PM Netanyahu signals flexibility on settlement building, and says Palestinians must recognize Israel as a “Jewish state.” Pres. Obama says negotiations may first focus on borders. Jackson Diehl asks which leader is bluffing. Ron Grossman urges giving peace a chance. Three Palestinians are killed by Israeli shelling in northern Gaza. Israel is allowing car parts into Gaza. Palestinian negotiators deny infighting. Peace Now says over 2,000 new settlement units will be built when the partial moratorium expires on Sept. 26. Ha'aretz looks at the plight of Palestinian residents of Jerusalem. Settlers vow to keep building no matter what and threaten to topple the Netanyahu government. A Bedouin village in southern Israel is raised for the fifth time in a few weeks. The end of Ramadan shows unmistakable signs of prosperity in the West Bank. The Palestinian labor group launches international campaign to boycott settlement products. The Arab News says Palestinians cannot continue negotiating with settlement construction ongoing.

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