FP’s Situation Report: In Israel, ceasefire is over and a soldier may be captured; Iron Dome funding is in limbo; Brennan’s under fire; Afghanistan prepares to resume its vote audit; and a bit more.

By Kate Brannen with Nathaniel Sobel

Breaking overnight — the ceasefire between Israel and Hamas is over. Who broke it? Unclear right now, but both sides resumed heavy fighting by late Friday morning. There was a lull in fighting at 8 a.m. local time when the three-day ceasefire between Israel and Hamas was supposed to begin, but less than three hours later, the fighting had resumed and dozens of Palestinians are now reported dead.

And Israel fears a soldier may have been captured. The NYT’s Isabel Kershner and Fares Akram: "Lt. Col. Peter Lerner, a spokesman for the Israeli military, said that government forces were moving to destroy a tunnel, as the terms of the cease-fire allowed for, when several militants came out of the ground. Colonel Lerner said the militants included at least one suicide attacker, that there was an exchange of fire on the ground and that initial indications were that a soldier was apparently dragged back into the tunnel. He was unable to offer details about the soldier’s condition or whether anyone was killed in the attack." More here.

What happens next? If Hamas has captured an Israeli soldier, the next time it goes to the negotiating table it will have something valuable to trade. In the meantime, the Palestinian families eager to return to their homes will now have to return to U.N. shelters as the death toll starts climbing once again. One sign that this might not go on much longer: Israel has said it is days away from destroying all of Hamas’s tunnels.

By allowing Israel to continue destroying Hamas’s tunnels was the ceasefire agreement doomed from the start? FP’s Colum Lynch: "The agreement — which was announced jointly by U.S. Secretary of State John Kerry and U.N. Secretary-General Ban Ki-moon — provides a brief timeout from the brutal fighting to allow the resumption of Egyptian-hosted talks between Palestinian and Israeli officials this weekend in Cairo on a more ‘durable cease-fire,’ according to the joint statement. In the meantime, Israeli forces will be able to stay put in Gaza, a key demand of Israeli Prime Minister Benjamin Netanyahu, who activated 16,000 more reserve troops Thursday and used a televised address to tell his people that the offensive wouldn’t stop until all of the tunnels Hamas has been using to sneak into Israel have been destroyed." More here.

Destroying Hamas tunnels has become the No. 1 priority for Israel, partly because the underground network is far more extensive than Israel may have realized. FP’s Shane Harris: "Israeli military, intelligence, and political officials have known for years that Hamas fighters were burrowing into their country from Gaza through underground tunnels. An Israeli army spokesman said this month that the military had discovered four tunnels just in the past 18 months, well before Israel’s current ground offensive began. But in interviews, current and former Israeli officials said the military and intelligence services didn’t realize the extent of Hamas’s subterranean operations, nor did political leaders act to counter a threat that has become the central focus of Israel’s Gaza campaign and stands as potentially the biggest Israeli intelligence failure in years." More here.

Israel wants a demilitarized Gaza strip – but who is going to keep Hamas from rearming? The LA Times’s Paul Richter: "Usually reluctant to involve foreign powers in their nation’s security, Israeli leaders have concluded that an outside force might be the most effective way to accomplish that goal. Initial international reaction to the idea of an outside force has been positive, with the United Nations, European Union and Obama administration all embracing the idea, in principle." More here.

Tangled up in Senate politics, the $225 million in new funding for Iron Dome remains in limbo. First, the money had been included in the controversial $2.7 billion border aid package. When Senate Republicans blocked that legislation yesterday, Senate Majority Leader Harry Reid tried to split off the Israel money, along with funding to fight wildfires out West, reports POLITICO’s Burgess Everett.

Democrats and Republicans both support the Iron Dome funding, but yesterday they haggled over whether the money required an offset from elsewhere in the budget. In the final days before Congress goes on its August recess, the funding for Israel has become nothing more than a political football.

As Washington awaits the release of the highly classified probe into the CIA’s torture program, John Brennan’s integrity is being questioned just when the agency needs it most. FP’s Shane Harris and Elias Groll: "John Brennan’s week has gone from bad to worse. The CIA director was already bracing for the imminent release of a 600-page Senate report that, as the world already knows, accuses the CIA of torturing suspected terrorists and misleading Congress about it. Then Brennan was forced to apologize for CIA employees who spied on the very Senate staff investigating his agency — an allegation he emphatically denied for months — following a scathing report by the agency’s own inspector general.

"Brennan’s credibility is now at a moment of supreme crisis. At stake is his reputation not only with his congressional overseers, but with a public that is about to read, in vivid detail, how the CIA brutally interrogated detainees, failed to gather any useful intelligence that could stop a terrorist attack in doing so, and then tried to cover up its actions." More here.

The EU Arms Embargo against Russia begins today.  Defense News’ Julian Hale with the story here.

