Abbas opens Gaza gateway to world

"It is a dream come true for us to be here to celebrate the reopening of the Rafah terminal as a free crossing between us and our brothers in Egypt," Abbas told an official ceremony packed with Palestinian and foreign dignitaries.

The key transit route, under EU monitoring, will open up the world to the Gaza Strip's 1.3 million largely impoverished residents, allaying fears the territory would be transformed into a "giant prison" after a 38-year Israeli occupation.

Palestinian officials hope that a fully functioning border will help kickstart a desperately depressed economy overly dependent on Israel and help bring down unemployment that has soared to 38 percent in recent months.

A crowd of hopeful travellers, curious onlookers and hoards of excitable children had massed outside Rafah's ornate wrought-iron gates, although EU officials have said the crossing will only start processing people on Saturday.

EU special envoy Marc Otte said that the move would help transform borders into bridges, not just between Gaza and its Arab neighbours but also to Israel.

"What happens today is a first step towards better growth for the Palestinian economy ... and for the movement of more people and goods inside the Palestinian territories and outside," he said.