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.”

Israel's ambassadors to Britain and France must have spent an uncomfortable few minutes on Monday as they were called in to hear of official displeasure in London and Paris at their government's decision to expand settlements in a key area of the occupied West Bank.

Sweden, Denmark and Spain also summoned Israeli envoys for a slap on the wrist. Even Germany, often cautious about criticism of Israel, issued a public protest.

Israel's behaviour is seen as retaliation for last week's landmark UN vote recognising Palestine as a member state. But it is more than that: authorising illegal settlements in the area known as E1 is plainly provocative. It is, as the UN's Ban ki-Moon put it, a near-fatal blow to the fading hopes for a two-state solution. Britain's foreign secretary, Wiliam Hague, made the same point starkly.

Swift and concerted diplomatic protests across Europe were certainly headline-grabbing. But what counts is whether they will be followed by more united and robust action. Even more important, what will be the response of the US, the only member of the security council to vote no to Palestine last week? And what effect will all this have on the Palestinians, divided between the West Bank and Gaza Strip, and between the PLO and the Islamists of Hamas after the latest blood-letting in the border enclave?

Protests by Britain, France and Germany represented an effectively coordinated position by Europe's big three powers. But the EU as a whole has spent years aspiring to be a bigger player on the world stage.

Its 27 member states comprise 400 million people. Even so, 14 of them backed UN membership while 12 others, including Britain, abstained. The Czech Republic opposed the decision.

It should be no surprise then that what the EU says about the world's most intractable conflict has so little effect. Israelis tend to sneer at the collective power of Brussels. If the EU is united it is usually by saying what it will not do — for example shunning Hamas as a terrorist organisation.

"The feeling in Israel is that Europe will never act against it for historical reasons," argues Yossi Mekelberg, a fellow at Chatham House in London. "The argument is that Europeans were either perpetrators in the Holocaust or failed to do enough to stop it. The Israeli government is always quick to press that button."

But, 67 years after the end of the second world war, things could be different. The EU is Israel's biggest trading partner and the largest provider of development assistance to the Palestinians. It is often criticised for being a "payer but not a player" especially after millions of euros worth of aid have gone up in smoke in Israeli attacks.

Europe was ahead of the curve in 1980 when the Venice declaration recognised the Palestinians' right to self-determination at a time when the PLO was beyond the pale.

But occasional talk of punishing Israel – for example by suspending its valued 1995 association agreement with the EU or other co-operation programmes – has remained that, just talk.

Chris Patten, EU external relations commissioner when Israel reoccupied the West Bank after suicide bombings in 2002, used to attack the US as the "Washington branch of the Likud". Still, European divisions have had a persistent life of their own. Change has been patchy. Individual member states have required that consumer produce from Israeli settlements, which all regard as illegal, be clearly labelled. But overall the EU still imports 15 times more from them than from Palestinians — an obvious inconsistency.

Daniel Levy, a former Israeli peace negotiator who now works for the European Council for Foreign Relations, said that an EU rethink is required urgently but does not expect it to happen quickly. "When you are so deep in a policy that essentially accords impunity to Israeli actions you can't spin on a dime," he argued. "It requires a whole different approach that isn't going to happen overnight."

It was in 2001 that the then French foreign minister, Hubert Vedrine, defined the challenge. "The EU should make the US recognise that it is legitimate for Europe to take its own approach to peace," he said.

"If the union really wishes to play a role, it must escape from the situation where defining a common position comes down to seeking the lowest common denominator in platitudinous declarations or ritualised diplomatic tours."

That advice remains relevant to this day.

The prospects for a two-state solution to the bitter conflict in the Middle East are being undermined by "facts on the ground" created by Israel, Palestinian divisions and the continuing "convulsions" of the Arab spring, the former British foreign secretary David Miliband is warning.

Miliband, speaking on Thursday, is the latest high-profile international figure to express alarm at the rapidly fading prospects for the creation of an independent Palestinian state alongside Israel – for decades the only solution that has seemed either possible or practicable.

"The danger is that, unwittingly, by omission not commission, by cruel irony not deliberate plot, the Palestinian cause is a victim of the Arab revolts," Miliband will argue at a charity dinner for Medical Aid for Palestinians.

"For the first time in a long time there is no 'peace process', not even the pretence of one. The facts on the ground are preventing that. Facts in respect of settlements. Facts in respect of Palestinian political divisions. Also facts in the air: Arabs, Americans and Europeans have their minds on other things."

Miliband criticises the leaked views of Mitt Romney, the Republican contender in the US presidential election. "Now is not the time to say that the problem is unsolvable or that Palestinians are committed to the destruction of Israel," he says. "That is a recipe that is not just unfair on the Palestinians. It is also dangerous for the region, including Israel."

