Palestinians have reportedly opened proximity talks with a surprisingly generous offer on borders. Israel is blocking official mail between the West Bank and Gaza. PA boycott volunteers say the Israeli army is searching for them. Israel says it is determined to break the boycott. Settlers in occupied East Jerusalem denounce negotiations. Experts say water may not prove a difficult issue. Palestinians accuse Israel of going ahead with planned home demolitions. Palestinian officials deny they are secretly negotiating with NATO. Shaul Mishal and Doron Mazza say Israel should propose a Palestinian state with provisional borders. Israel bombs three Gaza tunnels. The Economist profiles Palestinian state building efforts and Israeli extremists protest against the project. The Jerusalem Post says negotiations are off to a rocky start. Jonathan Power says Israel's policies are self-defeating.

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