NEWS: Leaks reveal US efforts to wiretap Israeli diplomats. Pres. Abbas says he prefers negotiations, and will continue them but is going to have a UN initiative in September. Israel says it will tolerate some Palestinian protests in September. Abbas reportedly met secretly with DM Barak. PLO officials say they're keeping their options at the UN open for now. Settlers attack a West Bank mosque in retaliation for Israeli military demolition of "unauthorized" buildings. PM Fayyad says Israel is fully responsible for the attack. Turkey is suspending military ties with Israel. Analysts ask whether new tensions between Israel and Turkey serve Palestinian interests. The governor of the Bank of Israel warns of the financial costs of deteriorating ties with Turkey. A Palestinian citizen of Israel family wins the right to reside in a “Jewish community.” COMMENTARY: Roger Cohen says Israel is isolating itself. Nidal Foqaha says the United States should vote yes on a UN Palestinian statehood initiative. Jeffrey Goldberg says former Sec. of Defense Robert Gates told him Israel is an “ungrateful ally.” Gershon Baskin says youth are crucial to peace. David Newman says freedom of expression is in danger in Israel. Guy Goodwin-Gill says Palestinian statehood must follow a democratic process. Linda Heard says Turkey should not let Israel off the hook. Sari Bashi looks at the future of the UN flotilla report. Yossi Alpher says Israel can use the UN to make progress and corner Hamas at the same time. Ghassan Khatib says Israel now has to deal with an empowered Egyptian public on Palestine. Itamar Rabinovich says Israel’s best option is to renew negotiations with the Palestinians.