NEWS: The World Bank says the Palestinian fiscal crisis is intensifying. Various scenarios face Pres. Abbas in the context of the emerging crisis. The Israeli military holds its largest snap drill in many years. The PA criticizes Egypt for hosting a Hamas leader. Like Mitt Romney, many in the Middle East are losing confidence in the prospect of a two-state solution. Abbas says he will deliver a speech at the UN in September asking for nonmember observer state status for Palestine. A Palestinian militant-turned-theater director detained by PA security forces has resumed a hunger strike. Israeli settlements keep expanding despite the evacuation of a tiny “unauthorized” outpost. An advisor to Pres. Morsy says amending the peace treaty with Israel is "only a matter of time.” COMMENTARY: David Sanger says Romney's recent comments could prove problematic if he is elected president. Khaled Diab describes Palestinians and Israelis jointly visiting Israel's Holocaust Memorial. Zvi Bar'el looks at a new Israeli book about Hamas. Eitan Gilboa says Israel would be wise not to interfere in US politics. Chris McGreal says PM Netanyahu has successfully made Iran the only Middle East issue in the United States. Walid Khadduri says energy security is a priority for Israel. Hani al-Masri says restructuring the PLO is the key to Palestinian unity. David Rothkopf says Netanyahu has exposed the fallacy of an all-powerful “Israel Lobby.” Aaron David Miller asks if Romney can be trusted with Middle East policy. Tony Karon says Palestinians are used to unfair attacks such as those in the recently released Romney video.