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The Palestinian Authority has demanded that Israel formally sanction a document in which it promises to permit Palestinian institutions in East Jerusalem to continue to operate, the Shin Bet security service has told the government in recent days.

The document, known as the "Peres letter," was appended to the Oslo II agreements of 1993.

The Shin Bet - which is presenting its analysis of the negotiating stance the Palestinians are expected to put forward at next month's Annapolis peace conference - has also warned Prime Minister Ehud Olmert against falling into the trap of declaring Israeli recognition of East Jerusalem as the capital of a future Palestinian state.

The warning points especially to the fact that "East Jerusalem" is understood to encompass the Old City and the Western Wall, both.

Shin Bet analysts are weary of a Palestinian negotiating ploy in which Israel would be lured to agree in principle to recognize East Jerusalem as the future capital of a Palestinian state, while delaying debate on the particular details of which side would maintain authority over religious sites.

President Shimon Peres, who served as foreign minister at the time of the signing of the Oslo Accords, had dispatched a letter to his Norwegian counterpart, Johan Jorgen Holst, stating Israel's recognition of the importance of Palestinian institutions in the city and its commitment to protect them.

Initially, Peres denied the existence of the letter after former PA Chairman Yasser Arafat revealed its contents. The intense public pressure which ensued from within the media and the political community eventually forced Peres to acknowledge the letter as fact.

The Palestinians are demanding that Israel allow the renewed activity of Palestinian institutions in east Jerusalem, chief among them Orient House, which was shut down in August 2001 in response to the Palestinian suicide bombing of the Sbarro pizzeria in the city.

The Palestinian demand is one of a series of measures in which Israel is expected to adopt so as to ease tensions on the ground, as is prescribed in the road map.

The first stage of the road map stipulates that Israel reopen the Palestinian Chamber of Commerce "and other closed Palestinian institutions in east Jerusalem... in accordance with prior agreements between the parties." The Palestinians were forbidden from undertaking government activities in east Jerusalem, and were required to preserve the status of these institutions as bodies of the Palestine Liberation Organization.

Since 2001, Israel has balked at requests to allow these institutions to resume functioning. Indeed, Jerusalem has viewed the closure of these bodies as one of its significant achievements from the intifada period.

As one of its reservations in agreeing to the road map, Prime Minister Ariel Sharon's government stated that the Palestinian Authority's status in Jerusalem is a matter to be discussed as part of final status talks, not beforehand.

Livni, Qureia meet privately in JerusalemForeign Minister Tzipi Livni on Wednesday met privately in Jerusalem with the head of the Palestinian negotiating team, Ahmed Qureia, as part of ongoing bilateral talks in preparation for the upcoming U.S.-sponsored regional peace summit. No further details were given about the meeting.

Palestinian negotiators have insisted to their Israeli counterparts that they are meeting their requirements under the first phase of the road map, which include: consolidating their security apparatus; renouncing violence; and appointing a prime minister and a cabinet with executive powers separate from those of the Palestinian Authority chairman.

The Palestinians say they remain committed to prior agreements signed with Israel.

The Palestinian negotiators repeated their demand that Israel cease settlement construction and expansion, and that Israel withdraw to its positions prior to September 28, 2000, the day which marked the start of the Al-Aqsa intifada.