Peace talks between Israel and the Palestinians remain stalled. The basic reason is that Israel will not accept a deal that destroys Israel, and the Palestinians will not accept a deal that doesn't destroy Israel. The Palestinians insist on the "right of return" (the 4.7 million descendents of the 700,000 Arabs who fled Israel in 1947 be allowed to return to Israel and become citizens). If allowed, this would destroy Israel, as a majority of the voters would be Arabs. Most of these potential returnees have not been allowed to settle down in the Arab countries they fled to, but instead must live in refugee camps. The Western nations, that push the idea of a peace deal, generally ignore the poisonous anti-Israeli atmosphere in the Palestinian, and Arab, world. All these Moslems believe that Israel should not exist, and must be destroyed. They pretend to be otherwise for the West, but their true attitudes can be seen in the Arab and Palestinian media.
Hamas fears that 5-10 percent of the 1.5 million Gazans support al Qaeda type organizations (that is, very conservative Sunni Islam, and the belief any Moslem who does not agree with them, is not a Moslem, and can be killed.) Few of these supporters are willing to act, so there are only a few hundred armed al Qaeda types in Gaza, and since Hamas recently killed 28 members of Jund Ansar Allah, no one wants to anger Hamas. It would be suicidal. But this has turned Hamas into a tyrant and religious bigot (enforcing conservative religious customs rarely seen before among Palestinians). This makes the al Qaeda supporters always ready to get violent, if persuaded to do so by exceptional leaders, or events. That's because the al Qaeda backers generally believe that Hamas is serving Israel, partly because Hamas negotiates with Israel and is seen as not militant enough against Israel and the West. Participating in elections is also seen as non-Islamic by al Qaeda, but democracy is popular with most Palestinians.
Hamas is fighting a low level war against Fatah in the West Bank, where the majority supports Fatah, but where Hamas has the support of 10-20 percent of the 2.5 million population. Hamas is a big believer in terrorism and assassination. So Israel is quietly providing some senior Fatah officials with additional security, meaning Israeli security people inside the West Bank, protecting Palestinian politicians from Palestinian assassins.
Rocket and mortar fire out of Gaza remains low, with only two rockets in June and two rockets and a mortar shell in July. Two mortar shells have been fired this month, along with several rockets (not all the ones that land in desolate areas are found). There are still Palestinian attempts to get through the Gaza security fence, or plant bombs along the fence (to kill Israeli soldiers who patrol the fence.) Israel also bombs tunnels every time rockets or mortars are fired, which discourages Hamas from these attacks on Israel. The smuggling tunnels are essential for the Hamas military buildup (larger and longer range rockets, for the "final battle" with Israel.
August 24, 2009: A Swedish newspaper admitted that, a story it published, where it's reporter in the Palestinian territories passed on an old Palestinian libel, that Israeli troops regularly killed Palestinians to steal their organs for transplants, was false. When the article was published a week earlier, there was outrage in Israel, and jubilation in the Arab world. The Israelis demanded proof, and the Arabs didn't care (and never did when it came to stories like this). The Swedes found that there was no proof, and the editor of the newspaper apologized. But Europeans are becoming more tolerant of these anti-Semitic slurs. Many Israelis see the pattern of violent anti-Semitism, which last peaked during World War II, building again, as Europeans become more tolerant of violence against Israel, and Jews in general.
August 21, 2009: Having seen Islamic terrorists increasingly use the ability to come from Jordan to the West Bank, and then into Israel, on tourist visas, Israel has stopped allowing anyone from entering Israel this way. This caused an uproar in the West Bank and Jordan, but terror attacks in Israel, is such a potent political issue in Israel, that the Israeli government knows that it cannot back down on things like this.