Associated Press

JULY 2, 1994

JERUSALEM (AP) -- Mutual recognition, the start of autonomy and the return of Yasser Arafat have brought Israelis and Palestinians no closer to resolving the most vexing issue dividing them: Jerusalem.

Israel and the PLO agreed to delay talks on the city, claimed by both sides as their capital and filled with holy sites for Jews, Christians and Muslims. But Arafat often mentions his plans for the city; on Saturday he roused cheers in Gaza City when he spoke of Jerusalem as the capital of a Palestinian state.

Such talk rankles Israelis. On Saturday, tens of thousands of Israelis attended a rally to protest Arafat's return Friday to Palestiian lands.

Arafat apparently will not visit Jerusalem during his current trip. But he insists that all roads lead there:

Yet any attempt to somehow divide the now-unified city of 560,000 people, including 150,000 Palestinians, would encounter enormous obstacles.

* While most Israelis favor the Israel-PLO deal, polls indicate vehement opposition to any potential concessions regarding Jerusalem. On the other hand,

* Most nations, including the United States, don't recognize Israel's claim to all of Jerusalem as its "eternal capital" and have their embassies in Tel Aviv. Israel seized Arab east Jerusalem from Jordan in 1967 and annexed it.

* Since capturing east Jerusalem, Israel has ringed the Arab sector with Jewish neighborhoods. Jews are now a majority even in eastern Jerusalem, and a clean division of the city is all but impossible. Few of the city's Palestinians have accepted Israel's offer of citizenship; many claim municipal policies are designed to get them to leave.

* The area claimed by Palestinians includes the walled Old City, which contains the holiest sites in Judaism and Christianity as well as Muslim holy sites next in importance only to Mecca and Medina in Saudi Arabia.

* The holiest Muslim sites -- the Dome of the Rock and Mosque of Al-Aqsa -- rest on the site of the Jewish Temple destroyed by Romans 2,000 years ago. To create the impressive plaza in front of the Western Wall, the Temple's only remnant, Israel razed an Arab neighborhood.