washington's policy towards Hamas and another Israeli foe, Iran, Vice Premier Haim Ramon said: "Let's not fear President Obama.
"I am convinced that President Obama and his team want to achieve what is essential to Israel - two states for two peoples," Mr Ramon told Israel Radio.
Israel's attacks in an offensive it launched on December 27 killed some 1,300 Palestinians and made thousands homeless. Gaza medical officials said the Palestinian dead included at least 700 civilians. Israel says hundreds of militants died.
Ten Israeli soldiers and three civilians, hit by cross-border rocket fire, were killed in the conflict.
The UN, whose secretary-general, Ban Ki-moon, toured Gaza's rubble-strewn streets on Tuesday and described the destruction he witnessed as heartbreaking, has estimated some €255 million is needed for urgent aid in the coastal enclave. Reconstruction, if it can be launched in light of the frost between Hamas and the West, may cost close to €1.5 billion, according to Palestinian and international estimates.
Although aid agencies said they planned a massive inflow of supplies through Israeli crossings, help will be complicated by the Western boycott of Hamas as a "terrorist" organisation and an Israeli blockade on many items, including building materials, that can be used to make weapons.
In his inaugural speech, Mr Obama promised to reach out to Muslims worldwide and "seek a new way forward, based on mutual interest and mutual respect".
Hailing Obama's election as "a change of historic significance", Israeli President Shimon Peres said: "What can be expected of the new president is a winning team to really rout violence from the Middle East and move the peace process forward."
Immediate diplomatic steps were likely to focus on turning the Gaza truce into a long-term ceasefire, and more comprehensive Israeli-Palestinian peace moves would have to await the outcome of Israel's February 10 Parliamentary election.
Hamas has said it was continuing talks in Cairo over Egypt's proposal for a deal that would guarantee the reopening of Gaza border crossings, including a terminal on the Egyptian frontier that had served as the territory's main exit to the outside world.
Israeli Prime Minister Ehud Olmert has declared his government's mission accomplished - noting a flurry of diplomatic efforts by the US, Egypt and European countries to prevent Hamas rearming.
That would mean as yet unspecified measures to stop Hamas smuggling weapons across the Egypt-Gaza frontier, a sensitive matter given Cairo's past efforts to play down its scope.