Israel launches a major civil defense exercise. The LA Times interviews Palestinian MK Tibi. The Wall Street Journal interviews Israeli Pres. Peres. Hamas' financial crisis worsens. Edward Djerejian says borders are the key to peace. Israel says it will ease West Bank checkpoints. Australia expels an Israeli diplomat over the Dubai assassination. Italian grocery chains ban settlement goods. Gaza extremists torch a UN children's camp. Israeli and Palestinian negotiators agree to the principle, but not the scope, of a land swap. Palestinian nonviolent protesters are injured by the Israeli military. Ha'aretz highlights Palestinian villagers trapped by Israeli restrictions. Israel denies offering nuclear weapons to apartheid-era South Africa. Israel is retroactively "authorizing" both Palestinian and settler buildings. Hamas claims to have captured an Egyptian "spy." The PA promises to find alternative employment for Palestinian settlement workers. Hussein Shobokshi accuses Israel of preparing a mass expulsion of Palestinians in a coming conflict. ATFP presents a set of resources illustrating US support for a two state solution and its centrality to the American national interest.