Outside Abbas' headquarters in the West Bank city of Ramallah, about 5,000 people thronged a square, hoisted Palestinian flags, and cheered. Large posters of Abbas, whose popularity had plummeted in recent months, adorned nearby buildings.
"We now have a state," Abbas said to wild applause. "The world has said loudly, 'Yes to the state of Palestine.' "
The U.N. General Assembly last week overwhelmingly endorsed an independent Palestinian state in the West Bank, East Jerusalem, and the Gaza Strip, territories Israel captured in the 1967 war.
The upgrading of the Palestinians to a nonmember observer state does not change much on the ground, but it carries deep potential significance. The vote amounted to an international endorsement of the Palestinian position on future border arrangements with Israel and an overwhelming condemnation of Israeli settlements in the areas claimed by the Palestinians.
Israeli Prime Minister Benjamin Netanyahu rejects a return to Israel's 1967 lines. Israel remains in control in parts of the West Bank and considers East Jerusalem, the Palestinians' hoped-for capital, an integral part of its capital.
Israel also continues to restrict access to Gaza. It withdrew seven years ago from the coastal strip, which is now ruled by Hamas Islamic militants who regularly fire rockets at Israel.
Israel, backed by the United States, campaigned strongly against the statehood measure, accusing the Palestinians of trying to bypass direct peace negotiations, which it said were the only viable path to a Palestinian state.
The Israeli lobbying efforts failed miserably. Just eight other countries voted with Israel, and even its closest allies in Europe, including Germany, Italy, France, and Britain, either abstained or voted with the Palestinians.
The following day, Israel said it would start drawing up plans to build thousands of settlement homes, including the first-ever development on a crucial corridor east of Jerusalem. Although the project is likely years away, if it happens at all, the announcement struck a defiant tone.
Building in the area, known as E1, would sever the link between the West Bank and East Jerusalem, which Palestinians claim for a future capital, and cut off the northern part of the West Bank form its southern flank. The United States, Britain, France, and other European states all denounced the plan.
On Sunday, the Israeli government delivered another blow, saying it would withhold more than $100 million in funds it transfers to the Palestinians each month. It said the money - taxes and customs duties that Israel collects on behalf of the Palestinians - would instead be used to pay off its debts to Israeli companies.