Abir Dandis, the mother of the two girls who were murdered in the Negev town of Al-Fura’a last week, couldn't find a police officer to listen to her warnings, neither in Arad nor in Ma’ale Adumim. Both police stations operate in areas where Israel wants to gather the Bedouin into permanent communities, against their will, in order to clear more land for Jewish communities. The dismissive treatment Dandis received shows how the Bedouin are considered simply to be lawbreakers by their very nature. But as a resident of the West Bank asking for help for her daughters, whose father was Israeli, Dandis faced the legal-bureaucratic maze created by the Oslo Accords.

The Palestinian police is not allowed to arrest Israeli civilians. It must hand suspects over to the Israel Police. The Palestinian police complain that in cases of Israelis suspected of committing crimes against Palestinian residents, the Israel Police tend not to investigate or prosecute them.

In addition, the town of Al-Azaria, where Dandis lives, is in Area B, under Palestinian civilian authority and Israeli security authority. According to the testimony of Palestinian residents, neither the IDF nor the Israel Police has any interest in internal Palestinian crime even though they have both the authority and the obligation to act in Area B.

The Palestinian police are limited in what it can do in Area B. Bringing in reinforcements or carrying weapons in emergency situations requires coordination with, and obtaining permission from, the IDF. If Dandis fears that the man who murdered her daughters is going to attack her as well, she has plenty of reason to fear that she will not receive appropriate, immediate police protection from either the Israelis or the Palestinians.

Dandis told Jack Khoury of Haaretz that the Ma’ale Adumim police referred her to the Palestinian Civil Affairs Coordination and Liaison Committee. Theoretically, this committee (which is subordinate to the Civil Affairs Ministry) is the logical place to go for such matters. Its parallel agency in Israel is the Civilian Liaison Committee (which is part of the Coordination and Liaison Administration - a part of the Civil Administration under the Coordinator of Government Activities in the Territories).

In their meetings, they are supposed to discuss matters such as settlers’ complaints about the high volume of the loudspeakers at mosques or Palestinians’ complaints about attacks by settlers. But the Palestinians see the Liaison Committee as a place to submit requests for permission to travel to Israel, and get the impression that its clerks do not have much power when faced with their Israeli counterparts. In any case, the coordination process is cumbersome and long.

The Palestinian police has a family welfare unit, and activists in Palestinian women’s organizations say that in recent years, its performance has improved. But, as stated, it has no authority over Israeli civilians and residents. Several non-governmental women’s groups also operate in the West Bank and in East Jerusalem, and women in similar situations approach them for help. The manager of one such organization told Haaretz that Dandis also fell victim to this confusing duplication of procedures and laws. Had Dandis approached her, she said, she would have referred her to Adalah, the Legal Center for Arab Minority Rights in Israel, which has expertise in navigating Israel’s laws and authorities.

John Kerry revealed his long-awaited plan for peace in the Middle East on Sunday, hinging on a $4bn (£2.6bn) investment in the Palestinian private sector.

The US secretary of state, speaking at the World Economic Forum on the Jordanian shores of the Dead Sea, told an audience including Israeli president Shimon Peres and Palestinian leader Mahmoud Abbas that an independent Palestinian economy is essential to achieving a sustainable peace.

Speaking under the conference banner "Breaking the Impasse", Kerry announced a plan that he promised would be "bigger, bolder and more ambitious" than anything since the Oslo accords, more than 20 years ago.

Tony Blair is to lead a group of private sector leaders in devising a plan to release the Palestinian economy from its dependence on international donors. The initial findings of Blair's taskforce, Kerry boasted, were "stunning", predicting a 50% increase in Palestinian GDP over three years, a cut of two-thirds in unemployment rates and almost double the Palestinian median wage. Currently, 40% of the Palestinian economy is supplied by donor aid.

Kerry assured Abbas that the economic plan was not a substitute for a political solution, which remains the US's "top priority".

Peres, who had taken the stage just minutes before, also issued a personal plea to his Palestinian counterpart to return to the negotiations.

"Let me say to my dear friend President Abbas," Peres said, "Should we really dance around the table? Lets sit together. You'll be surprised how much can be achieved in open, direct and organised meetings."

Thick locks hug the front gates of shuttered shops, now covered in graffiti and dust from lack of use. Only a handful of customers pass along the dimly lit road, sometimes stopping to check the ripeness of fruits and vegetables, or ordering meat in near-empty butcher shops.

