Special Envoy Mitchell meets with Pres. Abbas. Robert Wright says the UN can create a Palestinian state. Deputy Foreign Minister Ayalon says Palestinians must prove they want peace. Occupation forces demolish two homes under construction in occupied East Jerusalem. The EU pushes for an end to settlement activity and says it will recognize a Palestinian state “when appropriate.” Hamas celebrates its 23rd anniversary, and tries to shore up its popularity. Israel refuses entry to Palestinian firefighters being honored for helping with the Carmel blaze. Carlos Strenger says the Palestinian state has been born in South America. DM Barak says Israel is threatened by the lack of peace. Members of Congress say a unilateral declaration of statehood could end US funding to the PA. Carlo Strenger and Akiva Eldar say Palestinian statehood requires recognition of Israel. George Semaan says the Arabs need a new strategy for dealing with Israel. Hussein Ibish says Sec. Clinton's recent speech gives the Palestinians a real opportunity for progress.