An Israeli settler is killed by Palestinian police near a holy site, sparking new tensions. His aunt, an Israeli cabinet minister, says he was killed by a terrorist disguised as a police officer, but an investigation shows the group tried to break through a Palestinian roadblock. Settlers say they go there every night without Palestinian permission. PM Netanyahu calls the incident, which is in the context of an uptick in violence, “heinous.” The New York Times says Pres. Obama must present a peace plan. Israel’s West Bank separation barrier creates psychological divisions as well as physical ones. An Israeli IT company hires Palestinian programmers. Egypt closes the crossing with Gaza for the holidays. PM Fayyad says national unity is crucial for statehood and that Palestinians will soon celebrate Easter in East Jerusalem. Efforts to resume negotiations are underway, and a PLO official says they may not approach the UN if serious talks resume. Israeli officials say Hamas may want to capture more Israeli soldiers. Alon Ben-Meir says Israel must make the next diplomatic move. David Rosenberg says Palestinian leaders are creating their state and this is good for Israel. Gary Younge says the status quo is neither sustainable nor desirable for Israelis or Palestinians. Elliot Jager looks at the history of the Likud party. Tony Karon says the UN is the right place for Middle East diplomacy. Fawaz Turki says there is an intolerant streak in Palestinian society that must be challenged. Musa Keilani says unless something significant happens before September, the UNGA will recognize Palestine. Dan Ephron profiles Pres. Abbas in Newsweek.

Pres. Gul of Turkey says Israeli-Palestinian peace will determine the outcome of changes in the Middle East political landscape. Speculation grows as to whether PM Netanyahu or Pres. Obama will be the first to introduce new peace ideas. The new PA development plan looks beyond independence towards building the new state. A new outpost is founded by settlers and immediately dismantled by occupation forces. Israeli tanks enter an industrial zone in Gaza. Sec. Clinton says there is an urgent need to return to negotiations, and Jordan’s King says an EU role is vital. Pres. Abbas reaffirms his opposition to another armed intifada, and PM Fayyad supports nonviolent protests. Ari Shavit says Israel is facing a last chance to make peace and establish its right to exist. Abbas seeks “advice” from France about Palestinian statehood. Gideon Levy says Netanyahu must explain his vision for the future. The family of a captured Israeli soldier accuses Netanyahu of exploiting them. Former Amb. Indyk says the UN may vote to recognize Palestine in September. Larry Derfner says the murder of settlers is unacceptable, but doesn’t justify building more settlements. The US tax-exempt status of the Jewish National Fund is being legally challenged because of its discrimination against non-Jews. JJ Goldberg says Israel is refusing to take yes for an answer from the Palestinians on peace. Daoud Kuttab asks when Palestinians will form new political parties. Basem Ezbidi says both Fatah and Hamas are exploiting the election issue for political purposes.