This update summarizes bilateral, multilateral, regional, and international events affecting the Palestinians and Israel during the quarter from 16 November 2017 to 15 February 2018. Highlights include: U.S. president Donald Trump pledged to move the U.S. embassy in Israel from Tel Aviv to Jerusalem and formally recognized Jerusalem as Israel’s capital, reversing decades of U.S. policy. His decision provoked an international backlash, sparked a wave of protests and clashes in the occupied Palestinian territories, and compromised his own diplomatic efforts. The Israelis celebrated Trump’s decision, while the Palestinians cited it as an illustration of the United States’ pro-Israel bias and as the reason for their rejection of U.S. mediation in any future peace talks. Outraged, Trump ordered punitive cuts to U.S. humanitarian aid designated for Palestinian refugees, further undercutting any peace initiative, which advisors insisted was still under way. The Palestinians began pursuing a new, multilateral framework to continue the peace process. Amid these developments, the Palestinian national reconciliation process stalled once again.