To revive prospects for creating a Palestinian state, Miliband calls for Gaza – isolated by Israel and Egypt and cut off from the West Bank – to be part of a diplomatic strategy. "Israelis and Palestinians are suspicious of each other and of promises from outside. But the need for a negotiated solution between the parties should not stymie international clarity and consensus about the endgame in terms of borders and other issues."

Miliband also emphasises the importance of healing the rift between Fatah and Hamas. "Yours is a nationalist movement for justice and independence, not an Islamist movement for virtue and purity," he says. "And the very real danger is that in a divided Palestine, the idea of a campaign that joins the people of Gaza and the West Bank, is lost."

Surveying the Arab spring, the former Labour minister describes a "legitimacy crisis" of undemocratic regimes where "corruption, incompetence and kleptocracy have drained ruling elites of consent". In a new regional power structure, Iran is assertive, Qatar pivotal, Turkey seeking a role, religious divisions important and well organised Islamist parties rising. Sectarian politics and violence are tragically on show from Libya to Syria.

And more broadly, Miliband suggests, there is a "new calculus in geopolitics", with the US fatigued by Iraq and Afghanistan, Russia cash-rich but status-poor, China growing in wealth but vulnerable to Middle East instability because of oil dependence, and Europe consumed with its own problems.

"Leaders across the world must not lose interest," he warns. "The fact that Palestine is not in the headlines does not mean it can be forgotten. We know there can be no justice in the Middle East without a Palestinian state. But there can be no security in the Middle East without a Palestinian state. The crowds on the streets may not be chanting about Palestine, but they have not given up in their hearts and heads."

Mohamed Morsi's victory in Egypt's presidential election has brought him congratulations from across the Middle East. But there have also been mixed feelings, loaded messages from Israel to Iran, and uncertainty about the future direction of policy.

Islamists everywhere were delighted by the historic achievement for Morsi's Muslim Brotherhood, but conservative monarchies hoping to avoid the Arab spring unrest were not. Compliments from Saudi Arabia, where King Abdullah still laments the overthrow of Hosni Mubarak, sounded distinctly formal.

Morsi's main challenges lie in the domestic arena, with the Supreme Council of the Armed Forces (Scaf) determined to hold on to its powers to control defence, foreign policy and internal security. "There will be no dramatic changes," predicted the Egyptian analyst Said Shehata.

Still, even a weak president will want to speak out on the sensitive issue of Egypt's peace treaty with Israel. The Brotherhood's position, reiterated on Sunday, is respect for international commitments, though that does not preclude an attempt to renegotiate military deployments in Sinai.

Abrogation of the 1979 treaty would return Egypt to a state of war that cost it thousands of lives and would risk strategic relations with the US.

It is hard, too, to imagine any tolerance for Mubarak-era support for the blockade of the Gaza Strip, where jubilant Hamas leaders hailed Morsi's victory as "a defeat for the programme of normalisation and security co-operation with the enemy". The Rafah border is likely to be more open to Palestinians, though without triggering an immediate crisis with Israel.

Yediot Aharonot, Israel's largest-circulation newspaper, expressed alarm about what it called "darkness in Egypt" – a reference to one of the biblical 10 plagues. That was in contrast to a terse formal message from Binyamin Netanyahu but reflected popular Israeli fears about the long-term dangers of the Arab spring.

Morsi's first foreign problem arrived from Iran, where a news agency quoted the new Egyptian president on Monday as saying he wanted to reconsider peace with Israel. That was swiftly and emphatically denied, as was the reported statement that he wanted to see a "balance of pressure" in the region.

US diplomacy towards Egypt is based on the assumption Scaf will retain control of these issues. The US will be anxious to keep overflight agreements and free passage through the Suez canal. The generals will not want to jeopardise $1.3bn in annual US military aid.

"Morsi will not make any difference on the Palestinians or the treaty with Israel," said Nadim Shehadi of Chatham House. "It will be a continuation of the old system when the military and Brotherhood play good cop/bad cop and keep the balance."

Middle East expert Juan Cole wrote in Informed Comment: "Mursi and his colleagues will only change things at the margins for US policy."

Morsi's reputation for caution was reinforced recently when he dismissed as "delusional, slanderous and baseless" the suggestion that the Brotherhood had direct relations with Iran or Hezbollah, its Lebanese ally. "We will never stand with the forces who threaten friendly countries in the Arabian Gulf," he pledged.

Iran and Saudi Arabia are at odds over Bahrain and Syria so any rapprochement between Cairo and Tehran would anger the Saudis and Gulf partners. That could risk economic aid and investment in Egypt.

