Israeli-Turkish trade remains brisk in spite of tensions. Settlers turn to violence during the dismantling of an unauthorized outpost. Israeli forces demolish rebuilt Palestinian structures in the Jordan Valley. The PA Telecommunications Minister apologizes for harassment of TV and radio stations in Nablus. Israel arrests three Arabs accused of espionage for Syria. Hamas again denounces direct negotiations. Pres. Mubarak remains at the center of efforts to establish direct talks including a phone call with Pres. Obama, and Palestinians say negotiations on terms of reference are proceeding. PM Netanyahu vows to retaliate against Hamas for recent rocket attacks. Israeli police suspect an accused Jewish terrorist was part of a larger cell. Palestinian leaders in Israel threaten a national strike over discriminatory budget cuts, and a new study finds at-risk Arab students receive much less funding than Jewish ones. D. Bloomfield says Pres. Abbas' hesitation greatly assists Netanyahu. Gaza human rights groups blame Hamas for a large explosion. Israel plans to fight international isolation. Abdul Rahman Al-Rashed says Abbas must make some tough decisions. Michael Jansen says direct talks could be a trap for the Palestinians.

Speculation about a wider conflict grows in the aftermath of the clash at the Israel-Lebanon border. Andrin Hauri says the international community must do more to support Palestinian state and institution building. An Israeli airstrike kills a Palestinian in Gaza. Israeli police again raze a rebuilt Bedouin village that was recently destroyed. Egypt says Palestinian factions in Gaza were responsible for recent rocket attacks. Palestinians say there are now more than half a million Israeli settlers in the occupied Palestinian territories. Gaza girls take up fishing to feed their families. Shlomo Avineri says support for a “one-state” arrangement from the Israeli right is rooted in opposition to ending the occupation. Menachem Klein questions the effectiveness of Palestinian state building but concludes Israel's system of control in the West Bank is nonetheless doomed. Eytan Gilboa warns Israelis not to conclude that Pres. Obama will not again pressure them on peace. Hezbollah leader Nasrallah accuses Israel of being responsible for the assassination of former Lebanese PM Hariri and vows to produce evidence. IT technology allows Israeli and Palestinian teenagers to build friendships.

The NYT says Israel is right to cooperate with the UN investigation into the flotilla attack. Rocket attacks show how militants could use Sinai. Andy Zelleke and Robert Dujarric say the price of an Israeli attack on Iran may be a Palestinian state. Occupation forces shoot a Palestinian worker in Gaza. The PA says growth is dependent on international donors. Three Lebanese soldiers and a journalist are killed by Israeli troops at the border. Israel approves 40 new settlement apartments in occupied East Jerusalem. Pres. Abbas declines to set a date for direct talks. PM Netanyahu says he made no commitments to the US on direct talks. Palestinian activists ask female protesters to dress modestly. Americans for Peace Now launches a video campaign against settlement construction. Building in Gaza is focusing more on recreation than reconstruction. Israel allows a convoy of 250 trucks into Gaza. Gershon Baskin says hope must continue for peace. The last Palestinian kaffiyeh factory struggles to survive. Daphna Baram says liberal Israelis may soon face prosecution. Leslie Susser says “one-state” proposals from the Israeli right are a ploy to prevent ending the occupation. Joseph Mayton says Gaza's plight also presents opportunities.

The NYT says Israel is right to cooperate with the UN investigation into the flotilla attack. Rocket attacks show how militants could use Sinai. Andy Zelleke and Robert Dujarric say the price of an Israeli attack on Iran may be a Palestinian state. Occupation forces shoot a Palestinian worker in Gaza. The PA says growth is dependent on international donors. Three Lebanese soldiers and a journalist are killed by Israeli troops at the border. Israel approves 40 new settlement apartments in occupied East Jerusalem. Pres. Abbas declines to set a date for direct talks. PM Netanyahu says he made no commitments to the US on direct talks. Palestinian activists ask female protesters to dress modestly. Americans for Peace Now launches a video campaign against settlement construction. Building in Gaza is focusing more on recreation than reconstruction. Israel allows a convoy of 250 trucks into Gaza. Gershon Baskin says hope must continue for peace. The last Palestinian kaffiyeh factory struggles to survive. Daphna Baram says liberal Israelis may soon face prosecution. Leslie Susser says “one-state” proposals from the Israeli right are a ploy to prevent ending the occupation. Joseph Mayton says Gaza's plight also presents opportunities.

A rocket, probably aimed at Israel, lands in Jordan killing one man and injuring several. Efraim Karsh argues that Palestinians should forget about Arab support. Some analysts say recent rocket attacks are an effort by Hamas to derail peace talks, but others say it has an interest in keeping Gaza quiet. An Israeli airstrike in Gaza injures 42 Palestinians. PLO officials deny claiming the US threatened to cut ties. The World Bank appoints a new official to Palestine. Israel says officers will be assigned to protect civilians in future conflicts. Pres. Abbas meets US officials and proposes a trilateral meeting before direct talks. A building boom in Ramallah indicates economic growth in the West Bank. Israel agrees in principle to a UN investigation into the Gaza flotilla attack. Israelis and Palestinians use theater to promote peace. Robert Fisk says Israel has become a de facto member of the EU without anyone realizing it. US companies may have been involved in financing the assassination of a Hamas operative in Dubai. The Arab News questions Pres. Obama's policy of pressuring the PLO. PM Fayyad vows no unilateral declaration of statehood and rejects calls to abandon the fight for Palestinian independence.