For 60 years Palestinian and Arab leaders have been lying to their people. Creating and sustaining the lie that the Palestinian refugees of 1948 would return to their original homes and lands makes it almost impossible for President Mahmoud Abbas to reach an agreement with Israel on this, the most central issue in the conflict. Abbas and most of the Palestinian leaders from his Fatah movement have long realized that there could not be any real return of Palestinian refugees to Israel proper, but despite the fact that they have acknowledged this in private discussions with Israelis, they have not yet said it in public. The original 700,000-800,000 Palestinian refugees today number some 4.5 million (no one knows the exact figure of the refugees and their descendents which have been granted refugee status by the UN). In the West Bank and Gaza, not including the Palestinian diaspora, one of every two Palestinians is considered a refugee. Abbas' largest opposition to any agreement with Israel that includes concessions on the refugee issue comes from this very large segment of the population.

FOR 40 years, Israeli leaders have been lying to their public. Creating and sustaining the lie that Jerusalem was united and that all of united Jerusalem will be the eternal capital of the State of Israel makes it nearly impossible for Prime Minister Ehud Olmert to make the necessary concessions on the Jerusalem issue to reach an agreement with the Palestinians. It is really quite amazing that the majority of Israelis continue to hold onto the lie in believing that Jerusalem is truly united. Jerusalem has not been a united city since the time of the British Mandate. Most Israelis have never visited (nor do they care to visit) most of Palestinian east Jerusalem. Areas such as Sur Baher, near Kibbutz Ramat Rahel; Jabel Mukaber just past East Talpiot; Sawahre, an Area A Palestinian village near Bethlehem; Walajeh, between Gilo and Bethlehem; and

Um Tuba, which is next to Sur Baher, all have no meaning to Israelis.

In fact, most Israelis believe that the state should not invest money in those places thereby providing for equal education and public services. Thus there are parts of the "eternal capital" that look like the undeveloped parts of a Third World country. Ten kilometers from downtown west Jerusalem looks like parts of Calcutta. Almost no Israeli politician has ever visited these places and even the Jerusalem mayor probably isn't even aware or simply doesn't care that these Palestinian neighborhoods are part of his responsibility as Mayor.

Are those Israelis who speak against dividing Jerusalem willing to fight and perhaps die (or to send their children to fight and perhaps die) so that Um Tuba will remain part of the "eternal capital" of Jerusalem? I seriously doubt it.

PEACEMAKING will require from the leaders to undo the web of lies they have helped to spin for so many years. It is time to be honest with both publics. Palestinians have to understand that despite their understanding of "justice" - meaning to them that Palestinian refugees must be allowed to return to their original homes, this is simply impossible. Not only do their original homes no longer exist, their villages and towns have been replaced by others who are already living there 60 years. There is also a fundamental contradiction in seeking "two states for two peoples" while adhering to the "right of return" at the same time.

PALESTINIANS say: Recognize our right of return, and we'll negotiate the implementation details; anyway most refugees will not choose to go back. This kind of open ended "solution" would never be accepted by any Israeli leader.

It is not unreasonable for Palestinians to demand that Israel acknowledge its part in the creation of the refugee tragedy; that Israel contribute generously to an international fund for paying compensation and resettlement money to Palestinian refugees.

Adhering to the position that Israel must recognize the "right of return" is a non-starter.

Similarly, Israeli leaders must have the courage to say out loud that Jerusalem is a divided city today and that in the framework of an Israeli-Palestinian agreement, the Palestinian parts of east Jerusalem will be the capital of the future Palestinian state.

Most Palestinians have already come to terms with the reality that the Israeli neighborhoods - or what they refer to as settlements - in east Jerusalem will remain under Israeli sovereignty. The residents of Ramat Eshkol, French Hill, East Talpiot, Ramot, Pisgat Ze'ev, Neve Ya'akov and Gilo need not worry.

The Clinton parameters - a blue-print for a final status agreement - which most Palestinians today accept, ensure that those neighborhoods would remain part of Israeli Jerusalem.

JERUSALEM is arguably the most "segregated" city in the world. There are almost no areas where Israelis and Palestinians live together. A division along demographic lines is completely possible. The implementation of that division could be based on security realities.

Lastly - though perhaps most importantly - is the Temple Mount or Harem al Sherif. There are really only two possible options for dealing with the most holy of holy places: dividing the control and sovereignty; or transferring the control and sovereignty to a third neutral party.

In either case, both sides would have to agree to preserve the holiness of the sites for each other and for the future. Practically this means that neither side would be able to build, dig, tunnel, or even repair structures or elements that are underneath the holy places.

Jews claim that the Temple Mount is the most holy of holy places for them. The place where the Holy Temples stood, and where most Jews believe lie their remnants has, by Jewish law, been beyond our reach because we believe that the Temple can only be rebuilt only by God after the Messiah comes. We have left this issue in the hands of God for over 2,000 years, surely that will not change because of agreement with the Palestinians and the Muslim world that will recognize the control that they already have on the Mount.

In exchange Palestinians and Muslims would also recognize Israeli and Jewish control over the Western Wall with the same limitations regarding digging and tunneling underneath these sensitive areas.

With this understanding, Jerusalem would be finally recognized as the eternal capital of Israel, but only after Jerusalem is also recognized as the eternal capital of Palestine.

It goes together - this is the truth and the truth must be told.