The situation in Gaza is improving, but Israel is nervous. The US searches for plan B on peace, and will test the parties on core issues. Aaron David Miller says the administration should not overreach. Hamas says time is on its side. Israel shoots down a balloon near its nuclear reactor. An Israeli expert says it cannot defeat Hezbollah. The PA presses for authority in more of the West Bank. Despite a court order, Israel seizes Palestinian land for a new train line. The PA is investigating whether Mohammed Dahlan is forming a militia in the West Bank. Steven Klein says unilateral Palestinian independence is the best option. The Jerusalem Post publishes a leaked cable on US Middle East policy. Larry Derfner and George Hishmeh both praise Latin American recognition of Palestine. Hussein Agha and Robert Malley, as well as Hassan Haidar, say peace may no longer be possible. AIPAC considered itself targeted by a government espionage investigation. Rami Khouri says the US needs a bold new approach.