A break in fighting lets an international team reach the site of the plane crash in Ukraine. The NYT’s Andrew Roth and Andrew Kramer: "International monitors finally reached the crash site of Malaysia Airlines Flight 17 in eastern Ukraine on Thursday, after being blocked for days by fighting in the area between Ukrainian troops and pro-Russia separatists.  Ukrainian officials said they had suspended offensive operations against the rebels to allow the monitors to reach the site safely. Commanders at Ukrainian military positions near the site confirmed that they had been ordered to halt their advance." More here.

In Washington, the Senate unanimously approved the nomination of John Tefft to be the next ambassador to Russia. The post’s been vacant since February. Reuters’ has the story here.

Sen Carl Levin’s message to President Obama: Give Ukrainian forces more weapons. The chairman of the Senate Armed Services Committee, is not satisfied with the non-lethal aid the United States is providing Ukraine. His comments will surely add to the pressure on the White House to do more in response to Russia’s actions.

"We should take additional steps to help Ukraine reclaim sovereignty in eastern Ukraine and try to deter Russia from crossing the border," the Michigan Democrat said in a statement yesterday. "As part of this effort we should provide Ukraine with defensive weapons – such as anti-tank weapons – that can help Ukraine reclaim its territory and deter Russian aggression, without being needlessly provocative to the Russians."

And in the House, gruesome photos from Syria also prompt calls for the Obama administration to do more. FP’s John Hudson: "In an unusual briefing before the House Foreign Affairs Committee Thursday, a disguised Syrian defector shared photos he had taken before fleeing the war-torn country that document what appears to be widespread atrocities carried out by the regime of Syrian President Bashar al-Assad. The gruesome imagery depicting starved corpses and tortured bodies prompted criticisms by lawmakers, including Democrats, that Barack Obama’s administration isn’t doing enough to end Assad’s reign of terror." More here.

Welcome to Friday’s edition of Situation Report. If you’d like to be one of our subscribers, we’d love to have you. Sign up for Situation Report by sending us a note at gordon.lubold@foreignpolicy.com and we’ll just stick you on. Like what you see? Tell a friend.  And if you have a report you want teased, a piece of news, or a good tidbit, you, send it to us early for maximum tease. And the more shovel-ready, the better. And hey! Follow us: @k8brannen, @glubold and @njsobe4.

Who’s Where When: Marine Corps Commandant Gen. Jim Amos hosts the 1st Sea Lord of the British Royal Navy, Sir George Michael Zambellas, at the evening parade at Marine Barracks Washington.

A German officer will serve as U.S. Army Europe’s chief of staff. Military Times’ Jim Tice: "A German Army brigadier general who recently served with NATO forces in Afghanistan is assuming duties as the chief of staff of U. S. Army Europe, the first time a non-American officer has held that position. Brig. Gen. Markus Laubenthal, most recently the commander of Germany’s 12th Panzer Brigade in Amberg, and chief of staff of Regional Command North, International Security Assistance Force Afghanistan, will be stationed at USAREUR headquarters, Wiesbaden, Germany. He could report to duty as early as Monday." More here.

#FF @StanMcChrystal. Retired Gen. Stan McChrystal is on Twitter. See what he’s up to here.

What did the president talk to Congress about yesterday? Obama invited a handful of congressional leaders to the White House yesterday to discuss "ongoing U.S. efforts to respond to the conflicts in Ukraine, Iraq, Gaza, Syria, and other pressing issues," according to the White House. "The President requested this meeting to update and hear from some of Congress’ leading foreign policy voices before their departure for the August recess."

Who was in the room? Check out the list here.

Congress can’t get the border bill passed in time for recess, but it did pass a VA overhaul bill last night. All it needs now is the president’s signature. FP’s John Hudson: "In a rare moment of bipartisan cooperation, Congress approved a $16.3 billion plan to overhaul the Department of Veterans Affairs, which has been dogged by allegations of mismanagement and neglect, including that it allowed veterans waiting for medical care to die. The Senate approved the bill in a 91-3 vote on Thursday, one day after the House version passed by a vote of 420 to 5.

Rep. Jeff Miller (R-Fla.), chairman of the House Committee on Veterans’ Affairs: "We are now just one signature away from making government more accountable and providing veterans with real choice in their health care decisions… I am confident the president will do the right thing and sign this bill into law." More here.

The FT’s editorial page offers some foreign policy advice to the GOP, and urges the potential presidential candidates to move beyond the ‘shoot-now-ask-questions later’ approach: "There is a strong case to be made that Barack Obama’s diplomacy lacks the drive – and the Machiavellian mindset – required to cope with such challenges. The field is open for a Republican to seize that ground." More here.

China may have accidentally confirmed the existence of the Dongfeng-41 missile. Reuters: "A Chinese provincial department appeared to have inadvertently confirmed the existence of an intercontinental ballistic missile that may be able to carry several nuclear warheads and travel as far as the United States." More here.

