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.”

Hamas is expected to launch a crackdown on Islamic extremists in Gaza after the murder of an Italian peace activist who was strangled shortly after being kidnapped.

Vittorio Arrigoni, 36, was killed on Thursday after being abducted in an apparent attempt to force Hamas to release the leader of the Tawheed and Jihad group, Sheikh Abu Walid-al-Maqdas, who was arrested last month. Tawheed and Jihad later claimed it was not responsible for the murder.

About 2,000 people attended a rally to honour Arrigoni yesterday. Reports suggested Hamas police found his body on a mattress in an empty Gaza City apartment. According to a witness interviewed by the New York Times, he had been strangled with a plastic cord. The kidnappers killed him 24 hours before a deadline they had set for the release of their leader and several other prisoners. Killing him so early suggests they feared they were about to be discovered. Two men are being held in connection with the murder.

Arrigoni, known to friends as Vik, lived apart from fellow volunteers in the International Solidarity Movement (ISM). News of his abduction was posted via a video on YouTube in which he appeared blindfolded with a bruised face while a man held his head by the hair. Accompanying Arabic text said: "The Italian hostage entered our land only to spread corruption." It described Italy as "the infidel state".

He was last seen at a Gaza City gym on Wednesday, from where he ordered food by phone but never went to pick it up.

Nathan Stuckey, a volunteer from the US, said Arrigoni spent most of his time working as a journalist but was involved in promoting the right of Gazan fishermen to work without hindrance from the Israeli navy. "At the moment he was particularly focused on the launch of our new boat, which we will use to monitor the navy's violations of the rights of the fishermen. He often said that he now felt more at home in Gaza than in Italy and he was strongly committed to the Palestinian cause," Stuckey said.

At the rally in honour of Arrigoni on Friday, Mahmoud Zahar, a Hamas leader, said the Italian and other foreign activists were "our friends" and the perpetrators would be punished. He indirectly accused Israel of engineering the killing to intimidate foreign activists seeking to sail to Gaza to protest against a naval blockade of the territory. "Such an awful crime cannot take place without arrangements between all the parties concerned to keep the blockade imposed on Gaza," Zahar said.

While many view Hamas as a radical Islamist group, the responsibility of being in power has forced it to sacrifice ideology for a pragmatism that has alienated many of its supporters. Some have rejected Hamas's brand of nationalist Islam and embraced fundamentalist Salafi Islam, which aims to create a single Islamic commonwealth in place of nation states. Tawheed and Jihad means oneness of God and holy war or struggle.

Mkhamir Abusada, a professor of political science at An-Najah University in Gaza, said such groups began to emerge after Hamas took control of the Gaza Strip in 2007. "Most of the members of the Salafi groups were previously members of Fatah or Hamas. They are dissatisfied with Hamas's failure to fight Israel and Islamise Gaza," he said. "They cannot compete with Hamas but they are a source of annoyance. The killing of Arrigoni attacks the credibility of Hamas as the source of stability and law and order of which they are so proud. Hamas will respond very harshly to ensure there is no repeat."

Palestinian communities usually regard foreigners as allies against Israel, but Salafi groups are less likely to distinguish between non-Muslims.

The Army of Islam split from the Popular Resistance Committee. It initially carried out operations with Hamas such as the kidnapping of Israeli soldier Gilad Shalit in 2006. When relations between it and Hamas broke down, the Army began kidnapping foreigners, including two people from Fox TV in 2006 and the BBC's Alan Johnston in 2007. Johnston was released unharmed after four months.

Since then Hamas has worked hard to ensure the security of foreigners in Gaza. Many of the leaders of the Army of Islam, who were mostly from the Dogmush family, were killed or arrested by Hamas and others were killed in Israeli air attacks. In 2009 Sheikh Abdel Latif Moussa, the leader of Jund Ansar Allah, proclaimed an Islamic emirate from his mosque in Rafah. Hamas forces surrounded the mosque and killed the sheikh and 23 of his followers.

