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.”

As late as last week, the campaigners for captive soldier Gilad Shalit's release and his family still seemed optimistic. The campaign's leaders believed that the prime minister, the cabinet and most of the public supported the exchange deal. When asked what could still go wrong, they hinted that the cabinet was a possible bottleneck.

But it seems that even this was overoptimistic: As of yesterday, the decision got stuck at an even earlier junction - that of the forum of seven, the most senior cabinet members. The forum met a number of times over the last few days.

Based on earlier statements by the ministers, we may suppose that three would support the deal (Ehud Barak, Dan Meridor and Eli Yishai), and three would oppose (Moshe Ya'alon, Benny Begin and Avigdor Lieberman). It's also safe to assume that the military chiefs are as divided as the politicians: Chief of Staff Gabi Ashkenazi has supported the deal, while Mossad director Meir Dagan has opposed. The opinion of Shin Bet chief Yuval Diskin is also likely to carry considerable weight. Diskin opposed the deal when negotiations reached their previous peak in March.

So the ball is still in Prime Minister Benjamin Netanyahu's court. Before he took office, Netanyahu made no secret of his yearning for Ehud Olmert to bring the deal to a close; Shalit was captured on Olmert's watch. As prime minister, Netanyahu has displayed a consistent commitment to the negotiations and to concluding the exchange.

Now foreign reports suggest that Netanyahu is hesitating. This may be because of the nature of the agreement, which includes the release of scores of convicted murderers from Hamas, including senior terror activists. Another consideration is political. It's true that polls show that the public supports the deal and that most ministers would probably vote with the prime minister.

But the hard core of right-wing voters furiously opposes the release of murderers. This group was already incensed with Netanyahu over the construction freeze in the settlements. A double whammy of the freeze and the prisoner exchange may be a bit too much for the prime minister.

The tight secrecy around the deliberations on the exchange makes it hard to analyze the situation. A number of crucial variables are hidden from the public eye: Does the offer on the prime minister's table belong to the German mediator, or to Hamas? Does it include the release, with or without deportation, of the most senior Hamas prisoners? This is the toughest obstacle in the negotiations over the last three and a half years.

And what is the timetable? International media have reported that the mediator presented the sides with a Christmas deadline (others said a New Year's deadline), threatening to resign unless a deal was made.

If these reports are true, Israel this week will present its final answer to the mediator, who will need to complete another dash between Gaza and Tel Aviv. If the deal isn't completed this week, the negotiations may stall for a few more months. This is why Noam and Aviva Shalit were at Netanyahu's office yesterday, warning the prime minister that their son was on his way to becoming a second Ron Arad, the missing pilot. The choice was between returning Gilad and abandoning him, they wrote to Netanyahu.

It should be noted that the process on both sides of the talks is similar. Every decision-maker on both sides is trying his best to show his opponent that he has made every conceivable compromise and one more inch would be a mission impossible. Now these decision-makers must concentrate on preparing public opinion for the possibility of failure, and for piling as much blame as possible on the enemy.

On the Palestinian side, it seems Hamas won't compromise on any of the core issues, such as the most senior prisoners and the number of prisoners to be deported.

To Hamas, completing the deal without the symbolic top militants and with more than 100 prisoners deported would be a failure. The organization has pledged time and again to avoid just that.

Palestinians sources say the tougher wing in the organization is led by the political bureau in Damascus, along with the Gaza military leaders. The Gaza politicians, by contrast, appear to be more flexible, but seem to be as isolated in this triangle of power as they usually are.

Amid this ruckus, the dignity of the Shalit family stands out all the more. It took Noam Shalit two whole years to begin criticizing Olmert.It then withheld all criticism between Olmert's speech on his "red lines" and Netanyahu's entry into office. At this point, Noam Shalit won't criticize Netanyahu - and is holding back campaigners demanding stronger action.

There are telling signs out there: Al-Arabiya reports that Hamas sources say a deal on kidnapped soldier Gilad Shalit will be reached in a few days. Fox, the American network, says that Hamas has presented a new list of prisoners it is asking to be released in exchange for Shalit.

President Shimon Peres mentioned "significant progress" in negotiations, and Chief of Staff Gabi Ashkenazi warned that any media reports on the talks may endanger then. The activists calling for Shalit's release have been asked to "tone down" their activity.

Ayman Taha, a senior Hamas figure, confirmed on Sunday that a delegation in Cairo will meet with Egyptian intelligence officials and probably the German mediator, too. In response to a question by Haaretz as to whether the deal can be concluded by Id al-Adha on Friday, Taha was careful: "God willing ... things are moving." Notwithstanding the caution, this is the most optimism Hamas leaders have ever expressed when it comes to reports that a deal is near.