“All the shops are closed. I’m the only one open. This used to be the best place,” said 64-year-old Mustafa Sunocret, selling vegetables out of a small storefront in the marketplace near his family’s home in the Muslim quarter of Jerusalem’s Old City.

Amidst the brightly coloured scarves, clothes and carpets, ceramic pottery and religious souvenirs filling the shops of Jerusalem’s historic Old City, Palestinian merchants are struggling to keep their businesses alive.

Faced with worsening health problems, Sunocret told IPS that he cannot work outside of the Old City, even as the cost of maintaining his shop, with high electricity, water and municipal tax bills to pay, weighs on him.

“I only have this shop,” he said. “There is no other work. I’m tired.”

Abed Ajloni, the owner of an antiques shop in the Old City, owes the Jerusalem municipality 250,000 Israeli shekels (68,300 U.S. dollars) in taxes. He told IPS that almost every day, the city’s tax collectors come into the Old City, accompanied by Israeli police and soldiers, to pressure people there to pay.

“It feels like they’re coming again to occupy the city, with the soldiers and police,” Ajloni, who has owned the same shop for 35 years, told IPS. “But where can I go? What can I do? All my life I was in this place.”

He added, “Does Jerusalem belong to us, or to someone else? Who’s responsible for Jerusalem? Who?”

Illegal annexation

Israel occupied East Jerusalem, including the Old City, in 1967. In July 1980, it passed a law stating that “Jerusalem, complete and united, is the capital of Israel”. But Israel’s annexation of East Jerusalem and subsequent application of Israeli laws over the entire city remain unrecognised by the international community.

Under international law, East Jerusalem is considered occupied territory – along with the West Bank, Gaza Strip and Syrian Golan Heights – and Palestinian residents of the city are protected under the Fourth Geneva Convention.

Jerusalem has historically been the economic, political and cultural centre of life for the entire Palestinian population. But after decades languishing under destructive Israeli policies meant to isolate the city from the rest of the Occupied Territories and a lack of municipal services and investment, East Jerusalem has slipped into a state of poverty and neglect.

“After some 45 years of occupation, Arab Jerusalemites suffer from political and cultural schizophrenia, simultaneously connected with and isolated from their two hinterlands: Ramallah and the West Bank to their east, West Jerusalem and Israel to the west,” the International Crisis Group recently wrote.

Israeli restrictions on planning and building, home demolitions, lack of investment in education and jobs, construction of an eight-foot-high separation barrier between and around Palestinian neighbourhoods and the creation of a permit system to enter Jerusalem have all contributed to the city’s isolation.

Formal Palestinian political groups have also been banned from the city, and between 2001-2009, Israel closed an estimated 26 organisations, including the former Palestinian Liberation Organisation headquarters in Jerusalem, the Orient House and the Jerusalem Chamber of Commerce.

Extreme poverty

Israel’s policies have also led to higher prices for basic goods and services and forced many Palestinian business owners to close shop and move to Ramallah or other Palestinian neighbourhoods on the other side of the wall. Many Palestinian Jerusalemites also prefer to do their shopping in the West Bank, or in West Jerusalem, where prices are lower.

While Palestinians constitute 39 percent of the city’s population today, almost 80 percent of East Jerusalem residents, including 85 percent of children, live below the poverty line.

“How could you develop [an] economy if you don’t control your resources? How could you develop [an] economy if you don’t have any control of your borders?” said Zakaria Odeh, director of the Civic Coalition for Palestinian Rights in Jerusalem, of “this kind of fragmentation, checkpoints, closure”.

“Without freedom of movement of goods and human beings, how could you develop an economy?” he asked.

“You can’t talk about independent economy in Jerusalem or the West Bank or in all of Palestine without a political solution. We don’t have a Palestinian economy; we have economic activities. That’s all we have,” Odeh told IPS.

Israel’s separation barrier alone, according to a new report by the United Nations Conference on Trade and Development (UNCTD), has caused a direct loss of over one billion dollars to Palestinians in Jerusalem, and continues to incur 200 million dollars per year in lost opportunities.

Israel’s severing and control over the Jerusalem-Jericho road – the historical trade route that connected Jerusalem to the rest of the West Bank and Middle East – has also contributed to the city’s economic downturn.

Separation of Jerusalem from West Bank

Before the First Intifada (Arabic for “uprising”) began in the late 1980s, East Jerusalem contributed approximately 14 to 15 percent of the gross domestic product (GDP) in the Occupied Palestinian territories (OPT). By 2000, that number had dropped to less than eight percent; in 2010, the East Jerusalem economy, compared to the rest of the OPT, was estimated at only seven percent.

