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Palestinians celebrate next to a section of Israeli separation barrier at the entrance to the west bank city of Bethlehem as they watch a screen showing the U.N. General Assembly votes on a resolution to upgrade the status of the Palestinian Authority to a nonmember observer state, Thursday, Nov. 29, 2012. The U.N. General Assembly has voted by a more than two-thirds majority to recognize the state of Palestine. The resolution upgrading the Palestinians' status to a nonmember observer state at the United Nations was approved by the 193-member world body late Thursday by a vote of 138-9 with 41 abstentions.
RAMALLAH, West Bank—Palestinians erupted in wild cheers Thursday, hugging each other, setting off fireworks and chanting "God is great" after the United Nations granted them, at least formally, what they have long yearned for—a state of their own.

The historic General Assembly decision to accept "Palestine" as a non-member observer state won't immediately change lives here, since much of the territory of that state—the West Bank, Gaza Strip and east Jerusalem—remains under Israeli control.

Yet many Palestinians savored the massive global recognition—138 of 193 General Assembly members voted "yes"—following decades of setbacks in the quest for Palestinian independence in lands Israel captured in the 1967 Mideast War.

"It's a great feeling to have a state, even if in name only," said civil servant Mohammed Srour, 28, standing in a flag-waving a crowd of more than 2,000 packed into a square in the West Bank city of Ramallah. "The most beautiful dream of any man is to have an independent state, particularly for us Palestinians who have lived under occupation for a long time."

After the euphoria over the vote, Palestinians will return to their harsh reality. They lack most trappings of statehood, including control over borders, airspace or trade. In a further complication, they are ruled by rival governments, one run by Palestinian President Mahmoud Abbas in the West Bank and the other by the Islamic militant group Hamas in Gaza.

Yet, Palestinians say the recognition isn't just symbolic. They believe U.N. recognition will strengthen their hand in future talks with Israel, which has lambasted the the Palestinian move as an attempt to bypass such negotiations.

The warm embrace by the international community could also help Abbas, who led the recognition appeal, restore some of his domestic standing, which has been eroded by years of standstill in peace efforts. Hamas, entrenched in Gaza, has seen its popularity rise after holding its own during an Israeli offensive on targets linked to the Islamists there earlier this month.

After initially criticizing the U.N. bid as an empty gesture, Hamas has come around to supporting the popular move, with reservations.

Palestinians in the coastal strip also celebrated the vote, though on a smaller scale than after the massive eruption of joy in the streets after last week's cease-fire deal with Israel.

Some set off fireworks, others shot in the air and children in the streets cheered and flashed victory signs. "Today is a big joy for all of us," Abu Yazan, a 29-year-old Abbas supporter, said.

Izzat Rishaq, a senior Hamas figure in exile, said he welcomed the U.N. vote an achievement, but that Hamas counts on "heroic resistance" to create a Palestinian state—underlining the group's deep ideological rift with Abbas who opposes violence.

In Israel, Prime Minister Benjamin Netanyahu dismissed the U.N. vote as meaningless and accused Abbas of delivering a "defamatory and venomous" U.N. speech "full of mendacious propaganda" against Israel. Netanyahu argued that the U.N. move violated past agreements between Israel and the Palestinians and that Israel would act accordingly, without elaborating what steps it might take.

The Palestinians reject Israel's claim that the recognition bid is an attempt to dictate the future borders of Palestine. Instead, they say, it's a last-ditch attempt to rescue peace efforts threatened by Israeli settlement building on occupied land. Since 1967, half a million Israelis have settled on lands the U.N. says are part of Palestine.

Abbas aides say that with its vote, the U.N. is rebuffing Israeli attempts to portray these territories as "disputed," or up for grabs, rather than occupied.

Abbas aide Nabil Shaath said it will no longer be up to Israel to decide whether the Palestinians can have a state.

"The notion that Israel should approve the Palestinians' inalienable right to self-determination is simply illogical, immoral, and totally unacceptable," he wrote in an opinion piece in the Israeli daily Haaretz. 

The affirmation of the pre-1967 line as the border of Palestine also poses a direct challenge to Netanyahu who has refused to accept that demarcation as a basis for border talks with the Palestinians. Abbas and his aides have said that the Israeli leader's rejection of such a framework for negotiations, accepted by his predecessors, helped push them to go to the U.N.

The Palestinians could also gain access to U.N. agencies and international bodies, most significantly the International Criminal Court, which could become a springboard for going after Israel for alleged war crimes or its ongoing settlement building on war-won land.

However, Abbas has signaled that he wants recognition to give him leverage in future talks with Israel, not as a tool for confronting or delegitimizing Israel, as Israeli leaders have alleged. He told the U.N. on Thursday that the Palestinians will "behave in a responsible and positive ways in our next steps."

Palestinian technical teams have studied the laws of all U.N. agencies and put together recommendations for Abbas, said a Palestinian official involved in the effort. He said Abbas told the experts there is no rush, and the next Palestinian moves would in part depend on international reaction, said the official who spoke on condition of anonymity to disclose internal deliberations.

Most immediately, the Palestinian Authority, which relies heavily on foreign aid and is struggling with the worst cash crisis in its 18-year history, could face further funding cuts over the U.N. bid.

In Washington, a bipartisan group of senators warned the Palestinians they could lose U.S. financial support of millions of dollars a year and risk the shutdown of their Washington office if they use their enhanced U.N. status against Israel

Israel could also suspend the monthly transfer of millions of dollars in tax rebates it collects on behalf of the Palestinians, a punitive step it has taken in the past.

In recent months, the Palestinian Authority has been struggling to cover its public sector payroll, paying salaries in installments.

Mahmoud Khamis, a civil servant from the West Bank village of Deir Jareer, said he is willing to bear the negative consequences of U.N. recognition, including further disruptions in getting his salary. "It's good to have that state recognized, for the people of the world to hear our voice and know our cause," he said.

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Associated Press writer Dalia Nammari in Ramallah, West Bank, and Ibrahim Barzak in Gaza City contributed reporting.