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The Clinton proposal paved the way for understandings in Jerusalem, but it also created the principal dispute between the two parties.

An agreement was reached that East Jerusalem, which would be called Al-Quds, would be the capital of Palestine. Understandings were also reached regarding a division of East Jerusalem's neighborhoods such that Jewish neighborhoods would remain under Israeli sovereignty (other than Har Homa, which the first Jewish families are just moving into now, and Ras al-Amud), while Arab neighborhoods would be transferred to Palestinian sovereignty. In addition, it was agreed that parts of the Old City - the Muslim Quarter, the n Quarter and part of the Armenian Quarter - would be to the Palestinians.

But the Clinton proposal did not help the parties to draw mutually accepted borders between the Open City - to which both sides agreed - and the surrounding Palestinian areas, on one side, and Israeli areas, on the other. The Open City is territory that citizens of both countries can enter without passing through any checkpoints. The Palestinians wanted it to encompass all of Jerusalem, while the Israelis wanted it limited to the Old City only.

And the Clinton proposal complicated negotiations on the most sensitive issue: the Western Wall. Clinton had referred to "the holy parts" of the Wall, thereby creating an opening for the Palestinian claim that only the exposed part of the Wall (the Wailing Wall) is considered holy to the Jews, and therefore only this part should be left under Israeli sovereignty. Palestinians claimed the Western Wall tunnels were part of Haram al-Sharif (the Temple Mount).

Since the Taba talks ended, many meetings and seminars have taken place in an effort to close the gaps, attended by politicians and experts from both sides and from other countries as well.