Jackson Diehl questions Pres. Abbas' commitment to peace. Settlers fret over what will happen during talks and after the moratorium expires in September. The EU says major powers are working on establishing direct talks, which may begin next week. The PA and Israeli economy ministers meet but Palestinians are adamant about continuing the settlement goods boycott, which they say is working. The PA issues a one-year-on report saying that state and institution building are proceeding in spite of the occupation. Aaron David Miller says direct talks are no panacea. Shlomo Avineri says both Jews and Palestinians are national groups with a right to self-determination. Israel is dismantling a Jerusalem barrier constructed during the second intifada. PM Netanyahu may propose Israeli withdrawal from 90% of the West Bank. Shira Herzog and Leonard Fein both say only two states can bring peace. George Hishmeh dismisses claims that Arabs don't care much about the Palestinian issue.