Sheikh Hamad is the first head of state to visit embattled Palestinian enclave since international blockade imposed.

Sheikh Hamad bin Khalifa Al Thani, the emir of Qatar, has arrived in the Gaza Strip to inaugurate a Qatari investment project worth hundreds of millions of dollars to rebuild the impoverished and overcrowded coastal enclave.

The leader of the Gulf nation is the first head of state to visit Gaza since the imposition of a widespread international boycott of the Palestinian territory, spurred, in part, by the 2006 popular election of Hamas, considered by powers such as the United States, United Kingdom, European Union and Japan to be “a terrorist organisation”. Internecine fighting followed in 2007, leading to a rift between Hamas and Fatah – a group supported by many Western powers.

“This visit has great political significance,” said Hamas government spokesman Taher al-Nunu.

Nicole Johnston reports from Gaza on the emir’s visit

“He is the first Arab leader to break the political siege.”

The investment project seeks to build 1,000 homes for poor families in the devastated Khan Younis area in the south of the Strip.

Laying the foundation stone of the project, Hamas leader Ismail Haniyeh thanked the emir “for his brave decision to visit Gaza”.

“The visit of the emir announces officially the breaching of the political and economical siege imposed on Gaza for more than five years,” said Haniyeh.

“Today in Gaza and tomorrow in the freed Jerusalem,” he added.

Haniyeh also announced that the level of Qatari funding had risen from the $254 million previously reported to $400 million. No details about the extra funds were immediately available.

The emir also plans to meet with Hamas leaders at the Islamic University; he cancelled a planned speech in a stadium.

Mouin Rabbani, a senior fellow at the Institute of Palestine Studies in Amman, framed the emir’s visit as part of a regional power struggle. Hamas had long been headquartered in Syria, but the group has pulled away from Damascus since the start of the uprising against president Bashar al-Assad.

“[Qatar] is engaged in a struggle for influence with Syria and Iran in regional terms,” he said. “Hamas and Palestine more broadly have significant symbolic value in this context, and Qatar has in fact been instrumental in weaning Hamas away from Damascus.”

Still no reconciliation

The 41km-long Gaza Strip, home to 1.6 million people, sustained major damage during a huge 22-day Israeli military operation in December 2008 and January 2009.

Khan Younis has been particularly hard hit during the international blockade of Gaza, imposed since 2007, and during the half-decade before that. A 2011 EWASH report revealed that 90-95 per cent of Gaza’s water is unsafe to drink.

In a phone conversation on the eve of the visit, Palestinian President Mahmoud Abbas welcomed the emir’s intentions to help the people of Gaza, under an Israeli-led blockade since the Hamas takeover.

A late-night statement from the office of Egypt’s President Mohammed Morsi said his country welcomed the emir’s visit to Gaza, which it said came as part of Egypt’s effort “to break the siege on the people” of the territory.

Al Jazeera’s Nicole Johnston, reporting from Gaza, said Hamas leaders were making the most of the visit.

“I haven’t seen Hamas officials looking quite so pleased with themselves since they managed to free more than 1,000 Palestinian political prisoners last year,” she said.

Haniyeh also commented on the prisoner release, negotiated around the release of captured Israeli soldier Corporal Gilad Shalit.

Osama Hamdan, a senior member of Hamas, talks to Al Jazeera about the emir’s visit

“The visit coincides with our celebrations of the first anniversary of the victory that the Palestinian resistance achieved, which is [the] Shalit swap – where Qatar played an important role in the success of the deal,” he said.

Our correspondent reported that Hamas has been saying that it “really ends their political isolation”.

“They’ve really been treated as ‘a terrorist organisation’, as a pariah government, since they took control in 2007, and now they finally have a world leader, a leader of an Arab country, visiting them,” said Johnston.

“So it is a coup for Hamas. What it isn’t is good news for Fatah. The emir of Qatar is not going to Ramallah, he’s not going to the West Bank, and so the Palestinian Authority has been very strong in trying to push the point that the Palestinian territories should be united, that it is one political entity, and that even though the emir is only visiting Gaza, that this ‘national unity’ – which is stuck for the moment – eventually has to happen for there to be any progress at all on Israeli-Palestinian peace talks.”

Qatar has played a key role in the reconciliation process. Earlier this year, the emir brought together Abbas and Hamas’ supreme leader in exile, Khaled Meshaal, to make a deal.

Under the arrangement, Abbas was to lead an interim unity government to pave the way for new elections in the Palestinian territories.

That deal is yet to be implemented.