Reuters reports on the continuing complications that Israeli settlement activity is posing to Israeli-Palestinian negotiations (2.) The Washington Report on Middle East Affairs spotlights the ATFP second annual gala and the remarks of keynote speaker Undersecretary Nicholas Burns on Palestinian statehood (4.) The Jewish Telegraphic Agency examines the possibility of a prisoner exchange and ceasefire deal between Israel and Hamas (7.) Inter Press Service looks at the uniquely challenging conditions facing Lebanon's undocumented Palestinian refugees (8.) The Independent (UK) reports on a good Christmas tourism season for Bethlehem (9.) A Gulf News (UAE) editorial is critical of Israel's new settlement expansion plans (12.) In Haaretz (Israel) Akiva Eldar examines efforts to resolve the Palestinian prisoner issue (13.) Also in Haaretz is an analysis of how the controversy over the Israeli settlement issue may not be settled until the visit to the region of President Bush in January 2008 (15.)