News reports today are dominated by speculation about a potential prisoner exchange between Israel and Hamas involving captured Israeli soldier Gilad Shalit, and Ha'aretz examines who the winners and losers would be in the event of an agreement. Fox news interviews PM Fayyad. IPS reports that Palestinian children in the occupied territories face daily attacks from Israeli settlers. Two Hamas fighters are killed in an explosion in Gaza, and Yasser Abed Rabbo says Hamas would form a pact with the devil to weaken the PLO. Pres. Abbas says there will be no third intifada. A Palestinian student in Israel appears to have been rejected from university program because of his ethnicity. The BBC profiles life in divided and occupied Jerusalem. Gershon Baskin considers the merits of the PA government state building plan. In Bitter Lemons, Yossi Alpher and Ghassan Khatib debate how to move forward given the present impasse. In the New York Times blog, Daniel Gordis, Daoud Kuttab and David Makovsky debate the prospect of a Hamas-Israel prisoner exchange.

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