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As if on cue, firecrackers, echoing like gunshots, crackled in the distance as Benjamin Netanyahu, a former prime minister and leader of the opposition Likud party, held forth on the dangers he sees in ceding parts of Jerusalem to the Palestinians.

“When we leave, the Hamas comes in,” Netanyahu said, facing television cameras. “They’ll start rocketing — they don’t have to rocket — they can use small-arms fire right into every one of these [Jewish] neighborhoods. … What they could do here could be monumentally disastrous.”

Netanyahu chose a striking location for his message: an outlook atop the biblical Mount of Olives that provides a grand vista of Jerusalem, including the walled Old City and holy sites venerated by Jews, Muslims and Christians.

The media appearance this week, part of a swing through East Jerusalem by Likud lawmakers, was another salvo in the latest debate in Israel on the fate of the part of the city captured from Jordan in the 1967 Middle East war and later annexed, and which the Palestinians seek as the capital of a future state.

The debate comes in the run-up to a planned international conference on Middle East peace, as Israeli and Palestinian teams, prodded by Secretary of State Condoleezza Rice, are trying to hammer out a joint statement that would address the core issues of the conflict, including the status of Jerusalem, perhaps the most intractable issue of all.

The boundaries of Jerusalem were unilaterally extended by Israel shortly after the 1967 war, vastly increasing the city’s area and incorporating several Arab suburbs and villages in the West Bank. Jewish neighborhoods were later built in those areas, driving a wedge between Arab neighborhoods and forming a barrier between the Palestinians in Jerusalem and those in the West Bank.

Over the decades Israeli leaders have vowed that Jerusalem will remain Israel’s indivisible capital, and this year there were official celebrations marking the 40th anniversary of the city’s “reunification.”

But now there is talk again of the possibility of giving up some of Jerusalem’s Arab neighborhoods as part of a peace deal with the Palestinians.

In a speech in parliament last week, Prime Minister Ehud Olmert raised the prospect of relinquishing parts of the city where Palestinians live, naming areas that were incorporated 40 years ago.

“Was it necessary to also include the Shuafat refugee camp, Arab a-Sawahra, Walajeh and other villages and assert: ‘This, too, is Jerusalem?'” Olmert said. “About this, I must confess, legitimate questions can be asked.”

Olmert made his remarks at a legislative session in memory of Rehavam Zeevi, a rightist Cabinet minister killed in 2001 by Palestinian militants, who as a senior army officer in 1967 drew up the plan to expand Jerusalem into the West Bank.

Earlier this month there were similar public comments by Haim Ramon, a deputy premier and close ally of Olmert.

Ramon said it was in Israel’s interest to negotiate an agreement on Jerusalem that would secure international recognition of the Jewish part of the city as Israel’s capital, and the Arab areas as the capital of the Palestinian state.

But Ramon appeared to be referring to outlying Arab neighborhoods, not those in and around the Old City, which contains the Temple Mount, the site of the ancient Jewish temples, Al-Aqsa Mosque, the third-holiest shrine in Islam, and the Church of the Holy Sepulchre, venerated as the place where Jesus was buried.

“I agree that all the Palestinian neighborhoods except the Arab neighborhoods in the holy basin … would be transferred,” Ramon told Army Radio. He proposed a special administration to oversee the holy sites.

Avigdor Lieberman, a Cabinet minister from the rightist Yisrael Beiteinu party, said he would be willing to relinquish some Arab areas of Jerusalem as part of a swap for Jewish settlement blocs in the West Bank.

“In this framework, we are willing to exchange refugee camps that are within the Jerusalem municipal boundaries,” he told Israel Radio. Lieberman has advocated transferring Israeli Arab towns and villages to a Palestinian state as part of a land exchange that would leave Israel in control of major settlements in the West Bank.

The concessions suggested by Olmert and Ramon fall short of Palestinian demands for control of all of East Jerusalem, and some analysts say such a division may no longer be practicable.

Meron Benvenisti, a historian and writer who is a former deputy mayor of Jerusalem, said that the patchwork of Jewish and Arab neighborhoods that has developed in the area captured in 1967 makes it impossible to simply divide the city between Israel and a proposed Palestinian state.

“In this city the egg has been so scrambled that it cannot be restored. It is scrambled already,” Benvenisti told Israel Television. “This talk may be good for the Americans or for internal Israeli debate, but on the ground, take a look and see, how can you do it? You can’t.”

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