Another group called Sword of Truth has bombed internet cafes and beauty parlours. It is believed to have carried out the murder of a Christian bookseller in 2007.

Arrigoni's death comes just over a week after a gunman shot dead Juliano Mer-Khamis, an Israeli actor who ran a theatre in the West Bank city of Jenin. It is not clear why Mer-Khamis was shot but his views about freedom of expression had generated some opposition in Jenin.

Rachel Corrie from the United States and Tom Hurndall from London were both killed by Israeli forces in Gaza in 2003 and 2004 while volunteering for the ISM.

Israel and Hamas appeared to have stepped back from a major confrontation after a weekend of attacks which left 19 Palestinians dead and saw dozens of rockets fired at southern Israel.

The dead in Gaza included six civilians, with a further 65 injured.

The attacks increased after militants fired an anti-tank missile at an Israeli school bus from Gaza on Thursday, injuring a teenage boy.

Israel launched a series of air strikes and Gazan groups fired about 80 mortar shells and 20 longer-range rockets.

Leaders from both sides made radio appeals for calm and indicated that each side had no desire to escalate the conflict.

It was reported that Robert Serry, the UN special envoy for the Middle East, played a role in arranging the ceasefire, although his office would make no official comment.

Ghazi Hamad, the deputy foreign minister in the Gaza government, gave a rare interview on Israeli radio to appeal for calm.

Speaking in fluent Hebrew, which he learnt while imprisoned by Israel, he said that Hamas would cease its attacks if Israel halted its military operations against Gaza.

"We are interested in calm but want the Israeli military to stop its operations," said Hamad.

A succession of Israeli ministers also appeared on radio calling for calm, but also threatening retaliation for any attacks from Gaza.

Binyamin Netanyahu, the Israeli prime minister, told his weekly cabinet meeting: "The Israel defence forces hit Hamas and the terrorist organisation hard over the weekend.

"If attacks against Israeli civilians and the Israel defence forces continue, the response will be most harsh."

Violence between Hamas and Israel has escalated since the end of March, reaching levels not seen since the Gaza war which ended in January 2009.

Ashkelon and other towns near the Gaza Strip have seen schools closed and life disrupted by the threat of rockets.

Each time a rocket is detected, residents are warned with messages relayed by loudspeaker which gives them time to take cover. In prolonged attacks, residents take shelter in strongrooms and bomb shelters.

On Sunday, industrial estates were operating normally, shops were open and children were walking home from school.

The effect of rocket fire has been reduced by the success of Israel's Iron Dome missile defence system, which since it was first used last week has destroyed nine rockets in mid-flight.

There are two batteries, one stationed near Be'er Sheva, east of Gaza, and one near Ashkelon, north of Gaza.

The army insists that the system is still experimental, but it is expected to revolutionise Israel's defences against short-range rockets when it is fully developed.

In one of its own attacks, Israel claimed to have killed Tayseer Abu Snima, who it said was involved in the kidnapping of Israeli soldier Gilad Shalit in 2006.

The Israeli president, Shimon Peres, has welcomed "the winds of change" blowing through the Middle East and said events in Tunisia, Egypt and other Arab countries represent an opportunity for Israel and the Palestinians.

Peres's sentiments represent a new direction for the Israeli establishment, which has monitored the rise of popular movements and fall of authoritarian regimes in the Middle East with trepidation rather than excitement.

In an article written for the Guardian, Peres hails the technological developments that have given greater emphasis to science rather than land, which has empowered younger generations and left their elders behind. He described the upheavals as a "clash of generations rather than a clash of civilisations".

Peres, 87, took the largely ceremonial role of president in 2007 but he has served twice as prime minister and won the Nobel peace prize. He first served in the Israeli parliament, the Knesset, in 1959, was instrumental in building up Israel's military capabilities and is considered the father of Israel's nuclear programme.

