NEWS: PM Fayyad says he will not lead a national unity government. Concern is growing in Israel over what could happen if it continues to refuse to submit a peace proposal to the Quartet. Israel is completing its barrier along the border with Egypt. The PA says it will now be able to meet payroll since Israel has released tax funds. Hamas fires 120 employees. Israel is constructing news roads between West Bank settlements and occupied East Jerusalem. PLO officials say they are going to push forward with efforts to gain UN membership.Hamas leaders affirm that Jordan is not Palestine. Israel's practice of not allowing Palestinians to travel out of Gaza to pursue claims against occupation forces is being challenged in court. Israel may lose $250 million in US aid due to American budget constraints.

COMMENTARY: Rep. Steve Chabot says the US gave clear warnings in advance it would defund UNESCO over Palestine's membership. Yoel Marcus says renewing peace talks with the Palestinians is the key to repairing Israel's relationship with Egypt. Ha'aretz says PM Netanyahu should stop undermining Israeli democracy. Uri Savir says 64 years after the UN partition resolution, the conflict is more or less back to where it was then. Ghassan Rubeiz says it's going to be difficult for Palestinian leaders to reconcile. Nader Mousavizadeh says the Arab uprisings have strengthened the hand of the Israeli right. Andrew Sullivan challenges allegations of Israeli “pinkwashing.” Jeffrey Goldberg complains that the Israeli government has created ads suggesting it is impossible to remain Jewish in the United States. Ephraim Sneh says Israel cannot allow its relations with Jordan to deteriorate.