This morning’s Independent and the Independent i cover a World Bank report which warns of a deepening financial crisis within the Palestinian Authority (PA). According to the World Bank, the PA is facing a budget deficit this year of £250m. The World Bank report calls on international donors to urgently fulfil pledges to support the Palestinian economy.  It also urges Israel to ease trade restrictions in the West Bank in order to encourage private investment. The Independent notes an Israeli response which places responsibility on the PA for mismanaging its own finances, while detailing that tax revenues have twice been advanced by Israel to help relieve budgetary pressures on the PA.

The Guardian reports recent comments by several Palestinian leaders, which have suggested that the Palestinians are considering cancelling the Oslo Accords with Israel, due to the stalled peace process and growing public discontent. The report notes that such a decision would trigger the dissolution of the PA, bringing uncertainty to its 153,000 employees and their families.

Online, the Guardian reports on the content of a speech to be made today by former Foreign Secretary David Miliband. Speaking at a charity dinner, Miliband will express concern at the diminished prospects for a two-state solution between Israel and the Palestinians. His speech will reportedly argue that the peace process has been undermined by Israeli settlements, Palestinian divisions and the Arab Spring, which has diverted international attention to other parts of the region.

Elsewhere online, the BBC reports an overnight Israeli air strike on the Gaza Strip, which killed two Palestinians near the town of Rafah. The report notes that Palestinian officials identified those killed as employees of a border patrol unit. Reuters UK notes that the Israeli military identified the dead men as terror operatives who had been smuggling explosives into Gaza and transporting suicide bombers into Egypt in preparation for attacking Israel.

Meanwhile, the Telegraph publishes a concise report of a snap large-scale Israeli military exercise which took place yesterday on the Golan Heights. The report speculates that the exercise was conducted in preparation for possible conflicts with Iran and Syria. The online edition of the Telegraph reports that Israeli military officials referred to the exercise as routine, noting that a similar drill took place last year.

The Times also covers yesterday’s Israeli military exercise in a report on Amnesty International’s condemnation of the Syrian regime’s attacks on its own civilians. The Telegraph online also covers the Amnesty report, which it notes also criticises Syrian opposition fighters for alleged violations of human rights.

The Financial Times carries an interview with Ali Larijani, Speaker of the Iranian parliament. Larijani insists that Iran’s pursuit of nuclear power is purely peaceful and that US military action against Iran would be ‘highly costly’.

The T2 section of the Times includes an interview with Israeli chef Yotam Ottolenghi and co-author, Palestinian chef Sami Tamimi, on their new cook book titled ‘Jerusalem’.

In the Israeli media, Yediot Ahronot reports that US officials recently warned their Israeli counterparts that the potential side effects of an attack on Iran could include the annulment of Israel’s peace treaties with Jordan and Egypt. The American officials reportedly believe that public pressure in both countries would leave the Jordanian and Egyptian governments with little choice but to sever diplomatic ties with Israel.

Several publications report the surprise large-scale military exercise which took place yesterday on the Golan Heights. Ma’ariv reports some of the details of the exercise, noting that it was designed to examine war readiness. Meanwhile, Israel Hayom’s analysis of the drill argues that it was a routine exercise which does not indicate any increased Israeli anticipation of war. The article points out that the Israeli military made the Syrian authorities aware of the drill, so as not to cause unnecessary alarm.

Ha’aretz reports a speech made by Dr Shaul Horev, Director of the Israel Atomic Energy Commission. Speaking at the General Conference of the International Atomic Energy Agency (IAEA) in Vienna, Horev outlined Israeli disapproval of an Arab-led initiative for a conference on a nuclear-free Middle East, floated to take place in Helsinki during the coming winter. Horev argued that a nuclear-free Middle East can only be possible when there is peace in the region. Israel Hayom notes Horev’s declaration during the same speech that Israel will defend itself against any existential threat. Israel Radio News also reports Horev’s comments, noting his support for a Jordanian civilian nuclear programme for electricity production and water desalination.

In a separate item, Israel Radio News reports the Israel Air Force strike last night which killed two Palestinians in the southern Gaza Strip, noting that the two men were members of the Defenders of al-Aksa faction, under the auspices of Hamas, and were responsible for rocket fire against Israel and planting explosive charges.