NEWS: PM Fayyad says he is working to reduce the Palestinian dependence on foreign aid. Palestinians submit a detailed peace proposal to the Quartet, according to their deadlines, including a significant land swap, but PM Netanyahu refuses to make a counteroffer. The resumption of Israeli transfers of Palestinian tax revenues helps avert a financial crisis for the PA, but FM Lieberman denounces the move. Palestinian prisoners released by Israel get on with the business of daily life. Israel arrests 22 Palestinians in the West Bank. Pres. Obama tells Jewish Americans “no ally is more important than Israel.” Netanyahu complains about a recent meeting between Pres. Abbas and Kadima leader Livni. Hamas complains the PA continues to arrest its supporters in the West Bank. Germany confirms the sale of a sixth Dolphin submarine to Israel, and will pay for one third of it. COMMENTARY: ADL National Director Abe Foxman decries new Israeli laws that "violate democratic principles." Carlo Strenger says Israel's liberals face a wave of anti-Semitism. Douglas Bloomfield says weakening Abbas only strengthens Hamas. Asharq Al-Awsat interviews Mahmoud al-Zahar. Mohammed Azhar Ali Khan says Canada is on the wrong side of history in opposing Palestinian statehood. Nadim Rouhana says antidemocratic legislation in Israel threatens rights for the Jewish majority as well as the Arab minority. Howard Sumka says the struggle for peace must continue even if conditions are difficult. Uri Misgav says Israel was only hurting itself by withholding Palestinian tax revenues. Karl Vick says Gaza's economy continues to suffer as the peace process is it an impasse. Jonathan Rosen says dismantling outlying settlements has few disadvantages and would be a huge boost for Israel. Jesse Rosenfeld looks at a new book by Arthur Neslen on the diversity of Palestinian experiences.