The New York Times profiles friendships between wounded Israeli and Palestinian children. A commentary in the LA Times says Palestinians and Israelis will keep killing each other in the coming year, although Israeli security forces say 2009 was a "quiet year." Israel's Deputy Foreign Minister denies there is an occupation in the occupied territories, and his government is defending 15 previously "unauthorized" settlement buildings. Hamas reportedly rejects Israel's latest prisoner swap offer. The Palestinian Bureau of Statistics says there are 10.88 million Palestinians, half of them in the diaspora. A commentary in Ha'aretz questions the Israeli government's interest in peace. Special Envoy Mitchell reportedly will propose a new formula to restart permanent status negotiations. A Jerusalem Post commentary asks how Israelis would react if they were treated like Gazans, The BBC profiles a child born during the Gaza war, and IPS offers another retrospective of the conflict. American high school students are being indoctrinated with settler ideology. The Gaza war has left Palestinian citizens of Israel disillusioned. Gaza is reportedly being slowly rebuilt. The National says that Israel should not be allowed to dictate the terms for peace. Daoud Kuttab says Pres. Obama has taken his eye off the diplomatic ball. The Jordan Times calls for international sanctions against Israel.

Israel's high court orders that a major road in the occupied West Bank be opened to Palestinian vehicles, and a Ha'aretz commentary calls it 28 km of "distilled apartheid." Israeli and Egyptian leaders meet. About 1,000 protesters from around the world gather in Egypt planning to march into the Gaza Strip. The United States sharply criticizes Israeli plans for 700 new settler buildings in occupied East Jerusalem, as plans are announced for more building in the northern West Bank as well. The LA Times reviews Joe Sacco's new graphic novel about an Israeli massacre of Palestinians in Gaza in the 1950s. Hamas threatens to try to capture more Israeli soldiers if prisoner swap talks fail, and accuses Israel of refusing to release four key prisoners. A federal judge accuses the US government of hindering a lawsuit against the PA. Former PM Sharon advisor Dov Weissglas says Israel must continue working with the PA, especially on security. The Guardian says that in spite of its rhetoric of "resistance," Hamas has essentially abandoned the strategy of armed struggle. The National says both sides learned lessons from the Gaza war last year, and that most Israelis support the war but think it ended too soon. Rami Khouri says both sides lost. The Arab News says Israel's new settlement plans show it is not interested in peace.

The LA Times says that Israel is building a barrier along its border with Egypt. Several sources look back at the Gaza war one year on, as Hamas says it's ready for another conflict. Reports suggest that Hamas may be flexible on the deportation of released prisoners, and Ha'aretz says that it is likely to accept Israel's latest offer. Israeli cabinet minister Binyamin Ben-Eliezer says that jailed Fatah leader Marwan Barghouti should be released, but not in the context of a deal with Hamas. A leadership battle threatens to split Israel's Kadima party. A UN official accuses the international community of the "tragic" failure in Gaza. A YNet commentary says that settlers are on a collision course with mainstream Israeli society. More young Israelis pledge to disobey orders to evacuate settlements. West Bank shepherds say their livelihood is threatened by drought and occupation. The Guardian reports on Christmas in Bethlehem under the shadow of the separation barrier, as Palestinian Christians from Gaza pray for peace. Neve Gordon says Israel is determined to break nonviolent Palestinian resistance in the occupied West Bank.

Israel and the Vatican fail to resolve an ongoing dispute over a site in occupied East Jerusalem at which the "Last Supper" is reputed to have taken place. The LA Times says Israel's partial settlement freeze is not perfect but could form the basis for progress on peace. Reports differ over what is delaying an Israel-Hamas prisoner exchange, including a dispute over key prisoners, the possibility of deportation of some, and a bitter dispute between Israeli civilian and military leaders. The Christian Science Monitor says in any event an agreement will not end the siege of Gaza. Jerusalem's Latin patriarch denounces the occupation. Palestinians west of the separation barrier report ongoing settlement construction. Israeli prosecutors indict the leader of nonviolent resistance to the barrier for incitement, and a commentary in Ha'aretz says Israel is waging a war of attrition against nonviolent resistance to the occupation. A Cambridge University choir is split over a possible boycott of Israel. Palestinians say Israel is cutting Bethlehem off to tourists. Asharq Al-Awsat conducts a lengthy interview with Pres. Abbas.

In an interview with the Wall Street Journal, Pres. Abbas says as long as he is in office there will be no third intifada. The PA says it will investigate allegations that Israel harvested organs from Palestinians without consent in the late 80s and 90s. Negotiations continue on a possible prisoner swap between Hamas and Israel, which is reportedly considering deporting some "heavy prisoners." A new Israeli school curriculum about pre-state Jewish terrorist groups draws controversy. Israel bans the head of the "Islamic movement" organization from Jerusalem. International aid groups say the world has abandoned the people of Gaza, and a Jerusalem Post commentary says Israel's policies are radicalizing the population. A senior Palestinian official accuses PM Netanyahu of wasting time on peace.The Guardian runs commentaries calling for dismantling the separation barrier, ending the siege of Gaza and investigating reported complicity of Israeli doctors in torture. Former Pres. Carter apologizes to the Jewish community. Palestinian smugglers scoff at a new Egyptian underground barrier on the Gaza border. Aaron Miller says Pres. Obama needs to have foreign policy goals that are achievable, and Yossi Alpher says that it is in Israel's interest for Palestinians to develop a better grasp of Washington politics. Former AIPAC staff member Steven Rosen says that PM Netanyahu and Special Envoy Mitchell have agreed on Terms of Reference for peace negotiations that include the future status of Jerusalem among other issues.