“Economic separation resulted in the contraction in the relative size of the East Jerusalem economy, its detachment from the remaining OPT and the gradual redirection of East Jerusalem employment towards the Israeli labour market,” the U.N. report found.

Decades ago, Israel adopted a policy to maintain a so-called “demographic balance” in Jerusalem and attempt to limit Palestinian residents of the city to 26.5 percent or less of the total population.

To maintain this composition, Israel built numerous Jewish-Israeli settlements inside and in a ring around Jerusalem and changed the municipal boundaries to encompass Jewish neighbourhoods while excluding Palestinian ones.

It is now estimated that 90,000 Palestinians holding Jerusalem residency rights live on the other side of the separation barrier and must cross through Israeli checkpoints in order to reach Jerusalem for school, medical treatment, work, and other services.

“Israel is using all kinds of tools to push the Palestinians to leave; sometimes they are visible, and sometimes invisible tools,” explained Ziad al-Hammouri, director of the Jerusalem Centre for Social and Economic Rights (JCSER).

Al-Hammouri told IPS that at least 25 percent of the 1,000 Palestinian shops in the Old City were closed in recent years as a result of high municipal taxes and a lack of customers. “Taxation is an invisible tool…as dangerous as revoking ID cards and demolishing houses,” he said. “Israel will use this as pressure and as a tool in the future to confiscate these shops and properties.”

Both Israelis and Palestinians came away from Barack Obama's visit to the Holy Land with the feeling he would do more for Mideast peace than President Bush has. But neither side seemed fully convinced that Obama would have their interests at heart.

Israelis fear that an Obama administration would be too soft on Iran and too hard on them, and his visit didn't seem to fully dispel those concerns. And Palestinians spoke of a clear bias toward Israel.

"Instead of running away from the Middle Eastern issues, he intends to place them on the top of his diplomatic list of priorities," Israeli commentator Nahum Barnea wrote in the Yediot Ahronot daily.

The Democratic presidential candidate toured Yad Vashem's Holocaust memorial, where he donned a skullcap, and he stopped in an Israeli town that has been barraged by Palestinian rocket fire. Obama also visited the Western Wall - Judaism's holiest site - where he touched it and prayed. His one stop in the West Bank was the headquarters of moderate Palestinian President Mahmoud Abbas.

"What if Obama had put a Palestinian headdress on his head, as he put on a Jewish skullcap yesterday? What if he took off his shoes and stepped into the Al-Aqsa mosque, as he did at the Western Wall? That would be balanced behavior," wrote editor Hafeth Barghouti in Thursday's edition of the West Bank newspaper Al-Hayyat al-Jedida.

Still, Obama's stop in the West Bank stood in sharp contrast to a decision by Republican challenger John McCain to visit only Israel and not the Palestinian territories during a trip to the region in March.

Israelis and Palestinians were in rare agreement on one point: Obama told each what they wanted to hear, but his real audience was Jewish voters back home in America.

"He is here in order to impress the voters back home," said Israeli political analyst Yossi Alpher. "Israelis find him interesting, he says the right things carefully, but it's not the kind of visit that one can assess in any substantive or qualitative way."

Obama's candidacy has raised concern among some in Israel and Jewish communities elsewhere because of his declared willingness to speak to Iran. His family's Muslim roots have added to the unease, even though Obama is a Christian.

During his trip, Obama assured Israelis that if elected, he would not pressure them to compromise their security. He also backed Israel's right to defend itself against attacks. The "special relationship" between the U.S. and Israel would be preserved, he said.

He told the Jerusalem Post daily that "I will do everything in my power to stop Iran getting the bomb" - a welcome statement in a country that considers Iran to be its fiercest enemy. Speaking to the mass circulation Yediot Ahronot, he said a military option must be on the table to make sure Iran takes diplomatic efforts to prevent it from building nuclear weapons seriously.

Before dawn Thursday, Obama inserted a small written prayer into a crevice of the Western Wall - a common practice among visitors there - and bowed his head in worship.

Orthodox men at the wall for morning prayers ran down the steps to get a look at the candidate. Many reached out to shake his hand, although one Israeli hard-liner called out in a booming voice, "Obama, Jerusalem is not for sale!"

Hard-liners don't want Israel to cede to the Palestinians any part of east Jerusalem, captured in the 1967 Mideast war. But Palestinians want the eastern sector of the disputed city to serve as capital of a future state.