Moreover, the fact that the Egyptians are now letting Hamas leaders enter the country - after barring them following their refusal to sign the reconciliation agreement with Fatah that Cairo had prepared - is in and of itself a positive development.

Another positive development is Saturday's announcement by Fathi Hamad, Hamas' interior minister, that rocket fire on Israel would end, following a deal among the various Palestinian factions in the Gaza Strip. It is doubtful that the timing of the announcement is coincidental. Hamas needs quiet, because it does not want a local incident to torpedo a deal.

In Israel, the theory is that because the government is more right-wing, it will be more difficult for the prime minister to gain approval for freeing prisoners. This is not necessarily the case. If a deal is brought before the cabinet for approval, it means Prime Minister Benjamin Netanyahu is backing it. Support from Defense Minister Ehud Barak is guaranteed, and has been since his days in the government of Ehud Olmert. Shas will follow its spiritual leader Ovadia Yosef, who backs concessions for prisoner releases. Mossad chief Meir Dagan and Shin Bet boss Yuval Diskin probably will oppose the move, but Chief of Staff Gabi Ashkenazi probably will back it.

What is unusual in this instance is the role of military censorship: Compared to previous times, there is a near absolute blackout. The censor, Colonel Sima Vaknin-Gil, says that preventing detailed reporting is not directed at public opinion, and is merely to allow the negotiations to continue unhindered.

Sultan Abu al-Ghneim, who represents Fatah in the refugee camps of Lebanon, gave a speech last week at a Ramallah rally and called on Fatah to resume suicide bombings against Israel, according to the report in the London-based Al-Quds al-Arabi. But how reliable the report is remains unclear.

Abu al-Ghneim reportedly called on Fatah to use the "doom's day weapon" that the group used at the peak of the second intifada and has not employed for the past three years.

Palestinian sources in the West Bank could not confirm it. The statement being attributed to Abu al-Ghneim is just the latest of a series of statements by Fatah members, some more important than others, who threaten to resume the armed struggle. Similar ideas were heard during the sixth Fatah conference in Bethlehem in August, and also in recent talks between Fatah and Hamas. Such talk is certainly a subject of concern for Israelis.

The threat of a third intifada, which was discussed at length during the Sukkot holiday and the troubles at the Temple Mount, incited by third-rate activists of the Palestinian Authority and the Islamic Movement in Israel, apparently died down as the clashes ebbed. There are still plenty of reasons for concern, mainly because of the dead end in which the two sides have found themselves.

From this viewpoint, the situation between Israel and the Palestinians, specifically in the West Bank, may be ready to explode, despite the improvement in the economy there, the relatively effective governance of Mahmoud Abbas and Salam Fayyad and the improved security coordination between the Israeli Defense Forces and the PA's organs. The relations between all the sides - Israel and the U.S., Israel and the PA, Fatah and Hamas and the various other groups in the PA - are characterized now by seriously bad blood. Herein are some of the more obvious trends:

1. Israeli-Palestinian negotiations are stuck. The PA has climbed up too high a tree; when American pressure managed to force Israel to contain its building in the West Bank, it demanded a complete freeze in settlements as a precondition for resuming the negotiations with the Netanyahu government.

The rushed (and quick) about-face on the Goldstone Commission report caused Abbas confusion and embarrassment, and he fears any concession to Israel on this matter will cost him further attacks from Hamas, which will charge he is adding further betrayal to his original "selling-out."

2. A dead end between Fatah and Hamas. Even the Egyptian mediators are now refusing to name a new date for a meeting of the Palestinian factions so a reconciliation agreement can be signed. Hamas' list of excuses for refusing is bordering on the absurd. First, it opposed the principles of the agreement, and then based its opposition on the fact that the PA had delayed appealing to the UN on the Goldstone report, and now it's bringing up reservations on points in the agreement. Hamas apparently fears parliamentary and presidential elections, and notwithstanding its declarations to the contrary, it is not convinced it can defeat Fatah at the polls.

3. An internal crisis in Fatah. The situation in Fatah is not necessarily better. A survey published yesterday by the Jerusalem Media and Communications Center shows that only 12.1 percent of those asked trust Abbas. The Hamas prime minister in the Gaza Strip, Ismail Haniyeh, received 14.2 percent support. Many Fatah members are troubled and angered by Abbas' handling of the Goldstone report. The internal criticism may create instability in Fatah and affect Abbas' ties with Israel.