An underground barrier being constructed by Egypt along the border with Gaza comes under heavy criticism. A prisoner swap between Israel and Hamas continues to be negotiated. An American-style college program has opened for Palestinians in the occupied West Bank. Extremist rabbis from government-affiliated religious institutions continue to urge Israeli soldiers to disobey orders. Israel has jailed the leader of the nonviolent Stop The Wall campaign. Pres. Abbas says he's not optimistic about peace. A commentary in Ha'aretz says the Israeli peace camp needs to focus on a return to the 1967 borders, and another in YNet says that Israel is squandering an opportunity to make peace with the best Palestinian partners it has ever had. A Labor MK and former cabinet minister calls for a new American peace initiative to replace the Roadmap. Former Pres. Carter calls for the rebuilding of Gaza. A former Bush speechwriter says politicians from the religious right like Palin and Huckabee will find their encouragement of settlements has consequences. Leonard Fein expresses doubts about PM Netanyahu's intentions on peace. A new Palestinian opinion poll shows Pres. Abbas would beat Hamas leader Hanniyeh by 16 points in a new election. IPS reports that Europe's ties with Israel remained close in spite of recent tensions.

Israeli police seek to detain the organizers of a Palestinian cultural event in occupied East Jerusalem, and Pres. Abbas warns that Israel is seeking to expel Palestinians from the city. A UN official warns that there is a race against time on Middle East peace and confirms that the settlement moratorium fall short of what is required from Israel. Israeli troops claim they were fired on near Hebron in the occupied West Bank, and Egyptians claim to have been fired on from Gaza. Israeli FM Lieberman vows Israel will resume settlement building "in full force" after 10 months. A Ha'aretz editorial says Israel should pick up where PM Olmert left off on peace. Reports suggest Israel will give its latest response on a prisoner exchange with Hamas on Sunday. Israeli settlers used dogs to keep Palestinians from their own properties. The Guardian reports that CIA operatives are working with Palestinian police accused of abuses. The Forward reports that the United States is helping Israel keep a qualitative military edge over any potential adversaries. Several commentaries examine ways forward on peace talks, and Martin Indyk suggests an Israeli withdrawal to pre-intifada lines to facilitate Palestinian state building.

After 35 years in office, the Saudi foreign minister says his biggest regret is the lack of an Israeli-Palestinian peace agreement. In the LA Times, an international law expert affirms that settlements in occupied territories are illegal, and a separate report highlights the rise of religious extremism in Israel. The Christian Science Monitor analyzes the PLO's move to extend Pres. Abbas' term pending new elections. In a Herald Tribune commentary, Mustafa Barghouti warns that time is running out for a two-state solution. The AP profiles a Palestinian village in the occupied West Bank surrounded by settlements. Several reports examine the tragic consequences of last year's war in Gaza. Ha'aretz provides details of former PM Olmert's peace proposal, which reportedly involved Israel annexing 6.3% of the West Bank and much of East Jerusalem. Hamas reaffirms its intention to "liberate all of Palestine," and is reportedly inclined to accept Israel's current offer on a prisoner exchange. Egypt chides the organization for "foot dragging" on Palestinian reconciliation. JJ Goldberg critiques four common opinions about Israel and the occupation, and Michael Young says for all its imperfections, the Oslo framework offers the only chance of peace. In a highly unusual move, the pan-Arab daily Asharq Al- Awsat runs an "open letter to the Arab world" from Israel's Deputy Minister of Foreign Affairs, Danny Ayalon.

The New York Times looks at the controversy over PM Netanyahu's intentions on peace. The PLO extends the terms of Pres. Abbas and the Palestinian parliament in light of Hamas'refusal to agree to new elections. Israel's Consul General to New England says his country is ready for peace. Egyptian mediators propose a reconciliation summit between Fatah and Hamas, as student groups clash in Gaza and Hamas says 80 of its members have been arrested by PA police. The EU is set to deliver €200 million to the PA over the next three years. Abbas says that peace is possible in six months if Israel agrees to complete settlement freeze, and reports suggest that the US, Egypt and France are planning to try to restart peace talks based on the 1967 borders involving a complete but unannounced freeze. The new EU foreign policy chief will be traveling to Jerusalem. Israeli police raid the home of nonviolent Palestinian protesters. Jewish extremists plan another provocative march in occupied East Jerusalem. A commentary in the Guardian says Jewish internal dialogue about Israel needs to be more civil. Rami Khouri says that it's unfair for anyone to blame the Goldstone report for the present diplomatic impasse.

Pres. Abbas lays down conditions for returning to peace talks, rules out resumption of violence. The Washington Post's profile of two Palestinian brothers, one in the West Bank and the other in Gaza, illustrate growing political divisions in Palestinian society. The Christian Science Monitor says Egypt's Gaza border wall has deep strategic significance, and asks whether soldiers will obey extremist rabbis or PM Netanyahu. The Voice of America reviews the year of stalemated peace talks. PM Fayyad says Palestinian state building is underway. A report in Ha'aretz looks at tax exempt US funding for extremist settlers, including a rabbi who recently rationalized the killing of non-Jewish babies. Both Israel and the UK confirm that a British court issued and then withdrew an arrest warrant for former Foreign Minister Tzipi Livni. The Guardian profiles Palestinian "tunnel tycoons." The EU is formally reviewing its ties to Israel because of skepticism about its intentions on peace. Husam Itani says Palestinians are partly to blame for their own predicament and a commentary in the Arab News says Netanyahu is not serious about peace at all. In Bitter Lemons, Ghassan Khatib calls for increased international engagement to promote serious negotiations and Issa Samander suggests that Israelis would see realities differently if settlers were returned to Israel and behaved there as they do in the occupied Palestinian territories.