Landmark deal

The historic agreement signed on Wednesday would see the formation of a unity government within five weeks and elections set by current Palestinian President Mahmoud Abbas within six months.

Hamas Prime Minister Ismail Haniyeh told journalists gathered in Gaza that it was an honor to have reached an agreement with Fatah. Earlier this week he released six Fatah prisoners as a statement of willingness to further reconciliation efforts with Fatah.

"I am happy to declare the end of the period of inter-Palestinian division," said Haniyeh.

The two parties seemed more than amicable when they made the announcement in a hotel in northern Gaza, as if their violent split in 2007 was long forgotten. Their split was the result of a push to get Fatah forces out of the Gaza Strip with force and the strip has been ruled by Hamas ever since.

Haniyeh told reporters at the press conference in Gaza the deal would mean previous reconciliation agreements would be upheld. "We agreed to implement all the articles that were agreed in the past according to agreements in Doha and Cairo."

The vote for president, the legislative council and the Palestine Liberation Organization will take place at the same time as the election in six months. A special PLO committee will meet within five weeks to discuss what is expected of the organization from the initiation of the agreement.

People on the street

Gazans gathered outside the home of Haniyeh as the news was broadcast by local news networks across Gaza.

Children from Al-Shati refugee camp adjoining Haniyeh's house crowded around broadcasting trucks to get a glimpse of the news.

Another crowd gathered in the Square of the Forgotten Soldier in central Gaza as the news started reaching people in the street. The group in the square chanted "I swear to God the division is dead; the division is out of the house, my people are happy."

"Unity, freedom, dignity and humanity," they yelled and sang.

Wearing a black and white keffiyeh and a Che Guevara t-shirt, Samah Ahmad said she was still skeptical about the agreement.

"I will believe in reconciliation if I touch it on the ground. We're still looking for freedom; we're still looking for humanity; we want to feel we're one. I will believe it when I see it," she told DW.

Ahmad said reconciliation between Fatah and Hamas would not be a silver bullet for a stifled economy. "Gaza needs everything, not only the economy - we need health care, we need the borders to be open and we need freedom of movement. Societal reconciliation is more important than political reconciliation, because we believe that the leaders can have a good relationship, but the reconciliation should be with the people themselves."

Rehab Kenan, a woman wrapped in a Palestinian flag, posed for local media gesturing with a peace sign. "We've been waiting a long time, years for this to happen. We thank our leaders for the happiness they have brought us. We wish the reconciliation to be a continuous one, congratulations to Gaza, there have been eight generations waiting for this.I have two sons and this reconciliation will offer work and build their future," she told DW.

Economy cries out for change

Prior to an agreement being announced, DW spoke to strawberry farmer Mansour Albudi on the northern boarder of the Gaza Strip near the Erez Crossing into Israel.

He exports strawberries to Europe and told DW his patience with Hamas had worn thin. "The situation before 2007 was more useful for us in all the markets - I hate Hamas, when they came the situation became so bad, especially for the farmers."

Before 2007 he exported 30 tonnes of strawberries to Europe, now it's just 200 kilograms. "If I could change just one thing it would be this government in Gaza - they just live for themselves," he said.

Future challenges

There are many questions that remain unanswered under the new deal, for example the fate of the security forces. Hamas won the 2006 election and became the ruling party in the Palestinian Authority but were prevented by Fatah from taking control of the security forces. In 2007 Hamas' armed forces pushed Fatah security forces out of the Gaza Strip because they believed they were preparing to stage a coup.

A decision on whether Hamas should dismantle its forces or merge with the Palestinian Authority's security forces cooperating with Israel is yet to be decided.

Blow to peace talks

Soon after the reconciliation agreement was signed five people were injured in an Israeli air strike in northern Gaza. Israel said it had targeted militants preparing to fire rockets.

Israeli media reported on Thursday that Prime Minister Benjamin Netanyahu's Security Cabinet had decided to suspend peace talks with the Palestinians in reaction to the reconciliation deal and to impose economic sanctions on the Palestinian Authority.

Netanyahu told US Secretary of State John Kerry on Wednesday that the unity deal showed Abbas was not interested in peace. "Abu Mazen has chosen Hamas and not peace, whoever chooses Hamas does not want peace," he said.