A year into Hamas' rule in the Gaza Strip, courts are meting out justice, police are arresting thieves, motorists are paying for licenses and authorities are blocking Internet porn sites. At the same time, Gazans are stocking up on vegetable oil - not for cooking, but to run their cars during a severe fuel shortage. An Israeli-led blockade has forced 80 percent of the people to rely on United Nations food handouts. With sanitation services collapsing, millions of gallons of raw sewage are flowing into the sea. Enemies of the regime have been silenced. "We've only become stronger. We will not stand down. We will not go back," said Hamas official Sami Abu Zuhri. Hamas' rule in Gaza - along with a corruption scandal in Israel that threatens to bring down Prime Minister Ehud Olmert - is badly damaging prospects for a US-backed Mideast peace initiative that seeks to forge an agreement by year's end between Israel and the moderate Palestinian leadership in the West Bank. Gaza - a tiny fenced-in territory whose 1.4 million inhabitants are not free to come and go - has become a morass of contradictions. Internal fighting has stopped and crime is down under Hamas rule, but the calm was partly purchased through killing and torture. A cease-fire in Gaza that Egypt is trying to arrange could boost a US-backed Mideast peace initiative, but it could also prolong Hamas' rule. Quite a bit of money seems to be entering Gaza, but there's hardly anything to buy. Hamas is on a collision course with Israel, which still controls Gaza's borders, air space and coastline despite having withdrawn its army and settlers from the territory three years ago. Gaza militants launch rockets at southern Israel almost daily, and Israel targets Gaza with air strikes, land incursions and deadly missiles said to be fired from unmanned drones. The fighting has killed more than 400 Gazans and injured thousands of others in the past year. On the Israeli side, 11 soldiers have died fighting inside Gaza and six Israeli civilians have been killed and 110 wounded by shells fired into Israel. The barrages - nearly 3,000 rockets and mortars, according to the Israeli army - also have terrorized any Israeli living within range, including the about 110,000 residents of Ashkelon, nine miles north of Gaza. Musa Mahmoud Jaber el-Ghoul is a village elder among about 300 Palestinians living a few hundred yards from Gaza's northern border with Israel - the area where militants often launch rockets - and he says he has repeatedly begged the rocketers to stop firing across the border. "When anyone is injured over there (Ashkelon), it's considered a great achievement for the resistance," says 62-year-old el-Ghoul. But, he added, "It means the retaliation from the other side is also very tough ... and we pay the price." El-Ghoul, nicknamed Abu Ziad, was wounded himself fighting Israel and spent eight years in an Israeli jail. But now whenever Israel decides to stage a raid, soldiers with loudspeakers shout out "Abu Ziad!" from atop tanks, or call him on his cell phone, telling him to ask residents to stay indoors. One bizarre aspect of the fighting is Hamas' decision to target the border crossings from where vital humanitarian aid enters Gaza. That helps explain what the UN says is a 75 percent reduction in the supplies coming in during the past year. On one recent day, a militant blew up the only pedestrian crossing into Israel with a four-ton truck bomb. Despite the bombing, thousands of Gazans demonstrated hours later to demand the opening of Gaza's borders, and Palestinians said Israeli soldiers fired on the crowd, killing one man and wounding 16 others. While striking the border crossings would seem to be against the interests of Gaza's rulers, the attacks may be part of a strategy to break the Israeli boycott and seek more favorable conditions for a cease-fire. Such a truce could further President Bush's peace efforts because heavy casualties in Gaza make it hard for the moderate, West Bank Palestinian leadership to negotiate with Israel. Yet if a truce includes opening Gaza's borders to trade as Hamas demands, the main leverage on the group would be forfeited. For now, the fighting goes on, and civilians - both in Gaza and southern Israel - are paying the heaviest price. Fawez Abdul Jawad, a 40-year-old former Fatah-affiliated policeman, says he watches a video, over and over, of the Israeli bomb that destroyed his son's wedding last January. In the video, two young boys and a man are seen dancing to the joyful beat of drums when the screen suddenly goes blank. Seconds later, the scene reappears - but this time with clouds of dust, screaming women and bloodied bodies. An Israeli missile had hit a Hamas police building next door, killing Jawad's aunt and injuring him and three relatives, including a 7-year-old boy who he said may be permanently paralyzed. "The joy was ripped from us," said the father of six. Hamas, aware of the damage the Gaza-West Bank split has done to the Palestinians' statehood aspirations, says it wants to return to a power-sharing arrangement with Fatah - like the one dissolved last June 14 when Hamas took control of the strip. "We need each other," says Ghazi Hamad, political adviser to Hamas' prime minister, Ismail Haniyeh. But for Fatah's West Bank government, joining forces with Hamas could jeopardize the large amount of money it gets from the international community. And Israel has made it clear it won't hold peace talks with any government that includes Hamas, which remains sworn to the Jewish state's destruction. Meanwhile, the prevailing view in Gaza is that Hamas is becoming entrenched. Motorists now must pay to register their vehicles and Hamas police control traffic - a big change from the general mayhem under Fatah-led governments. This past week authorities began blocking Internet porn, jamming many wholesome sites in the process. Not everyone is happy with Hamas' methods, but Gazans are reluctant to complain. Hamas has shut down all opposition media in the strip, and two men interviewed for this story said they were tortured by Hamas - one displaying a leg wound that he said came from metal spikes driven into his shin. Support from Syria and Iran helps keep the Hamas government running. Iran is said to be both financing Hamas and providing increasingly sophisticated weaponry to attack Israel. The moderate Palestinian president, Mahmoud Abbas, also sends lots of money into Gaza by paying salaries to former Fatah employees on the condition they stay home from work. But even Gazans with money can find little to buy. Some goods are smuggled in through tunnels from Egypt, but mostly only food and medicine are allowed in, leaving acute shortages of everything from cement to baby strollers. Gaza's children seem the most vulnerable in the bitter standoff. Between 70 percent and 90 percent are failing math in U.N.-run schools and 60 percent are failing Arabic, said John Ging, Gaza director of the U.N. agency in charge of Palestinian refugees. He blamed the children's flunking on "overcrowding, underfunding and a violent environment" that does not encourage study.