The Christian Science Monitor profiles the Israeli city of Tel Aviv (1). President Obama seeks reciprocity from Arab nations as well as Israel in pursuit of Mideast peace (2), while Bahrain reacts to calls from its crown prince for a new approach to Arab relations with Israel (7). BBC News tells the story of a four year old girl paralyzed in the Gaza war (5). A report released yesterday shows that the Israeli government is substantially subsidizing Jewish settlements in the West Bank (8). UN Secretary General Ban Ki-Moon calls on Israel to halt settlement construction (14).

The US-Israel dispute continues over settlements (1, 2, 5, 8, 9, 10, 11), especially in Jerusalem, and the future of the separation barrier (7, 18). Speculation continues about the state of relations between the Obama administration and PM Netanyahu (6, 13, 15, 16). Netanyahu urges Jewish investment in the Palestinian economy (14). Hamas claims it will not block a PA-Israel agreement (4). The Israeli government decides to remove all references to the Palestinian Nakba from school textbooks (17).

The US-Israel dispute over settlements generally and construction in East Jerusalem in particular continues to develop (2, 3, 5, 7, 13, 16, 17). Several reports highlight divisions within Israel on the issue (1, 9), while Chief Sephardi Rabbi Shlomo Amar called on American Jews to insist that settlements were a religious requirement. Ha’aretz reports that Israel is considering dismantling more outposts (6) but also confiscating more Palestinian land (7), and confirms that in spite of claims by PM Netanyahu and other Israeli officials, very few Palestinians are eligible to buy property in West Jerusalem (8).

The US-Israel dispute about settlement activities has now focused on planned construction in Jerusalem (2, 3, 4, 5, 6, 13, 17). This ongoing controversy continues to fuel speculation about PM Netanyahu's relations with the Obama administration and future as Israeli head of government (1, 7, 8, 10, 11). Meanwhile, settlement-freeze talks continue (12). The PA re-opens the office of al-Jazeera in the West Bank (15), but talks between Fateh and Hamas are postponed (16).

Coverage continues of emerging economic growth in parts of the West Bank (1, 12, 17). The Washington Post features an op-ed by former Israeli PM Olmert arguing against a focus on the question of Israeli settlements, and another by crown prince of Bahrain Shaikh Salman bin Hamad al-Khalifa urging Arab states to communicate their desire for peace directly to the Israeli public (2, 3). In the Guardian, an anonymous Israeli writer questions Israel’s housing minister’s stance on keeping Arabs and Jews in separate towns, while Jerusalem's legal adviser has ordered the demolition of settler structures adjacent to the old city (5, 7). In Ha’aretz, Ari Shavit argues that Israel must make progress with the Palestinians before it can push the international community for a harder line on Iran, but Aluf Benn suggests that the Obama administration is still far from presenting a detailed peace plan of its own (8, 6). Two articles consider the state of both the traditional and the more peace-oriented pro-Israel groups in Washington (13, 15).

Secretary of State Hillary Clinton discusses Palestine in her address to the Council on Foreign Relations yesterday (1). Former U.S. diplomat Thomas Pickering meets with Hamas officials in Switzerland (2). The group of U.S. Jewish leaders that met with President Obama on Monday report that the meeting has allayed their concerns about his approach to Israel and Mideast peace (3). The Palestinian Authority shuts down the Al Jazeera television network in the West Bank (5) (12). Prime Minister Netanyahu is reportedly considering attending and speaking at the UN General Assembly meeting in September (15). Quartet envoy Tony Blair lauds improvements made by the Palestinian Security Forces in the West Bank (18).

An interview with Bassem Khoury, Palestinian Minister of National Economy lays out the PA economic policies (1). A group of Israeli soldiers speak out about widespread abuses they allege took place during the Gaza war (3) (7), while Defense Minister Ehud Barak says that any criticism of the IDF should be directed at him (12). The International Monetary Fund says the Palestinian economy is showing strong signs of growth (6). The World Bank pledges $33.5 million for Palestinian infrastructure initiatives (15). President Obama meets with U.S. Jewish leaders to discuss his approach to Israel and Mideast peace (16).

The American Charities for Palestine reports on the progress of a major public works project in the West Bank village of Beit ur al Tahta (1). Middle East Progress features a piece by Ian Bomberg examining the importance of economic growth in the West Bank (2). The Christian Science Monitor looks at visits being made by locally based U.S. diplomats to Israeli settlements (3). Quartet envoy Tony Blair praises recent steps taken by the Israeli government to ease the quality of life in the West Bank (6). The World Bank pledges $12.5 million for Palestinian Authority reconstruction operations in Gaza (7). Haaretz speculates on the slowed construction of the West Bank barrier wall (12).

The European Union’s foreign policy chief calls on the UN Security Council to recognize a Palestinian state (1). Britain revokes several arms exporting licenses from companies selling weapons parts to Israel (2). An article in the Jordan Times looks at how Palestinian children are being paid to work in the dangerous Gaza smuggling tunnels (6). Palestinian President Mahmoud Abbas reiterates his refusal to resume peace talks until Israeli Prime Minister Netanyahu accepts the two-state solution and halts settlement activity (9). A series of opinion articles examine the ongoing issue of a proposed Israeli settlement freeze (3) (10) (11) (12).

The West Bank city of Nablus sees signs of renewed economic growth (1) as Israel begins to relax restrictions on movement for Palestinians (9)(13). Tensions between the EU and Israel continue during a visit by the German foreign minister (2). Six months after the cessation of the war in Gaza, the outlook for the area remains grim (3)(7). Israeli National Security Adviser Uzi Arad rules out a total withdrawal from the Golan Heights during a discussion about possible talks with Syria (4). Egypt claims progress in negotiations for the release of captive IDF soldier Gilad Shalit (8)(10). Israel may permit a specially trained Palestinian counterterrorism unit to operate in the West Bank (12).