Pointing out that modern technology has enabled the creation of wealth without large amounts of territory, as was necessary in the past, he writes: "The older generation had greater respect for land than science. But we live in an age when science, more than soil, has become the provider of growth and abundance. Living just on the land creates loneliness in an age of globality."

Peres's article could be seen as an encouragement to some of his compatriots to give up their obsession with land and realise the need to release it for the establishment of a Palestinian state. Many Israelis are reluctant to give up territory conquered in 1967 from Syria and Jordan in exchange for peace.

The changes in the Middle East highlight that Israel cannot be an island of affluence in a sea of poverty, he noted. "Improvements in our neighbours' lives mean improvements to the neighbourhood in which we live," he wrote.

The events in the Middle East highlighted the need for Palestinians and Israelis to achieve a peace agreement as soon as possible. "Peace is needed and can be achieved by direct negotiations. This was the case with Egypt and Jordan, and can happen with the Palestinians. The gap between ourselves and the Palestinians is more psychological than material," he wrote.

Peres's comments are at odds with the feelings of other parts of the Israeli government who say that the fall of President Hosni Mubarak was "a disaster" for Israel and hope that President Bashar al-Assad of Syria will remain in power out of fear of the alternative. Earlier this week Israeli officials told the Guardian that they believe that recent changes in the Middle East create strategic problems for Israel.

A major part of the Israeli government's international perspective is guided by Avigdor Lieberman, the foreign minister, who is considered to be much further to the right than Peres.

Israel is considering plans to build an artificial island off the coast of the Gaza Strip to house a sea and airport, and encourage tourism in the area.

Yisrael Katz, the Israeli minister for transport, said the plan had been under consideration for many months and had been encouraged by Binyamin Netanyahu, the Israeli prime minister. He said it would also relieve Israel of the obligation to be the transit point for goods into the enclave.

The Gaza Strip has no sea port and its airport was destroyed. The area is the sixth most crowded place in the world. Since 2007, Israel, which controls the majority of Gaza's borders has only allowed limited kinds of goods into Gaza and allowed very few exports out. Gazans have got round restrictions by smuggling goods from Egypt through tunnels.

Katz said he expected the island would be under international control for at least 100 years to ensure Israel's security. "We have built models and there are many entrepreneurs who are interested and prepared to invest billions and make money," he told Israel Army Radio

A spokesman for the Israeli ministry of transport said the main aim of the plan was to improve the quality of life for Palestinians in Gaza while ensuring Israel's security. "The island would be three square miles and it would be linked to Gaza with a three mile-long bridge which could take vehicles, trains and pipes for oil and gas. The island would have hotels, tourist areas, a marina with yachts and an airport and a seaport."

He estimated that the project would cost up to $10bn (£6.2bn), create 100,000 jobs and take up to 10 years to complete.

Environmentalists and Palestinian officials, however, described the venture as "fantasy" and "madness", and accused the minister of political opportunism.

A spokesman for the Israeli Ministry of Environmental Protection said they had not been consulted about the project. Previous plans for a deepwater port in the Gaza Strip have stalled, partly because of Israel's security concerns, but also because any developments could cause massive damage to the whole coast of Israel.

Gidon Bromberg, director of Friends of the Earth Middle East, described the project as "complete madness".

"This sort of thing makes no sense whatsoever," he said. "The environmental implications would be felt along the coast of Gaza and Israel. Even the building of a marina caused a two-mile scar of beach erosion in Israel which the developer's planning had not predicted. The public should be very sceptical."

Ghassan Khatib, spokesman for the Palestinian Authority, said that if Israel wanted to improve the lives of Palestinians there were lots of simpler measures they could take. "This is pure fantasy and it is not the concern of Israel. If they want to help Palestinians, they must end the siege on Gaza, and allow the reintegration of the West Bank and Gaza and the establishment of a Palestinian state. Then they are welcome to make proposals."