Of all the outstanding issues in the way of an Israeli-Palestinian peace accord, the status of Jerusalem is probably the most complex and sensitive.

It is one which, on the face of it, offers no scope for compromise.

Israelis of all political persuasions insist that a united Jerusalem will be the eternal capital of the Jewish state - come what may.

Palestinian women pray near the Dome of the rock

With equal insistence, the Palestinians say that the Arab eastern half of Jerusalem - where the Al-Aqsa Mosque and the Dome of the Rock, sacred Islamic sites, are located - will be the capital of their new state.

Given these mutually incompatible demands, negotiators have been trying to find a solution that would allow each side to claim that its rights have been honoured.

Compromise

At the beginning of the year, according to Arab diplomats, the two sides moved towards some kind of compromise - the one that was alluded to by the Israeli Deputy Defence Minister, Ephraim Sneh.

Possible compromise

Palestinian sovereignty for a number of Arab districts north of Jerusalem Palestinian flag allowed over some buildings in eastern Jerusalem Palestinians vote for own mayor

This would give the Palestinians sovereignty over a limited number of Arab districts just to the north of Jerusalem - with these districts being brought inside the city boundary.

At the same time, the Palestinian flag would fly over some key buildings in the eastern half of the city, including Orient House - the unofficial Palestinian seat of government.

The Palestinians in the city would also vote for their own mayor.

"In effect," a diplomat said, "the Palestinians would have sovereignty over their people in Jerusalem, but not the land."

'Victory for both sides'

The advantage of this scheme is that it could be presented by negotiators on both sides as a victory.

The Israelis could say that, as promised, they would be maintaining sovereignty over a united city. At the same time, Yasser Arafat could claim credit for raising the Palestinian flag over the sacred Islamic sites and other buildings in east Jerusalem.

Such a scheme would undoubtedly attract criticism from some right-wing quarters in Israel who object to any concessions being made to the Arabs.

But stronger objections could be expected from a much wider section of Palestinian society - and from the Arab world as a whole.

Palestinian unease

There is a feeling among the Palestinians that an ageing and ailing Yasser Arafat - in his desperate desire to become the first president of Palestine - has already made too many concessions in the negotiations with Israel.

The Israelis could say that, as promised, they would be maintaining sovereignty over a united city. Yasser Arafat could claim credit for raising the Palestinian flag over the sacred Islamic sites and other buildings in east Jerusalem.

Such a deal would not meet the requirements of a just peace

Rev Dr Naim Ateek

There is now widespread anxiety in the West Bank and Gaza Strip that Mr Arafat will accept a deal on Jerusalem which leaves the Palestinians with nothing more than a token presence there.

"Such a deal would not meet the requirements of a just peace," said Rev Dr Naim Ateek, President of the Sabeel Ecumenical Theology Centre in Jerusalem. "This is not the Jerusalem people know, and I don't think the people will accept it."

This is not what Palestinians suffered and gave their lives for. An unacceptable compromise over Jerusalem will make their blood boil.

Former adviser to Yasser Arafat

Some other Palestinians believe that non-acceptance would take the form of a return to street violence of the kind witnessed during the intifada - the uprising against Israeli occupation which began in 1987.

"This is not what Palestinians suffered and gave their lives for," said one former adviser to Yasser Arafat. "An unacceptable compromise over Jerusalem will make their blood boil."

Nevertheless, Yasser Arafat knows that a compromise is the best he can hope for.

And with the state for which he has strived all his life so tantalisingly close, the chances are that he will accept such a deal, no matter what the dangers may be.