NEWS: Israeli occupation forces evict Palestinian protesters from the site of the controversial E1 settlement expansion, and PM Netanyahu vows to complete the project. Some Palestinian activists see such nonviolent protests as the wave of the future. Palestinian factions may be moving closer to a unity agreement, and Egypt says they have agreed to implement previous agreements. An American couple of Jewish origins are taken aback by aggressive security measures by Israel's airline. The EU details its planned drive for revivified peace talks in 2013. Jordan's King urges renewed Israeli-Palestinian negotiations. Aid groups in "Area C" must strictly follow Israeli occupation rules or risk having their projects destroyed. Palestinian officials, including PM Fayyad, call on Arab states to rescue the PA from its financial crisis. Palestinian refugees are reportedly starting to return to a beleaguered camp near Damascus. An Israeli soldier is charged with assaulting a Palestinian citizen of Israel at a checkpoint. The JTA profiles Yair Shamir, a possible successor to the indicted FM Lieberman as head of the Yisrael Beiteinu party. COMMENTARY: Dan Fleshler looks at threats facing Israeli-Palestinian security coordination. Shlomo Avineri says constructive unilateral steps by Israel and the Palestinians are now the only way forward. AP looks at tensions between Pres. Obama and Netanyahu. Amira Hass says the E1 protest marks a change of tactics for Palestinian activists. Karl Vick says Palestinians are adopting settler tactics. Aeyal Gross says it's the Israeli governments settlement policies, not Palestinian protesters, that are violating the law. Oudeh Basharat says Arab citizens in Israel must vote. Aluf Benn looks at the new film "The Gatekeepers." Alon Ben-Meir says lack of trust is a key reason for the impasse between Israel and the Palestinians. Uri Savir proposes a national emergency cabinet for the next Israeli government. Rajab Abu-Sariyyah says the Egyptian initiative for Palestinian national reconciliation is a failure. Larry Derfner profiles MK Zoabi, "the most hated woman in Israel." David Remnick profiles extremist Israeli politician Naftali Bennett.

NEWS: Israel says a bomb blast in Tel Aviv yesterday was "criminally motivated," and not political. Palestinian towns and villages are being affected by extreme weather. Israeli officials are trying to expedite controversial settlement expansion plans in occupied East Jerusalem. Israel exported $7 billion in arms in 2012. Critics within the Likud party say its new, more extreme leadership is abandoning some of the values of founder Menachem Begin. Palestinians say settlers destroyed over 200 olive trees near Nablus. Masked gunmen claiming to be Fatah dissidents in Nablus say they will confront Palestinian security services if arrested. The UAE is donating $50 million to a housing project in Gaza for Palestinian former prisoners of Israel. A news photograph depicts a settler woman and child using their bodies to prevent Palestinians from plowing their own fields in the occupied West Bank. Palestinian activists have been erecting structures in the strategic E1 area slated for settlement expansion by Israel. The Obama administration confirms that the PLO's upgrade in status at the UN violated no American laws. Palestinian protesters say Israel is increasingly using "skunk liquid" against them. COMMENTARY: The New York Times says "Israel, the Palestinians, Arab states and the international community all have a stake" in making sure the PA has the requisite funding to function properly. Mahmoud AbuRahma says Europe should rethink its role regarding Gaza border crossings. Ha'aretz interviews Amos Oz, who says the Netanyahu government is the most "anti-Zionist" ever. Anshel Pfeffer says the extremist and annexationist Israeli politician Naftali Bennett is not only stealing votes from PM Netanyahu, he's also outdoing him in command of English and messaging. Eyal Megged says a recent interview with former Shin Bet Chief Yuval Diskin should have been the political end of Netanyahu, but has made barely a ripple. Randa Haider says both Israelis and Palestinians will suffer if Israel's extreme right prevails in the coming election. Uri Savir says everyone might benefit from it, but a Jordanian-Palestinian confederation is up to the two parties. Hillel Halkin says Israeli voters don't face any good options. J.J. Goldberg critiques the management styles and "failures" of Netanyahu and DM Barak. Ben Caspit says the recent spat between Israel's officials and diplomats will not end well. David Horovitz says Israel's mainstream right has shifted to the extreme right.

NEWS: Pres. Abbas and Hamas leader Mishaal meet in Cairo. A car has exploded in Tel Aviv but no clear explanation is yet determined. Abbas rejects a conditional Israeli offer on Palestinian refugees from Syria. A Palestinian man in Gaza, and four in the West Bank, die due to extreme weather. Hamas' University in Gaza is training Hebrew teachers. At least two Palestinians are shot in confrontations with settlers near Nablus. Peace Now says the Israeli government has secretly approved yet another "unauthorized" settlement outpost. Israeli occupation forces demolish a Palestinian home in occupied East Jerusalem. Human rights groups express concern about the death of a Palestinian man in Hamas custody. Israel is persisting in new settlement expansion plans in occupied East Jerusalem in spite of unanimous international opposition. Rap music faces increasing censorship by Hamas in Gaza. COMMENTARY: Reuters interviews extremist Israeli politician Naftali Bennett. Zvi Bar'el says it's absurd that Israel's Arab citizens are so irrelevant to its elections and in the Knesset. Dov Weisglass says the only way forward now is the creation of a temporary Palestinian state with provisional borders, along the lines of Phase II of the Roadmap. Eitan Haber says Pres. Obama's appointment of Chuck Hagel signals Israel cannot move independently against Iran. Mendy Finkel says Israel's critics are too quick to dismiss prospects for a two-state solution. Chris McGreal says Hagel is a true friend of Israel. Laura Rozen says the campaign against Hagel has backfired against right-wing Jewish groups. Osman Mirghani says Hamas' acknowledgement that there is a big difference between opposition and governance, or fantasy and reality, should be a lesson to Islamists everywhere. Abeer Ayyoub says Iran has become the principal backer of Palestinian Islamic Jihad. Shlomi Eldar interviews MK Tibi. Aaron David Miller says the short-term future may be a three, not a two, state reality.