Fatah members are, therefore, going to great efforts to distinguish themselves from the PA and Abbas. According to the survey, their efforts are paying off: 34.6 percent of those asked expressed support for Fatah, compared to only 17.9 percent for Hamas. However, their pronouncements may come at a price: Grassroots operatives may take their words literally as justification for violent attacks - first and foremost, for carrying out sporadic shootings in the West Bank.

4. Israeli hesitation. The behavior of the PA on the issues mentioned, along with the improved capabilities of its security forces and the fear this could turn, one day, against Israelis, have raised questions among the political and IDF leadership on the wisdom of further efforts to bolster the PA. So Israel is not eager to authorize the transfer of further security control to the PA, allowing more units to be trained by the Americans in Jordan or the equipping of PA security forces with more sophisticated means.

5. Jerusalem. "It's true those were French tourists," said a Fatah activist this week, in a belated acknowledgment on the Temple Mount incident that sparked riots earlier this month. But he immediately played dumb: "But how could we have known?" The issue of Jerusalem, and the Temple Mount specifically, remains quite sensitive. In Israel, there are concerns the accumulation of pressures from various sources may entice the PA to "break ahead" and heat up the discourse by ignoring troublemakers in Jerusalem. The ground is far from calm, indicated by the clear increase in stone-throwing incidents aimed at Israeli drivers in the West Bank.

It is sometimes hard to believe the remarks coming out of Cairo over the past 48 hours are actually directed at Hezbollah. The Egyptian press has tagged its leader, Hassan Nasrallah, with denigrating epithets like the "monkey sheikh," and remarks from security officials in Cairo to the Israeli press sound reminiscent of how generals speak in times of war.

Those same officials air blunt warnings that Egypt will "vigorously hit back" those who endanger its national security, "whether Iran or Hezbollah." Cairo has made clear that from its perspective, Hezbollah had crossed each and every line in the sand.

This is not the first time Egypt has thwarted the plans of Islamist groups to harm Israelis in its territory. Still, the current incident is being viewed in Egypt as more serious than ever before it, as this time Israel was merely a secondary target.

Egyptian security sources said Hezbollah cells were planning strikes against ships in the Suez Canal, an incalculable strategic asset for the country, and this would not be the first time regional war broke out over disrupted traffic on its waters.

The canal nets Egypt billions of dollars a year, a revenue source second only to tourism. A strike on a ship crossing it would be a dizzying blow to Egypt's economy, President Hosni Mubarak's regime, the country's standing in the Arab world and its own national pride. Tourism would also experience a steep drop if Egypt became perceived as a country which cannot maintain its internal security.

A giant question mark hangs over Nasrallah's motives. Hezbollah would presumably gain from attacking Israeli targets and smuggling weapons to Hamas in the Gaza Strip, but the pace with which it admitted publicly that it operated terror cells on Egyptian sand will only diminish its standing.

In the eyes of the Arab world, this is a deed that simply isn't done. Syria, if it operated similarly against Jordan or Saudi Arabia, would never admit as much. Even Israel, since its failed 1997 assassination attempt on Hamas leader Khaled Meshal in Amman, is hesitant to conduct such actions in Arab countries with which it has peace agreements.

One possible explanation for Hezbollah's actions is that its leader became a victim of his own hubris. After blatantly intervening in Palestinian affairs, he took de facto control of Lebanon and openly threatened Egypt during Israel's Gaza offensive for supposedly siding with the"Zionist enemy."

Perhaps he erred in believing he could go toe-to-toe with Mubarak, and even hoped the move would bolster support of his organization ahead of Lebanese elections in two months.

Prof. Eyal Zisser, head of the Dayan Center at Tel Aviv University, said Hezbollah's actions in Egypt would not change the voting patterns of Lebanon's Druze, Sunnis or Maronite Christians, and its Shiites generally support the movement anyway.

Former Military Intelligence chief Maj. Gen. (Res.) Aharon Ze'evi-Farkash believes Nasrallah was fulfilling a mission he was ordered to carry out by Iran. Iranian President Mahmoud Ahmadinejad is striking a hard, provocative line against Israel and the West, and under his mentorship Nasrallah seems to be sticking his neck out even further.

Ze'evi-Farkash believes the Middle East is on the brink of a particularly significant period in its history as the Barack Obama administration calls for renewed dialogue with Tehran. But Iran would want to enter such a dialogue from a position of strength, seeing the international community is too weak and hesitant to stop its nuclear program or its intervention in affairs in countries around the region.

In Israel's eyes, a high-profile confrontation between Egypt, Iran and Hezbollah is good news. But even now, it is best to keep in mind that Egypt is hardly working in Jerusalem's best interest. Egypt's rage at Nasrallah will not necessarily translate into comprehensive steps against weapons smuggling to Gaza, or to warmer relations with Israel.