Israel's handling of a Libyan aid ship implements lessons from the Gaza flotilla attack, and the committee investigating it demands documents. A crossing in southern Gaza is due to expand. PLO officials reiterate there will be no direct talks without further progress and call other suggestions “an insult.” Occupation forces demolish two Palestinian homes near Hebron. The Arab League chief is optimistic about negotiations. Future applicants for Israeli citizenship may have to swear allegiance to a “Jewish state.” West Bank economic growth is reflected in expanded car dealerships. Settlers are pushing for a one-state solution with the West Bank. FM Lieberman calls for complete Israeli disengagement with Gaza. Settlers in Jerusalem recruit Israeli children to fight police in the event of the enforcement of a long-delayed court-ordered eviction. 46% of Israelis think Pres. Obama is pro-Palestinian. Israel tells the UN the West Bank is outside its boundaries. Seth Friedman says Israel's hand must be forced on home demolitions. The Independent profiles a Gaza travel agent. Support for Israel among Americans remains very strong. George Hishmeh asks if US policy is stuck until the November elections.

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