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What's behind Israeli's extension of Jewish control over holy city

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Haj Ali Khalaf arcs a spindly arm toward a tightening noose of Israeli housing on what was once Arab land. In 90 years in the world's holiest, and most fought-over, city, he has lost two homes (captured), acres of land (seized), and one son (exiled) to entrenching Israeli power.

"I pray for peace," he whispers, gazing toward the 16th-century city walls that lie near the eastern edge of modern Jerusalem. "But the Jews must stop taking our land."

Across town, Mrs. Rachel Lustig recalls truckloads of Jewish victims from a massacre of decades past, proof that it has taken both Arabs and to make Jerusalem the core of the Arab-Israeli conflict. She points toward the ancient Mount of Olives.

Her mother was -- is -- buried there. The Arabs, however, toppled the Jews' gravestones to mount a luxury hotel.

She, too, prays for peace. "We must find a way to live together, Jews and Arabs," she says, but argues that the Arabs could "get all of Jerusalem and still go on fighting us.

"Only Sadat has the courage for peace."m

Haj Ali Khalaf has since passed on, his prayers for peace unanswered. The sacred city of Jerusalem, even without gun battles or bombing raids, seems the focus of tension and conflict as never before.

In one corner is a tiny, mighty, and defiant Israel. In the other are local Palestinians and Egyptian President Anwar Sadat, aware that he has virtually no chance of bringing other Arabs behind his peace initiative unless he can somehow undo israel's 1967 capture and annexation of the eastern Arab-held sector of the divided city.

In between stand United States negotiators. They argue that the final status of the city has yet to be negotiated, and view the eastern sector as under Israeli occupation. At the 1978 Camp David summit they packed away the "Jerusalem issue" for much later debate. But the package has been unraveling with a vengeance.

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