But Mr Al-Bayu, 30, has not given up. His eyes on the Israeli withdrawal, he started rebuilding his Beach Casino restaurant last Wednesday. 'It will be even better than it was in the past,' he said. 'People will come from Gaza and the West Bank, Arabs will come from Israel and so will Jews. If there is peace, why not?'

The restaurant, which was opened by his father in 1972, shut its doors after the start of the uprising that led the army to curb access to the beach area, Mr Al-Bayu said. The day after the killing of the settler, his compatriots rampaged in al-Mawasi, torching six restaurants, including the Beach Casino, and three houses, and destroying hothouses and irrigation equipment. Mr Al-Bayu said the fire cost him US$40,000.

After Tsalach's killing, the army banned fishing from boats and began stringently controlling all movement in and out of al-Mawasi. Residents hardly leave the one-by-12-kilometre area because, they said, the wait at the Tufah checkpoint coming back could take days. According to the army, the strictures on movement were imposed to prevent attacks against soldiers and settlers. Al-Mawasi residents, the army said, had carried out, assisted or unknowingly given cover to such attacks. Recent Israeli media reports, however, described al-Mawasi as a quiet area compared with others in Gaza.

Although the unilateral withdrawal represents the first relinquishing of territory to Palestinians, who want it as part of a future state, the initiative is not necessarily what it seems. Palestinian suspicions that Israel is using the pullout as a means to avoid peace negotiations and to annex much of the West Bank were reinforced last week when Dov Weisglass, a senior aide to Mr Sharon, said that at least 180,000 of the 240,000 Israeli settlers in the West Bank would remain where they were under any future arrangements and that the US supported this. Last year, Mr Weisglass said explicitly that the Gaza withdrawal was intended to freeze the peace process. And if many of the 8,000 settlers now put up strong resistance to the withdrawal, Mr Sharon will be able to point to that as a reason why he cannot make concessions in the West Bank, an occupied area of biblical hilltops that is historically resonant for many Israelis.

While supporters of the withdrawal said it would relieve Israel of the burden of ruling over Gaza's Palestinians and help ensure a Jewish majority in Israeli-controlled territory, opponents see it as violating perceived Jewish rights to all of the biblical land of Israel. Israeli officials expect some settlers to begin streaming out towards the end of this week, while others are expected to defy the evacuation down to the last minute.

Meanwhile, an attack that killed four people last week in the Israeli Arab town of Shfaram by a Jewish right-wing extremist opposed to the withdrawal has touched off warnings of further violence in the run-up to the pullout.

In the eyes of Palestinians and the international community, economic recovery for Gaza is widely seen as depending on free movement of people and goods in and out of the Strip.

'If Israel turns Gaza into a big prison then nothing will change,' said Salah Abdul-Shafi, a political analyst based in Gaza City. 'Movement of goods and people is crucial to encourage investors and small businessmen to start up and flourish.'

But within the Palestinian public there is also worry that the newly liberated areas will be divided up for the benefit of Palestinian Authority (PA) officials and their cronies rather than that of the Palestinian people. That would mean small businessmen such as Mr Al-Bayu - whose livelihoods have been devastated during the fighting in recent years - would lose out.

'People have concerns given the past record of the PA of corruption and mismanagement, although I think [this time] there is quite a transparent process,' Mr Abdul-Shafi said.

Mr Al-Bayu said that for the past five years he had dreamed of the moment when he could reopen the restaurant. Since it closed, he said, he had been unemployed. 'I have no other work than the restaurant. There's no work in Khan Yunis. I have friends, and I took loans from each of them for food, for the house, for my children. I owe them US$38,000. I promised them I would return the money after the restaurant reopens.'

Meanwhile, Al-Mawasi fisherman Naim Abu Hanoun, 55, is hoping the Israeli withdrawal will enable him to get back to sea after four years. 'We have been living off help from outside, help from the door of Allah,' he said. The UN and the Saudi government provided his family with flour, rice and beans. Now, Mr Abu-Hanoun said he needed about US$2,000 for new netting and to fix his motor. 'If there is a withdrawal it will definitely be better than the presence of the Jews here,' he said.

His son, Mahmoud, a vegetable merchant, said that because of checkpoints and security inspections, guavas shipped from al-Mawasi to the West Bank after the start of the uprising arrived spoiled. From 2000 to 2003 he was completely out of work because of the difficulties in getting fruit to market, he said. The impending Israeli withdrawal has raised his hopes, however. 'We can ship vegetables to the West Bank, Israel, Egypt and Saudi Arabia,' he said. 'We have excellent land here for growing guavas, tomatoes, peppers, sweet potatoes and eggplants.'

This mood of quiet optimism is leading some people to action. Mr Al-Bayu's restaurant was demolished by army bulldozers in June - officials said they were concerned it could be inhabited by Israeli right-wing extremists bent on thwarting the withdrawal. But Mr Al-Bayu decided not to wait until the Israeli pullout to begin rebuilding.

His family rented the restaurant for three decades from the Khan Yunis municipality, but he fears that Palestinian Authority officials might shut him out of the beachfront's future. By clearing the rubble and laying down concrete blocks, he has re-staked his claim on the spot he occupied for so long. He has also been negotiating with a bank for a loan of the US$70,000 he said was needed to restore the restaurant.

Osama al-Fara, the Palestinian Authority mayor of Khan Yunis, was non-committal during an interview when asked if Mr Al-Bayu and the others whose restaurants were closed down and then burned by settlers would be allowed to reopen.

He says the restaurateurs stopped paying their rent after the uprising began, and that their leases were not renewed. The mayor envisions the beachfront as the linchpin in a plan to make Khan Yunis, the second largest city in Gaza, a magnet for tourists from throughout the Middle East.

'These restaurants have to be more attractive. If the people who rented before can improve them in a good way, they will have priority,' he said.

An Israeli army officer came to the beach on Thursday and ordered Mr Al-Bayu to stop building. Fearing a reappearance of the bulldozers, Mr Al-Bayu agreed to comply. But he said he planned to start building again when all the soldiers and settlers were gone.

'How would you feel if someone came and told you that you cannot build inside your own house?' he asked.