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.
Dan Balilty/AP
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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.

Nabil Gheet, a neighborhood leader who runs a gift and kitchenware outfit in the adjacent town of Ras Khamis, also resists coming under the PA's control.

"We have no faith in the Palestinian Authority. It has no credibility," he says, as his afternoon customers trickle in and out. "I do not want to be ruled by Abbas's gang," he says, referring to Palestinian President Mahmoud Abbas.

The road to reconciliation

Such sentiments are fraught with complications. On the one hand, Palestinians say that there can be no peace with Israel until the creation of a Palestinian state with Jerusalem as its capital – suggesting that there is no road to reconciliation without some kind of redivision of the city. On the other, Palestinians who live in Jerusalem have enjoyed most of the benefits of Israel citizenship for the past 40 years – healthcare, national insurance, universal education, and other social services – and don't want to forfeit them. Moreover, many fear that a ceding of their neighborhoods to the PA will cut off access to Jerusalem.

Meron Benvenisti, a historian and former deputy mayor of Jerusalem, says that denying Palestinians, most of whom hold Israeli-issued permanent residency cards, the right to live in Israeli Jerusalem might be illegal. It'd be the equivalent, he says, of stripping people of their citizenship en masse.

"You can't just decide to cut off people. It's like cutting off parts of a living organism. Secondly, it's immoral, because you've told people this is their lot in life decades ago, and they got used to it," says Mr. Benvenisti, author of several books on Jerusalem. "This is especially so when there's no Palestinian state on the other side of the border. One day you're part of Jerusalem, and the next day you're part of – what? You can't make them residents and then suddenly revoke their status. How will they get from here to there? Who will be their policemen?"

The specific complications he raises are just a few of the questions that Israeli and Palestinian negotiators face as they try to reach some kind of "declaration of principles" that they can bring to Annapolis, where the US plans to host an international peace summit before the new year.

Jerusalem's recent history

Israel conquered East Jerusalem in the 1967 Six-Day War, and while Israel officially annexed the territory, it is considered occupied by Palestinians and much of the international community. The creation of a Palestinian state with Jerusalem as its capital is a cornerstone of the Palestinian national movement.

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