Three militants are killed in an explosion at a Gaza training camp. PM Fayyad says the Palestinian state will be in the 1967 borders. Pres. Abbas visits Egypt. Hamas is challenged by more extreme Jihadists. A holy site near Nablus becomes a new flashpoint in the occupied territories. Aaron David Miller says now is not the time for diplomatic action by the US. Activists in Gaza warn Israel not to block an upcoming flotilla, but Israel says its navy is ready to board ships again. A Palestinian artist develops passport stamps. Turkey's foreign minister is highly critical of Israel in an interview with Reuters. Israeli commandos get special training for the flotilla. Hamas' founder is memorialized in a new museum. Controversial archeology continues in Jerusalem. Palestinians are planning their approach to the UN in September. Akiva Eldar says Jerusalem is already divided. FM Lieberman may be charged with corruption. Tensions are rising between Palestinian residents and occupation forces in East Jerusalem. A Knesset bill seeks to change the names of Jerusalem neighborhoods. Israel arrests 12 alleged Palestinian extremists in the West Bank. Gershon Baskin says it's crucial to salvage the two-state solution. Greg Philo says Israel successfully spins images of conflict. A majority of both Israelis and Palestinians expect a third intifada. Israeli towns want to the screen residents for "social suitability," which Palestinians say will be code for ethnic discrimination. Egypt says the opening of the Gaza border doesn't lessen Israel's responsibilities. Egyptian analysts say major changes to the relationship with Israel are unlikely under any new government. Yossi Alpher says PM Netanyahu's strategy is all about popular opinion and Ghassan Khatib says he offered no new ideas in his Washington trip.

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