No two-state solution is possible unless an agreement can be implemented that satisfies both Israeli and Palestinian requirements in Jerusalem. Today, such an agreement in Jerusalem is still possible, but barely.

When Israelis and Palestinians convened at Camp David in 2000, dealing with the "radioactive" issue of Jerusalem was an exercise in diplomatic quantum physics: the parties were confronted with a complex and highly sensitive issue for which they were unprepared. A decade later, after several rounds of negotiations and another intifada, the principles required for a permanent status agreement on Jerusalem are now familiar to all involved. They are:

* a political division of the city, whereby large Israeli settlement neighborhoods in East Jerusalem (with the possible exception of Har Homa) are incorporated into Israel within the framework of an agreed land swap, and the Palestinian neighborhoods become part of the state of Palestine;

* a special regime or special arrangements for the Old City and its surroundings--without prejudice to the question of territorial sovereignty--with robust international participation that guarantees the religious, historical and cultural integrity of the Old City and its holy sites, as well as universal access and freedom of worship based on the established religious status quo;

* universal recognition of Jewish, Christian and Muslim attachments to Jerusalem and its holy sites, and of Yerushalayim as the capital of Israel and al-Quds as the capital of Palestine.

Two basic geographic and demographic conditions must be met in order to satisfy these principles. First, there must be a clear political boundary/border in the city that creates two contiguous and viable cities, Yerushalayim and al-Quds, each fully under the sovereignty of and integrated into its respective state. Second, this boundary/border must result in a clear division of the populations. Under a permanent status agreement, it is highly unlikely that any Palestinian residents of East Jerusalem will be required to live under Israeli sovereignty, nor will any Palestinian built-up area likely remain on the Israeli side of the border, and vice versa.

At Camp David in 2000, the demographic and geographic realities on the ground, as imposed by Israeli settlement neighborhoods and enclaves in East Jerusalem created since 1967, made the delineation of a border that met these requirements daunting, albeit possible.

Can such a border still be delineated today in Jerusalem? The answer is: yes, but just barely, because of three developments over the past decade.

First, Har Homa is a large settlement neighborhood with more than 12,000 residents. Its location makes a border in the southern part of Jerusalem harder to delineate. While this is a significant complication, it is indeed still possible to devise a border that attaches Har Homa to Israel without completely undermining the geographical integrity and contiguity of Palestinian East Jerusalem. But politically this will be a hard sell. Har Homa did not exist in 2000, and this settlement is viewed by the Palestinians as the quintessential post-Camp David unilateral act. As such, the Palestinians will likely insist it not be included in the land swap--a position likely to be rejected by even a moderate Israeli leadership.

Second, a decade ago there were approximately 1,400 settlers residing inside existing Palestinian neighborhoods like the Muslim Quarter of the Old City and Silwan. Today, there are more than 2,000. This number includes settlers living in a large enclave in Ras al-Amud that did not exist in 2000 and in the rapidly growing flashpoint in Sheikh Jarrah, where in 2000 there was only a symbolic settler presence. Under any peace agreement, these settlers will almost certainly be extracted--a requirement that will increase the already high Israeli domestic political price of an agreement. Put bluntly, while the removal of settlements in these highly sensitive sites in Jerusalem may well give rise to violent resistance on the part of some settlers, the political cost in the removal of 2,000 settlers is still not significantly higher than the cost of removing the 1,400 who were there a decade ago. But in places like Silwan, Sheikh Jarrah and Mount of Olives, this calculus has been changing in recent years, and for the worse.

Third, settler-related activities in and around the Old City--archeology, national parks, tunnels--have transformed the perception of the conflict among Israelis and Palestinians alike from a national conflict that is amenable to territorial compromise into a religious and symbolic conflict that is not. The discourse in both Israel and Palestine is less predisposed to a political agreement than in the past.

There can be no question: implementing a two-state solution in Jerusalem will be more difficult today than it was a decade ago, and its implementation gets more difficult with each passing day. But as of today, such a solution is not impossible.

However, if the current pace and trajectory of developments on the ground continue, within two or three years this will no longer be the case. Within this timeframe, settlements will so Balkanize the geography and demography of Jerusalem that the delineation of a viable political border will no longer be possible. Likewise, if settlement-related policies in and around the Old City continue to radicalize the conflict and transform it into a religious "kulturkampf", any proposal for a Jerusalem agreement will fail to generate broad support in either Israel or Palestine.

Today, we are holding on by our fingernails to the two-state solution in Jerusalem; consequently, we are holding on by our fingernails to the two-state solution itself.

Exacting responsible policies from the parties--at the very least, a de facto settlement freeze in East Jerusalem and refraining from inflammatory actions in and around the Old City--is not "elective surgery", but rather a life-saving procedure if the very possibility of the two-state solution is to survive.-Published 1/8/2011 © bitterlemons.org

Daniel Seidemann is a lawyer specializing in East Jerusalem issues.