The Saudis backed Ahmed Shafiq, Mubarak's last prime minister and Morsi's rival for the presidency. So whatever else happens, "Egypt's relations with Saudi Arabia will never be the same again," suggested Ahmed Asfahani, the respected al-Hayat columnist.

Jordan, another western-backed Arab monarchy nervous about the pressures of the Arab spring, will be privately unhappy about Morsi's victory – not least because it will encourage the country's Islamic Action Front, the political wing of the Muslim Brotherhood. Morocco shares similar concerns.

In Syria, where the Brotherhood makes up a significant part of the anti-Assad opposition, the government offered its formal congratulations, avoiding the awkward question of whether Damascus is likely to see a free and democratic election soon.

Gilad Shalit has been the most famous prisoner in the Middle East since he was captured by Palestinian fighters on the Israeli side of the border with the Gaza Strip in the summer of 2006.

The deal to release the young artillery sergeant, as now confirmed, is a sensational achievement for Hamas, the Palestinian Islamist movement which controls Gaza but is shunned as a terrorist organisation by Israel.

In all, 1,000 Palestinians will be freed, including top members of the PLO as well as its rival Hamas. One is expected to be Marwan Barghouti, a Fatah leader popular with activists. Another is the head of Hamas military operations in the West Bank. No fewer than 315 of the 1,000 are serving life sentences.

Formal announcement of the agreement by Israel's prime minister, Binyamin Netanyahu, and the Hamas leader, Khaled Meshal, dispelled doubt over whether this was the real thing. Previous rumours of a deal had proved false; so had wild celebrations in Gaza.

Netanyahu's calculation, described to the newspaper Haaretz by one Israeli official, was that the changes of the Arab spring and the rise of "extremist forces" in the region meant it was urgent to agree now.

The key player in this shadowy drama has been a German mediator and former intelligence officer named Gerhard Conrad, reported to have been in Cairo in the last few days, along with Israeli and Hamas officials. Egypt, still in turmoil following the overthrow of Hosni Mubarak in February, is well placed as a go-between, though its relations with Israel have deteriorated badly in recent weeks. Netanyahu may have assumed they could get worse.

Hamas, for its part, has been feeling uncomfortable due to the violent unrest in Syria, its main base outside Gaza, so the mass release of prisoners will boost its credibility. Another factor may have been the sense that it had been upstaged by the PLO's bid for Palestinian membership of the UN.

Shalit's lonely, five-year plight has moved Israelis, who largely still accept the burden and risks of compulsory national service. But there has been angry criticism of the government for failing to secure his release. Past swaps have involved freeing hundreds of Palestinian or Lebanese prisoners, just for the bodies or even the body parts of Israelis killed in action, triggering criticism that it means handing victory to enemies; in 1985, Israel freed 1,150 prisoners in exchange for three soldiers captured in the Lebanon war.

Palestinians face the problem on a far larger scale: they count some 6,000 of their number held as security prisoners in Israeli jails, the admiring Arabic label of prisons as "factories for men" masking the toll on families. Men Israel calls "terrorists" are for Palestinians "freedom fighters" who lead their resistance to occupation.

For all Israel's vaunted intelligence capabilities, from electronic surveillance to networks of informers, its security forces have never managed to locate Shalit or mount a rescue operation.

And Hamas, in defiance of international law, never allowed access to him by the Red Cross or any other humanitarian organisation.

When the soldier's captors released his letters or audio, or, most recently, a videotape portraying him, it was always done as a move in what was a protracted bargaining process.

The prisoner's messages were delivered in ways designed to influence Israeli public opinion.

An intensive international diplomatic campaign to secure his freedom made no headway.

Long road to freedom

25 June 2006: Gilad Shalit is abducted on the Israeli border with southern Gaza

26 June: The Palestinian Popular Resistance Committees demand prisoner releases in exchange for Shalit

28 June: Israeli troops enter the southern Gaza Strip

29 June: Dozens of Hamas officials are detained by Israeli forces

1 July: Militants thought to hold Shalit demand the release of 1,000 prisoners

12 July: Hezbollah seizes two soldiers and kills others before a major conflict

2007

25 June: Palestinian militants release an audio message from Shalit

2008

27 December: Israel launches a major offensive in the Gaza Strip

2009

24 November: Senior figures from Hamas take part in talks on a deal to hand over Shalit

2010

8 July: Huge rally in Jerusalem calls for a deal to secure Shalit's release.

17 October: Israel says that talks for Shalit's release have resumed

2011

11 October: Israeli cabinet session which leads to deal to free Shalit

Ben Quinn