By Jeffrey Heller JERUSALEM, July 3 (Reuters) - A deadly rampage in a bulldozer by a Palestinian resident of Jerusalem left Israel grappling on Thursday with the dilemma of how to maintain security in the city along with the premise it is undivided. Israel captured Arab East Jerusalem in the 1967 Middle East war and annexed it along with nearby villages in a move that is not recognised internationally, granting Palestinian residents Israeli identity cards that gave them wide freedom of movement. In issuing the same documents used by Jews, Israel was sending a signal that East Jerusalem -- which Palestinians want as the capital of a future state in the West Bank and Gaza Strip -- was the "indivisible capital" of the Jewish state. But Wednesday's attack on Jerusalem's busy Jaffa Road in which three Israelis died and a shooting spree, also in Jewish west Jerusalem, which killed eight Israelis in a religious seminary in March have combined to raise particular concern. Both attacks were carried out by Palestinians from areas Israel regards as part of East Jerusalem. Unlike Palestinians from the West Bank, where Israel has built a controversial barrier, the two could work and travel in all of Jerusalem. Prime Minister Ehud Olmert proposed after Wednesday's incident the demolition of the homes of East Jerusalem residents who carry out attacks against Israelis, government aides said. "We must use a punishment that would deter. We have to act with a tough hand, to negate social rights and to destroy immediately the houses of every terrorist from Jerusalem," one official quoted Olmert as saying. But demolition notices would likely draw legal countermoves by Palestinians from East Jerusalem in Israeli courts, as well as international protests that destroying a home the attacker shared with other family members was collective punishment. BARRIER Olmert's deputy, Vice Premier Haim Ramon, said re-routing the West Bank barrier to include Palestinian villages that Israel considers to be part of East Jerusalem could be a solution. The two attackers came from such communities. "These are Palestinian villages that were never part of Jerusalem. They were annexed to it in 1967. No Israeli goes there," Ramon said on Israeli Army Radio, echoing comments Olmert made several months ago. However, that would draw fire from Israel's right wing and entail a change in government policy at a time when the shape of a future Palestine's borders are a central issue of U.S.-brokered peace talks. Tightening security in and around East Jerusalem could also prove difficult and give the impression Israel has sought to dismiss for the past four decades, that a divide exists between the two parts of the holy city. "There are 200,000 Arabs in East Jerusalem. You can't put up roadblocks or a fence that would make life unbearable for everyone," one Israeli government official said. Despite tensions, many of Jerusalem's Israelis and Arabs live in close quarters, in neighbourhoods that abut each other. They shop at the same malls and share government services. "We were shocked when we heard what happened," said the uncle of the bulldozer driver, Hosam Dwayyat, 30. "He never showed any signs of aggressions. He has been working with Israelis for many years." Dwayyat, who was shot dead at the scene of the attack, had a record for drug-related crime but no obvious ties to any militant group. (Additional reporting by Mohammed Assadi, Editing by Samia Nakhoul)
Palestinian Hamas policemen carry luggage, belonging to Palestinians waiting to cross into Egypt, at the Rafah border crossing in the southern Gaza Strip July 2, 2008. Palestinians clashed with Egyptian police ...
