Jericho is the first of five West Bank towns to revert back to Palestinian control in coming weeks, part of an attempt to restore the situation that existed before the outbreak of fighting in September 2000.
The pullout was delayed for weeks because of a dispute over security arrangements and a deadly suicide bombing in Tel Aviv, reports CBS News Correspondent Robert Berger. Israel will withdraw from another West Bank town next week.
In other developments:
As part of the pullback in Jericho, Israeli troops removed one roadblock, while two other barriers were to remain in place during a month-long period in which the ability of the Palestinian forces to keep calm will be tested. The Palestinians had insisted that all checkpoints be removed but accepted the compromise.
Ahead of the handover, Israeli and Palestinian commanders jointly patrolled the area. Israeli flatbed trucks began removing cement blocks at one of the roadblocks, while Palestinian forces took up positions in another area.
Israeli travel restrictions have severely hampered daily life in the West Bank and Gaza Strip in more than four years of fighting, and the removal of barriers sends a message to ordinary Palestinians that an informal truce with Israel is beginning to pay off.
Israel says the barriers were erected to prevent Palestinian suicide bombers and gunmen from reaching Israeli targets; hundreds of Israelis have been killed in attacks by militants since 2000.
Palestinians found it difficult to believe their lives are going to improve.
"Even if they remove one checkpoint here or there, there are dozens of others," said Ayman Shaabna, 19, standing in line at the main checkpoint just south of Jericho.
In the past four years, Israeli troops have rarely entered Jericho, which has largely stayed out of the fighting.
Palestinian negotiator Saeb Erekat, a resident of Jericho, said the handover of the town is the first step in returning to the situation before the outbreak of fighting on Sept. 28, 2000. "The point is we are trying to get things back ... gradually, hoping that through peace and negotiations things will change," he said.
Maj. Sharon Assman, an Israeli army officer involved in the handover, said it was now up to the Palestinians to keep militants in check and ensure calm. "There will be additional meetings to consider additional easing of restrictions. This will depend on ... guarantees of the Palestinian security forces that they will fight terror," he said.
As part of the handover, 17 Palestinian fugitives in Jericho were taken off Israel's wanted list, said Erekat. The fate of two top militants jailed under international supervision in Jericho, including the mastermind of the assassination of an Israeli Cabinet minister, remains unclear.
Palestinian leader Mahmoud Abbas said Tuesday the two militants would be released, sparking an outrage among Israeli leaders. Erekat later said no agreement has been reached.
As part of the handover, Israel eased checks at the main roadblock at the southern entrance to Jericho, allowing incoming traffic through without inspection. Outgoing cars were only to be checked sporadically. In the past, long lines often formed in either direction.
Jericho will remain off-limits to Israelis for the time being, Israeli commanders said. Before the outbreak of fighting, thousands of Israelis would visit the town on weekends, many drawn by a luxury hotel and casino.
Violence has dropped considerably since the Mideast summit, but militant groups like Hamas and Islamic Jihad have not formally joined a cease-fire. Islamic Jihad carried out a suicide bombing in Tel Aviv on Feb. 25, killing five Israelis and endangering the truce.
The West Bank town of Tulkarem was next to be handed over, in coming days. That would be followed by Qalqiliya, just south of Tulkarem, according the understandings. No date has been set for the handover of the remaining two — Bethlehem and Ramallah.
Not on the list at all are two West Bank cities, Nablus and Hebron, and another town, Jenin. Israel maintains a tight military grip on the three places, charging that they are hotbeds of militant activity.
Some 40 other world leaders attended a second day of ceremonies and educational conferences to mark the opening of the $56 million museum, which tells the story of the Holocaust from the victims' viewpoint through personal testimonies and artifacts.
"It's a place of deep shame for any German because the name of my country, Germany, is and will forever be inseparably linked to the Shoah, the ultimate crime against humanity," said German Foreign Minister Joschka Fischer, using the Hebrew word for the Holocaust.
Polish President Aleksander Kwasniewski said he would try to preserve the memory of the Polish Jewish community that was nearly obliterated by the Nazis, and French Prime Minister Jean-Pierre Raffarin said his government would stand strong against anti-Semitism.
The leaders, including heads of state and Cabinet ministers, sat in a large circle and took turns speaking.
The French prime minister said the Holocaust played a huge role in shaping postwar Europe, and the reason France is determined to battle racism and anti-Semitism.
"Unfortunately this is something that cannot be relegated to the past. The reappearance of this phenomenon is something we cannot deny," Raffarin said.
"The government that I head struggles very firmly and vehemently against all the forms of the reappearance of anti-Semitism in France. Repression is called for and we shall do that without fail," he added.