NEWS: Two Palestinians drown during flash floods in the occupied West Bank. Palestinian factions are trying to arrange a cease-fire at the main Palestinian refugee camp in Damascus. Israelis do not seem to share the concern some pro-Israel Americans are expressing about the nomination of Chuck Hagel. A new poll suggests Palestinian popular support for armed struggle has increased in recent months. Ha'aretz profiles controversial MK Hanin Zuabi. Two Palestinian citizens of Israel are convicted on charges of plotting terrorism. Pres. Abbas and Hamas leader Mishaal may meet in Cairo. Danny Dayan quits as leader of the Israeli settler council. A new poll suggests Israeli voters aren't enthusiastic about PM Netanyahu, but prefer him to everybody else. The first Palestinian envoy to Kuwait in 22 years has been appointed. COMMENTARY: The Media Line interviews PM Fayyad about the PA's fiscal crisis and political woes. The New York Times interviews Pres. Peres, who says Israelis don't want to be seen as an occupying state. Reuters interviews former Shin Bet chief Yaakov Peri, who says Israel faces the prospect of another Palestinian uprising driven by despair. Jerome Slater says as long as Israel is blockading Gaza, it cannot claim self-defense in combating Hamas. Abraham Foxman says Hagel would not have been his choice, but he's not opposed to the nomination. Osama Al Sharif says Palestinians only stand to gain by national reconciliation. John Whitbeck says that, from a legal point of view, the State of Palestine already exists, albeit under occupation. Grant Rumley says Israelis are avoiding a major foreign policy debate during their current election season. Michael Singh says American patience and persistence are required in pursuing Middle East peace.

NEWS: Changing official logos and letterheads of the PA to "the State of Palestine" shows the limitations of symbolic measures. Palestinians dismiss Israel's objections to the move. PM Netanyahu's frontrunner status in the upcoming Israeli election comes with certain political dangers. Pres. Obama's nomination of Chuck Hagel for Defense Secretary leaves some in Israel uneasy, but Deputy FM Ayalon defends the nominee. Sen. Rand Paul tells Pres. Abbas the US as opposed to Palestine joining more multilateral agencies. More fighting is reported in a large Palestinian refugee camp in Damascus, with five killed. Abbas appoints a new leadership for the Fatah committee in the Gaza. Teachers in the occupied West Bank are unable to afford transportation due to unpaid wages. Israeli security forces say there has been a significant rise in "terror acts" in the West Bank in the past two months. The EU says it wants to promote informal, "Track II," talks between Israelis and Palestinians. Gaza's archaeological treasures are at risk from war and neglect. A Palestinian farmer is engaged in a long-term struggle to reclaim his land from settlers. COMMENTARY: Roger Cohen says Israel's true friends, like Obama and Hagel, are willing to criticize it. Chemi Shalev says the dysfunctional Obama-Netanyahu relationship is the main cause of the Hagel controversy. Peter Beinart says mainstream Jewish groups like AIPAC aren't going to fight the Hagel nomination. Aaron David Miller says Hagel's views on Israel should not be any kind of litmus test for his nomination. Or Kashti says Israel's education minister is a threat to education and free thinking. The Guardian interviews right-wing Israeli politician Naftali Bennett, who vows there will never be a Palestinian state. Mohammad Yaghi asks if Israel's considering a "Jordanian option" for the occupied West Bank. Shlomi Eldar looks at a new Israeli movie about former security officials, "The Gatekeepers." Frida Ghitis says no one should give up on a two-state solution. Hussein Ibish says the growing controversy between the UAE and the Muslim Brotherhood has implications for the whole region, including Palestine.