Obama had caused a flap over the issue days before his visit here when he said Jerusalem should not be divided - a statement that infuriated the Palestinians. Obama later said the city's fate should be negotiated.

Abraham Foxman, director of the Anti-Defamation League, a U.S.-based Jewish organization, said he met briefly with Obama on Wednesday evening, and the candidate repeated his commitments to Israel. Foxman said he had heard Israelis express concerns earlier.

"To what extent he's laid them to rest, time will tell," he said, adding that Israelis were "impressed with the depth of his knowledge, his understanding and his response."

In his brief visit to the West Bank city of Ramallah, Obama expressed strong support for the creation of an independent Palestinian state, backed negotiations between Israel and moderate Palestinians and rejected talks with the violently anti-Israel Islamic Hamas group that overran Gaza last year.

"It was a campaign visit, but the positive thing for Palestinians was the pledge that Barack Obama will work from the first day in the White House, if he gets elected, to find a solution to the Palestinian issue," said Abbas political adviser Nimr Hamad. "Because it was a campaign visit, it was focused much more on Israel, to attract the Jewish vote."

Mansour Habayed, 28, who works for a Palestinian cell phone company, noted that Obama spent much more time in Israel than in the West Bank. "I am not optimistic that Obama will be a different president of the U.S., in terms of finding a solution to our problem," he said.

Israel's military said it began digging up the bodies of Lebanese fighters yesterday after the government struck a deal with Hezbollah guerrillas to swap five living prisoners and dozens of bodies for two Israeli soldiers captured in 2006.

Israel said in a statement that the swap agreement was signed "in the presence of a U.N. representative." Implementing the deal depends on carrying out further steps, the statement said without providing specifics.

Hezbollah officials would not comment.

Israel approved the swap June 29. It will hand over Samir Kantar, serving multiple life sentences for a 1979 attack in Israel's north, as well as four Hezbollah prisoners and dozens of bodies of fighters. In return, Israel is to receive Ehud Goldwasser and Eldad Regev, two soldiers captured by Hezbollah in a 2006 cross-border raid that set off a fierce 34-day war.

Israeli Prime Minister Ehud Olmert declared the two soldiers dead before his cabinet approved the deal, but Hezbollah leader Hassan Nasrallah, who has not allowed Red Cross visits or given any sign that the two are alive, called the declaration "speculation."

Israeli military officials, who spoke on condition of anonymity because final arrangements had not been made, said the exchange was likely to take place by tomorrow.

Kantar was convicted of shooting a police officer, then killing an Israeli man in front of his 4-year-old daughter before beating the girl to death. Kantar denied killing the girl.

Yesterday, the officer's family appealed to Israel's Supreme Court to block the exchange. "Don't release Kantar. He is a despicable mass murderer, and Israel will be sorry in the end," the officer's daughter, Keren Shahar, said.

The court is not expected to intervene in the deal.

The military confirmed that the process of exhuming bodies had begun at the Amiad cemetery for enemy combatants, not far from the Israel-Lebanon border. It was declared a closed military zone to prevent reporters from witnessing the process.

In another aspect of the agreement, mediated by a U.N.-appointed German official, Hezbollah has compiled a report on the fate of Ron Arad, an Israeli airman captured alive after his plane was shot down over Lebanon in 1986. Israeli negotiator Ofer Dekel was in Europe yesterday to pick up the report, the military officials said.

But in announcing the signing of the swap agreement, government spokesman Mark Regev said Israel had not received the report. When it has, he said, "we will have discussions inside the government on how to move forward." Regev would not say where the signing took place.

In exchange for the report on Arad, Israel is to provide information on four Iranian diplomats who disappeared in Lebanon in 1982.

Iran, which supports Hezbollah, alleges that the officials were kidnapped by Lebanese militiamen allied with Israel and delivered to Israeli troops. Israel has long denied holding them, and Samir Geagea, former head of the disbanded Lebanese Forces, has said militiamen killed them.

Israel stepped back from the brink of political turmoil Wednesday after the two main parties in the ruling coalition hammered out a last-minute compromise to prevent the passage of a bill calling an election.

This gives Prime Minister Ehud Olmert a few more months to pursue peace talks with the Palestinians and to try to win release of three captured soldiers. But the price was agreeing to a primary election in September that is likely to end his reign.

Olmert's main coalition partner, Labor, was poised to vote in favor of a bill to dissolve the parliament and call elections Wednesday. Labor's support would have guaranteed approval, mostly symbolic at this stage because the bill would have needed to pass three more parliamentary votes to become law.

