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The Palestinian Authority is demanding that Israel acknowledge the "Peres Letter," which accompanied the Oslo accords of 1993, and which promises to allow Palestinian institutions in East Jerusalem to operate there, the Shin Bet security service said in an analysis to the political leadership.

In anticipation of Palestinian demands at the Annapolis peace summit, the Shin Bet warned Prime Minister Ehud Olmert that he should not be drawn to recognize East Jerusalem as the future Palestinian capital, because it also includes the Old City and the Western Wall. According to Shin Bet analysts, there are concerns of a Palestinian "trick" during the negotiations, in which Israel will be tempted to offer recognition, in principle on East Jerusalem as the Palestinian capital, and delay discussion on the details and the arrangements for administering the holy sites there.

The Palestinians are demanding permission to renew the activities of their institutions in East Jerusalem. First among these is the Orient House, which was closed down following a suicide bombing in August 2001 at Sbarro, a restaurant in central Jerusalem.

The Palestinian demand is part of the list of improvements that Israel is asked to perform, and is a claim that relies on the implementation of the road map.

The first stage of the road map requires Israel to reopen the Palestinian trade center and "other closed Palestinian institutions in East Jerusalem," in accordance with earlier agreements between the two sides.

The agreements did not permit Palestinian governance activities in these institutions, and designated them as PLO institutions.

In a letter to then-Norwegian foreign minister Johan Jorgen Holst, Shimon Peres pledged that Israel would preserve the functioning of Palestinian institutions in East Jerusalem and recognized their significance for the Palestinians.