NEWS: PM Fayyad says the PA fiscal crisis is being exacerbated by pledged Arab aid that is not being delivered. PM Netanyahu says Israel is now going to construct a barrier along the Syrian border. Sen. Rand Paul calls for a gradual reduction in aid to Israel. Egypt says it has foiled a car bombing attempt near the Gaza border. Netanyahu's rivals are considering an implausible center-left coalition for the coming election. Charges are dropped against an Israeli youth accused of attacking a Palestinian taxi. Israeli security officials believe there is a "low possibility" of another Palestinian uprising. Hamas officials say they will be selecting a new leader this month. Netanyahu says he still stands behind his Bar-Ilan speech in which he endorsed a two-state solution. The PLO says it's working to end violence in Palestinian refugee camps in Syria. Many Palestinian citizens of Israel seem ready to ignore the upcoming Israeli election. COMMENTARY: Jackson Diehl says the Obama administration should adopt a low-key approach to Middle East peace, but Jeremy Ben-Ami says bold measures are required to save the two-state solution. Ha'aretz says the Israeli government is wrong to stop Palestinian prisoners from seeking an education. Avner Cohen says Asma Aghbarieh-Zahalka is creating a new political discourse in Israel. S. Daniel Abraham says, in order to survive as a Jewish state, Israel needs a Palestinian state alongside it. Ben Caspit says Netanyahu must now choose between the sane parties of the center-left or the not-so-sane religious right. The Jerusalem Post says Palestinian leaders are irresponsible in blaming Israel for their fiscal crisis. Jeff Barak says Netanyahu's policies have been disastrous. Jonathan Freedland says Israel's shift to the right will cost it the friends it needs most. Peter Beaumont says Netanyahu appears to be a "strong man with a fearful heart." Alex Joffe says Palestinians may hate Netanyahu, but they are playing into his hands at every stage. The Daily Star says Palestinians need to persist in pursuing national reconciliation. Hamas figure Kassem Kassir says the group would like to maintain relations with Iran, if possible. Raphael Ahren says Netanyahu and FM Lieberman don't mean what the world thinks they're talking about when they refer to a two-state solution. Tal Kra-Oz looks at the rise of the annexationist, one-unequal-state, movement on the Israeli right.

NEWS: Fatah holds its first rally in Gaza in years, which some see as more evidence of potential Palestinian national reconciliation. An Israeli and a Palestinian chef co-author a book on Jerusalem food. Former Shin Bet chief Diskin harshly criticizes PM Netanyahu's attitudes towards Iran. Two documentaries on the Israeli-Palestinian conflict are shortlisted for this year's Academy Awards. Palestinian officials say the PA fiscal crisis may make joining more UN and multilateral agencies prohibitively costly. Pres. Abbas says Palestinians need Arab financial support, which has been pledged but not delivered. Abbas authorizes PA agencies to operate under the rubric of the "State of Palestine" on all official documents. Reports suggest the Israeli government may be delaying highly controversial E1 settlement construction plans. Palestinian refugees trying to flee the war in Syria are being charged hefty visa fees at the Lebanese border. COMMENTARY: Ziad Asali and Ghaith al-Omari say the international community needs to move quickly to salvage the Palestinian institution-building program. Zbigniew Brzezinski says it would make no sense for the United States to attack Iran. Yoel Marcus says if Pres. Peres really believes in his strong disagreement with Israel's policies towards the Palestinians, he should resign. Sawsan Zaher says the Israeli government is engaged in a cover-up of information clearing MK Zoabi from any wrongdoing in the Gaza flotilla affair. The Jerusalem Post says Israel's diplomats can't be expected to defend policies that lack adequate explanation. Ben Caspit says Israeli society is acting recklessly on Jerusalem. Akiva Eldar says demographics suggest a continued rise of Israel's right-wing parties. Adnan Abu Amer says it's only a matter of time before there is another Gaza war. Shlomi Eldar strongly criticizes Hamas' efforts to ban journalists in Gaza from working with any Israeli media outlets. Alan Berger says the US should help Israelis make peace with the Palestinians, even if that means meddling in their elections. Alan Philps says Israel's slide to the extreme right is gravely endangering the country.

NEWS: Occupation forces clash with Palestinian protesters after Israeli troops raid a West Bank village. Villagers are still trying to recover from the spasm of violence. Israel says it has "yet to decide" whether to transfer Palestinian tax revenue to the PA this month or not. An Israeli NGO says settlement construction in occupied East Jerusalem reached a new high in 2012. Israel orders dozens of Bedouins to leave their villages in the occupied West Bank so it can conduct military exercises. Israel has finished most of its barrier along the Egyptian border. Pres. Abbas will visit Egypt on Jan. 11. The PA cancels electricity debts for all West Bank residents. Israeli settlers are farming privately-owned Palestinian land while the military keeps the owners away. Likud party members are increasingly calling for annexation of occupied Palestinian territories in the run-up to the election in Israel. The JTA profiles Netanyahu aide Ron Dermer. COMMENTARY: Ari Shavit says the settlers are trying to politically occupy Israel. Amira Hass says Palestinian "threats" to Israel are driven by fears that the status quo could remain permanent, but Abdul Rahman Al-Rashid says Palestinians really should consider dissolving the PA. Shimon Shiffer says the attack by Israeli officials on diplomats who question the timing of the E1 settlement expansion announcement is bewildering. A.B. Yehoshua says Israelis have to demand an end to the settlement project in order to save Israel as a Jewish state, but the Washington Post dismisses the significance of settlements. Ariel Katz says both Israelis and Palestinians are driven by self-preservation. Geoffrey Aronson harshly criticizes PM Fayyad's policies, but Hussein Ibish says his account is fundamentally wrong.