Olmert had threatened to fire Labor Cabinet ministers if they voted for the election bill. That would have removed his parliamentary majority and made elections inevitable.

An election campaign would put peace efforts far onto the back burner.

Instead, Olmert agreed to a Labor demand for primaries in his Kadima Party by Sept. 25 in exchange for Labor's dropping its support of the election bill.

Olmert has lost most of his public support because of an inconclusive war with Lebanese Hezbollah guerrillas in 2006 and several corruption investigations against him. Labor Party leader Ehud Barak, the defense minister, has repeatedly called for Olmert's ouster, only to back away from taking decisive action.

The compromise allowed both Olmert and Barak to save face. Olmert can remain in office and keep his coalition intact, while Barak can tell supporters that he is forcing Kadima to replace its leader.

Kadima officials say Olmert has not ruled out running in the party primary, hoping to clear his name after a cross-examination of a key witness in the latest corruption case, American businessman, Morris Talansky, slated for July 17. But opinion polls show Olmert unpopular within the party and among the general public, and unlikely to win.

His likely successor as head of Kadima would be Foreign Minister Tzipi Livni or Transportation Minister Shaul Mofaz.

But even if one of them replaces Olmert after the September primaries, general elections would not be far off, possibly as early as November.

Polls indicate that the hardline Likud, led by ex-premier Benjamin Netanyahu, would win an election now. Likud sponsored the election bill, and bitterness came quickly to the surface in the parliament after Labor withdrew its support, forcing Likud to withdraw the measure.

Another Likud leader, Gideon Saar, called Labor lawmakers "wimps" from the podium, setting off an angry exchange with the parliament speaker, Dalia Itzik of Kadima.

When Olmert got up to speak, the hardliners from Likud tried to shout him down. Olmert retorted, "You call any effort toward peace 'surrender' because you don't want peace."

Olmert announced that his Cabinet will vote Sunday on a proposed prisoner exchange with Hezbollah, which is holding two Israeli soldiers it captured two years ago, setting off the 34-day war. The exchange is said to include freedom for Samir Kantar, a Lebanese serving multiple life terms for a 1979 attack in which four Israelis were killed.

This week the chief military rabbi started examining evidence to determine whether they two soldiers can be officially declared dead. They were known to be badly wounded when they were captured.

Political analyst Hanan Crystal said the Kadima primaries will not prevent Olmert from pushing the international community for tougher action against Iran for its nuclear program. Israel believes Iran is pursuing nuclear weapons.

Also, Israel and Syria are holding indirect talks through Turkish mediators, Olmert's government is in U.S.-sponsored peace talks with moderate Palestinian President Mahmoud Abbas and is maintaining a tenuous truce with the Islamic Hamas regime in Gaza.

"Ehud Olmert has what he wants, the big political exit he wanted, with Iran, with Syria and with Gaza," Crystal told Israel Radio. "He is the legitimate prime minister for the entire summer."

Israel will keep Gaza border crossings closed another day in response to Palestinian rocket fire that had violated a new cease-fire, the Defense Ministry said late Wednesday.

The decision came after Gaza's Hamas rulers said they would not police other militant groups that break the truce that went into effect last Thursday.

It was the first major hitch in the truce and raised questions about its ability to hold.

Islamic Jihad militants fired three rockets at Israel on Tuesday, saying they were retaliating for an Israeli raid in the West Bank, which is not part of the truce accord.

Israel responded by closing the border crossings just three days after it had stepped up shipments of vital supplies into Gaza, a key part of the truce accord. Hamas called that a truce violation.

The Israeli decision not to open the crossings Thursday was made in a high-level meeting, according to defense officials, speaking on condition of anonymity because the meeting was closed.

The officials said the tenor of discussions was to start the supply flow over every time the crossings have to be closed: waiting three days before increasing supplies, and another week before the next step, which might include more fuel shipments.

That would be a major setback for Hamas, with Israel holding out the threat that every time a Gaza militant fires a rocket or mortar, Israel would turn back the clock on supply flow. The main benefit of the truce for Hamas is the possibility of ending a yearlong Israeli blockade that has caused severe hardships for the already impoverished territory.

But Hamas sent mixed signals. Its officials were meeting with heads of smaller militant groups to persuade them to honor the truce, but in public statements, the group remained defiant.

Hamas leader Khalil al-Haya said, "Hamas is not going to be a police securing the border of the occupation (Israel). No one will enjoy a happy moment seeing Hamas holding a rifle in the face of a resistance fighter."