The DoD’s IG found that a former senior official was sidestepping the competitive bidding process to hire people he already knew. The WaPo’s Dan Lamothe: "Alan S. Rudolph, the former director of the agency’s chemical and biological technologies directorate, recruited people he knew to work for him and had several organizations, including George Mason University, hire them as employees to do work for his organization, the Defense Department Inspector General’s Office found. The investigation was sparked by complaints that Rudolph was hiring his friends outside regulations." More, including Rudolph’s response, here.

U.S. officials hope that Egypt, Israel, Iraq and Saudi Arabia can find common ground in the fight against extremist groups. The WSJ’s Jay Solomon and Carol Lee: "The eruptions of Islamist violence in the Gaza Strip, Syria and Iraq have begun shaking the Middle East to its core, increasing the likelihood that a new order will emerge when the dust starts to settle. The region’s traditional power centers-Egypt, Saudi Arabia, Iraq and Israel-are all threatened by the surge of Islamist forces that aim to disrupt the status quo. Even Shiite Iran, which often stokes Islamist movements, is finding that the surge of Sunni extremism is threatening its position in the region."

A senior Arab official: "We’re seeing the region dividing up into a moderate camp and an extremist camp. The two camps have opposing and irreconcilable views of the role of radical Islam… That’s why it’s important to be more publicly supportive of moderate forces. Not doing so will in effect undermine moderates and empower extremists." More here.

Writing for FP, journalist Adam Baron describes his final days in Yemen before getting kicked out. "I never really thought about how my time in Yemen would come to an end. But needless to say, I would never have believed it would end with me being forced to leave within 24 hours, booted out in a matter befitting a criminal …

"… Critical reporting on the state of the country has apparently become unwelcome in post-Arab Spring Yemen. Such reporting is needed now more than ever: At the moment, there doesn’t appear to be a single accredited American journalist based in a country where the United States is waging a covert drone war against what President Barack Obama’s administration has dubbed the world’s most dangerous al Qaeda franchise." More here.

Planes ordered to fly higher in Iraq now. The Wall Street Journal’s Robert Wall: U.S. airlines are prohibited from flying over Iraq below 30,000 feet, the Federal Aviation Administration said late on Thursday. The agency, which had previously restricted airlines from flying below 20,000, issued the new requirement because of ‘the potentially hazardous situation created by the armed conflict in Iraq.’" More here.

As violence rages in Iraq and Syria, the U.S. must pay attention to the Kurds, asserts a new report from the Center for American Progress. The report looks at the ascending Kurdish political and military actors from the perspective of both Turkish domestic politics and broader regional dynamics, and offers recommendations for a more coherent U.S. policy.

Michael Werz, Senior Fellow at CAP, told Situation Report last night: "With the rise of ISIS and chaos in Syria and Iraq, both the United States and Turkey are in need of new partners with whom to work towards regional stability.  Turkey is already cooperating well with the KRG and could move towards closer cooperation with Syrian Kurds.  Advancing the peace process with Kurdish groups domestically will be important to improving Turkey’s stature in the wider region."

Policy Analyst Max Hoffman added: "The U.S. needs to recalibrate its approach to Kurdish groups in Syria, deepen ties with the KRG with less deference to Baghdad’s wishes, and adjust its interactions with Kurdish political actors to reflect the influence of these groups and Ankara’s more open approach to the idea of Kurdish autonomy along its southern border. These steps could help curb the rise of groups like ISIS and insulate Turkey against the spread of regional turmoil." Read the report here.

If the U.S. military is going to fulfill the QDR’s strategic objectives, it’s going to need more resources. That’s according to the National Defense Panel, which delivered its review of the 2014 Quadrennial Defense Review to Congress yesterday. The congressionally mandated report, "Ensuring a Strong Defense for the Future," concludes there is a growing gap between the strategic objectives the U.S. military is expected to achieve and the resources required to do so. You can read the full report here.

In Afghanistan, the high-stakes vote audit resumes tomorrow. AP’s Amir Shah: "The head of the Afghan Independent Election Commission and the chief U.N. envoy to Afghanistan said the sides have agreed on new criteria, allowing the audit to go forward." More here.

How can the US stabilize Afghanistan now that the era of stabilization is over? The presidential election drama isn’t the only Afghan upheaval underway: provincial reconstruction teams are closing, meaning foreign civilian and military actors have lost key platforms outside Kabul to project their security and aid assets. A new US Institute of Peace report by Frances Brown, argues that NATO’s  governance and development strategy needs to adjust accordingly.

At least eight firms specializing in deep dives are bidding to take part in the next phase of the search for Malaysia Airlines Flight 370, likely lost in the Indian Ocean west of Australia, one of the greatest mysteries in aviation history. The WSJ’s Daniel Stacey reports, here.