Israel's internal military investigation into the flotilla attack finds the killings justified, but That National says nobody is fooled. Israel considers restricting citizenship for certain converts. PLO officials reiterate their conditions for direct negotiations, but pledge no unilateral declaration of independence. Israel demolishes three Palestinian structures in Jerusalem, including an inhabited home. Palestinians emphasize national unity. A poll shows most Palestinians believe proximity talks will fail. US conservatives form a new pro-Israel, pro-occupation organization. Israel approves 32 new settlement homes in occupied East Jerusalem. Israelis fear a “cultural intifada” as Western stars cancel visits. Israel is developing high-tech “remote killing” devices. Hussein Shobokshi says right-wing American groups are funding Jewish terrorism. Ghassan Khatib says that by emphasizing borders and security, only the Palestinians are being serious about peace. Alon Pinkas says Pres. Obama may have to adopt the Clinton parameters for peace.