Roger Cohen says Israelis are trapped between security and anxiety. The Washington Post profiles Israeli settlement activity in Jerusalem. In a new poll, 60% of Palestinians favor proximity talks, huge leads for Fatah over Hamas. The Arab Bank closes two out of three Gaza branches due to Hamas policies. Bethlehem prepares for the second Palestine Investment Conference. Special Envoy Mitchell meets PM Netanyahu. Hamas condemns Pres. Abbas for opposing violence. Ha'aretz analyzes the list of goods banned from Gaza by Israel. The Israeli Foreign Ministry is working closely with an ultra-right wing organization on Palestinian "incitement." Israel's Vice-Premier says talks are doomed to failure. Avi Shlaim and Simon Mohun say the OECD must put conditions on Israel's membership. An Israeli general is accused of a cover-up in the death of Rachel Corrie. Patrick Seale says the US extracted valuable concessions from Israel but Palestinians may squander them. Rami Khouri looks at the debate on the pro-Israel lobby. George Hishmeh says Walt and Mearsheimer disagree about the viability of a two-state solution. Daoud Kuttab says Arabs are pessimistic about Israel but see hope in the US. Alon Ben-Meir says Arab states should re-prioritize the Arab Peace Initiative.

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