The current episode in the never-ending saga of Jerusalem-related controversies relates to a leaked draft resolution implying that the Council of the European Union expects East Jerusalem to become the capital of a future Palestinian state. Banner headlines highlighted Israel's shock and dismay over this diplomatic "outrage". At this writing, PM Binyamin Netanyahu is pulling out all the diplomatic stops to convince the Europeans to retract the offending words; it is still not known if he will succeed.

There is, of course, nothing revolutionary in the proposed EU statement. Since the failed Camp David summit in 2000, the political division of Jerusalem has become the sine qua non of any final status agreement between Israelis and Palestinians. It has been a common denominator of every credible plan to resolve the conflict, from Taba to the Geneva accords and beyond, and every Israeli leader who engaged in earnest in final status negotiations--including veteran Revisionist Ehud Olmert--has been compelled to embrace this position.

So one can almost chuckle over the reservations expressed by the French government last week regarding the draft EU proposal, bearing in mind that in June 2008 President Nicolas Sarkozy declared before the Israeli Knesset: "There cannot be peace without recognition of Jerusalem as the capital of two states...."

But while a sense of irony is in order, this skirmishing over a draft EU declaration discloses some important underlying trends relating to Jerusalem.

Firstly, as the two-state solution has taken root even among Likudniks like Netanyahu, with cognitive convergence taking place regarding the borders between Israel and Palestine (to be located somewhere between the route of the barrier and the green line), Jerusalem is becoming the central arena of Israeli-Palestinian skirmishing.

Indeed, Jerusalem has emerged as the arena of choice for all those who oppose a political resolution of the conflict. Fear of impending negotiations has reenergized the efforts of the extreme northern faction of Israel's Islamic movement, while the messianic settlers, bolstered by outside help from the likes of US presidential hopeful Mike Huckabee, are having a field day in Jerusalem. On two recent occasions--the Shepherds Hotel settlement and the Gilo expansion plan--Netanyahu chose Jerusalem as the place to publicly challenge US President Barack Obama. And while there is some merit to Netanyahu's claim that he has exhibited more restraint regarding settlement activities in Jerusalem than his predecessors, settler-related activities in the city--displacement, demolitions, tunneling, archeology, etc.--are of late unprecedented in their scope and intensity.

Under these circumstances, Jerusalem has become a significant stumbling block to resumed negotiations. Neither the Palestinians, the Egyptians nor the Jordanians, much less the other Arab states, can accept negotiations that make them appear complicit with the loss of East Jerusalem to the Arab and Muslim worlds.

Secondly, despite the stalled prospects for credible political talks, altered expectations and accumulated frustrations have changed the calculus regarding Jerusalem. In the zero-sum, neo-con world of the Bush administration, Israel could have expanded Gilo with impunity. Today, the chorus of criticisms over Gilo (and over demolitions, displacements, etc.) has made clear that Israel is estranging its closest allies with its actions in Jerusalem.

Thirdly, even if the Obama administration chooses not to lead on the radioactive issue of Jerusalem, Israel is not immune. The void will be filled by the EU, both anticipating latent American positions and expressing frustration at the US failure to exercise leadership on this issue.

So the trends disclosed by the EU draft resolution are far from trivial. Just as the two-state solution has become a commonplace, we are now witnessing the crystallizing of a clear consensus that (a) any future agreement will entail the political division of Jerusalem; (b) getting events in Jerusalem under control is critical in kick-starting the political process; and (c) if Israel does not act responsibly in East Jerusalem--particularly in and around the Old City--it will be on a collision course with even its closest allies in the international community.

How Israel deals with this challenge will be critical. By conceding the inevitability of a politically-divided Jerusalem, Israel could pave the way for the legitimacy and recognition it seeks for itself and its capital. (Few have noted that the EU draft proposal entails EU recognition of Israeli Jerusalem as the nation's capital.) Alternatively, continued adherence to the mantra of the "eternally undivided capital" will inexorably lead Israel toward increasing and unprecedented isolation.

Israel may well "succeed" in watering down the EU's Jerusalem language. If so, this will be a Pyrrhic victory. It will only force the world to continue speaking in code about Jerusalem, while Israel tries to avoid dealing with--and preparing its public for--the hard choices coming down the pike. Such an approach is hardly in Israel's interests.

Lest those who support the emerging Jerusalem consensus be tempted to bask in this "victory", they would do well to curb their enthusiasm. In the streets of Sheikh Jarrah, in the tunnels under Silwan and down the road in the settlements on Jerusalem's periphery, another drama is unfolding in the form of steady developments on the ground. Left unchecked, these developments may well ensure that by the time the changing Jerusalem perceptions crystallize into political action, the geography and demography will be so balkanized that the two-state solution will be lost.- Published 7/12/2009 © bitterlemons.org