The Financial Times, Independent i, Guardian, Times and the Independent all report this morning on the eviction by Israeli police of around 200 Palestinian activists from a controversial site in the West Bank over the weekend. The activists had established a tent encampment in the E1 area situated on the northern outskirts of Jerusalem and declared it a Palestinian village called Bab al-Shams. Several weeks ago the Israeli government had announced plans to build homes in the area, which lies between Jerusalem and the large settlement bloc of Ma’ale Adumim, but is also considered important to the territorial contiguity of a future Palestinian state.

Meanwhile, the Telegraph sites a report on Friday in Yediot Ahronot that claims the European Union, spearheaded by the UK and France, is planning to present a new peace initiative to Israel and the Palestinians following the formation an Israeli government after next week’s election. The report in the Telegraph includes quotes from an unnamed Israeli official, who says that “the EU is planning to come up with something.” This morning’s Telegraph also includes an in-depth analysis by David Blair of how Israel-US relations might develop over the coming months in the wake of Israel’s elections and the appointment of Chuck Hagel as the new US Defence Secretary.

Elsewhere in the region, the online edition of the Financial Times reports that although opposition forces in Syria captured one of the country’s largest air bases last week, troops loyal to President Assad are pressing to win back control of a strategically important suburb of the capital Damascus. The online editions of the Guardian, Times and Financial Times cover a decision by Egypt’s highest appeals court to overturn the life sentence given to former-president Hosni Mubarak and to order a re-trial in the case. Meanwhile, the Guardian claims that international sanctions on Iran are unintentionally causing a shortage of life-saving drugs in Iran.

In Israel, the announcement yesterday by the Finance Ministry that the national deficit for 2012 stands at NIS: 39 billion, almost double the NIS: 20 billion which had been the target figure, is a major story in most dailies and is the headline in both Haaretz and Yediot Ahronot. Prime Minister Netanyahu played down the figures, saying that it represented a deficit of 4.1 per cent, as opposed to an expected 3.9 per cent, saying “I don’t think this will have significant consequences for Israel’s citizens.” However, Labour Party leader Shelly Yachimovich commented that “Netanyahu is leading the Israeli economy to total collapse.”

Meanwhile, Israel Hayom and Makor Rishon both report prominently on a spat over the weekend between Netanyahu and former-prime minister Ehud Olmert. In an interview on Channel Two, Olmert accused Netanyahu of having wasted huge amounts of money on preparations to strike Iran, which never came to fruition. Olmert added further criticism yesterday over Netanyahu’s decision to purchase an additional submarine against the advice of military leaders. Netanyahu rejected the criticism and accused Olmert of “trying to mobilize the world against Israel.”

Maariv weighs up the potential combinations which could comprise a coalition government following next week’s election. According to the report, Netanyahu would prefer to form a coalition which includes Tzipi Livni’s Hatnuah party and Yair Lapid’s Yesh Atid, rather than enter government alongside Naftali Bennett’s Jewish Home party and the ultra-Orthodox party Shas.