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Holy city: Israelis and Palestinians both insist on having Jerusalem as their capital.
Holy city: Israelis and Palestinians both insist on having Jerusalem as their capital.
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Israel puts Jerusalem on the negotiating table

Ahead of an international peace summit, leaders say some areas could be ceded to the Palestinians.

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Reporter Ilene Prusher explains some of Jerusalem's history and talks about Jews and Palestinians living there today.

As she visits the Middle East this week, USSecretary of State Condoleezza Rice is pressing Israeli and Palestinian leaders to commit to confidence-building measures and a timetable ahead of an upcoming US-sponsored peace conference in Annapolis, Md.

Israel has resisted a timetable, but Prime Minister Ehud Olmert said in a major speech Sunday night that he is ready to begin accelerated peace talks – even on final-status issues such as Jerusalem.

Mr. Olmert's statement reiterated recent remarks by Israel's deputy prime minister indicating that Israel must be prepared to discuss giving up parts of Jerusalem – potentially dividing the city – in upcoming negotiations with the Palestinians.

"It is in Israel's interest that all the Jewish neighborhoods in Jerusalem receive international recognition and that Arab neighborhoods like Walajeh and Shuafat are transferred to the Palestinians," Haim Ramon, the vice premier, told cabinet members last month.

Whether intended as a trial balloon or as a genuine attempt to get Israelis accustomed to the idea of turning Arab neighborhoods over to Palestinian control, the message sent shock waves through both Israeli and Palestinian society.

Many Palestinian residents opposed

Those feeling skittish about the city's potential partition aren't just Israelis – who traditionally take the position that Jerusalem should be Israel's united capital – but also Palestinian Jerusalemites, who fear that their standard of living will fall if they come under the control of the Palestinian Authority (PA).

"I don't want to have any part in the PA. I want the health insurance, the schools, all the things we get by living here," says Ranya Mohammed as she does her afternoon shopping in Shuafat.

"I'll go and live in Israel before I'll stay here and live under the PA, even if it means taking an Israeli passport," says Mrs. Mohammed, whose husband earns a good living from doing business here. "I have seen their suffering in the PA. We have a lot of privileges I'm not ready to give up."

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