PLO officials say negotiations will be difficult but an agreement is possible. The settlement freeze issue is unresolved, being debated within the Israeli cabinet, and the US says will be discussed in negotiations. David Makovsky says there is reason for optimism. The CSM says international support is critical. Pres. Abbas appoints a new Chief of Staff. Palestinian students in occupied East Jerusalem face a critical shortage of classrooms. Facing a budget crunch, the PA cuts spending on vehicles. A strike by Israeli diplomats threatens PM Netanyahu's trip to Washington. Aziz Abu Sarah sees hope for the future. The UN says Israel is not cooperating with its investigation into the flotilla attack. Bilal Hassen says the US is not supporting its Palestinian allies. Ghassan Khatib says negotiations still lack clear terms of reference. Yossi Alpher says the negotiations will be useful, but probably not on final status issues. Hussein Ibish welcomes negotiations but says Palestinian state building remains essential.

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