News stories by Pierre Klochendler, page 22

Under a complex twin-pronged initiative from the U.S. and Egypt, Israel's hard- line government is moving towards backtracking on two major planks of its policy in the occupied territories - resisting demands for a blanket freeze on all settlement building in the West Bank, and acquiescing in the end of its tight siege of the Hamas-controlled Gaza Strip.

A paralysing equation has long bedevilled would-be Middle East peacemakers: either, go directly to negotiating the kernel issues of the Israel-Palestine conflict - borders, security, refugees, Jerusalem - and leave, in the context of a full peace, the thorny question of Israeli settlements in the West Bank to fall naturally into place. Or, tackle the settlements head-on, thereby opening the way for a peace drive.

Israeli Prime Minister Benjamin Netanyahu's much anticipated policy speech about his peace intentions was suffused with peace rhetoric, but it was starkly short on a peace vision.

'What are you doing here?' The motorist in the battered white Volvo stops to ask us alongside an overflowing rubbish cart. Residents of this poor Palestinian neighbourhood in occupied East Jerusalem have been burning garbage in a bid to clear the uncollected mounds.

Has Israeli Prime Minister Benjamin Netanyahu got the Obama message? To judge by his minimalist response to President Barack Obama's landmark Cairo University address and his continuing reluctance to meet Obama's demand for a total freeze on Israeli settlements, the answer would seem to be, 'No'.

U.S. President Barack Obama drew widespread, if in some quarters, guarded praise from around the region as he labelled the conflict between Israelis and Palestinians, Israelis and the Arab world the No. 2 issue (behind the extremism of a minority of Muslims) that needs addressing if relations between the U.S. and the Muslim world are to be changed for the better.

Air raid sirens wailed out on Tuesday morning and Israelis were asked to go down into bomb shelters as the country engaged in its largest-ever civil defence drill. Israelis remain deeply worried by what they perceive as an existential threat of a possible future all-out missile attack from Iran and its proxies.

Israel is set to approve a radical new bill which threatens to legalise discrimination against its sizeable Arab minority for the first time.

The tremors of Monday's North Korean nuclear test have been felt all around the world, no more so in a country seemingly not directly affected by whether or not North Korea is a full-fledged nuclear power. In Israel, there is deep concern, an existential fear even - over the implications that Iran will be next in the nuclear line.

A showdown over Israeli settlements in the occupied West bank is looming between Israel and the United States barely a week after the encounter at the White House between U.S. President Barack Obama and Israeli Prime Minister Benjamin Netanyahu. What's becoming increasingly clear is that the May 18 encounter was no friendly 'getting-to-know-you' meeting between a new President and a new Prime Minister of the Middle East's most enduring alliance.