What's at stake? Why does it matter?

Occupied Jerusalem is always a centre of attention at this time of year, as Christians and Jews both mark high points in their calendars with Easter and Passover. This year, however, it is also — not for the first time — the focus of argument over peacemaking in the Middle East.

Why is it so sensitive?

Occupied Jerusalem is a combustible melting pot of religion and politics. The city is the main symbol of the national struggle between Israel and the Palestinians.

It is also home to the holiest sites in Judaism and Christianity and the third holiest site in Islam. Israel's control of occupied Jerusalem makes it a rallying cry for the Jewish state's regional enemies, including Iran.

 Who wants what?

The Palestinians want occupied east Jerusalem, captured by Israel in 1967, as the capital of the state they aim to establish in the West Bank and Gaza Strip, alongside Israel. Israel considers occupied Jerusalem as its "eternal and indivisible" capital, although few other states accept that status — most maintain their embassies to Israel in the coastal metropolis, Tel Aviv.

 How does it affect US diplomacy?

The Palestinians have demanded a complete halt to the building of colonies, including occupied East Jerusalem construction, before any more peace talks. Israeli Prime Minister Benjamin Netanyahu in November ordered a halt to new home building in the West Bank, but excluded areas annexed to occupied Jerusalem.

The announcement this month of new colony expansion plans in one such area, at Ramat Shlomo, infuriated the Palestinians, obstructing US plans for indirect negotiations and triggering rare US criticism of Israel.

 Why are colonies an issue?

Israel has built colonies for some 200,000 Jews in West Bank land surrounding occupied Jerusalem. Critics of Israeli colony in the lands captured in 1967 say the policy will render impossible the creation of a viable Palestinian state. The occupied Jerusalem colonies form a belt that encircles, encloses and separates occupied East Jerusalem from the West Bank. They see it as a strategic attempt to prevent the possibility of occupied east Jerusalem ever becoming the capital of a future Palestinian state.

Israelis, who controlled only occupied west Jerusalem from their state's founding in 1948 to the 1967 war, are also moving into Palestinian areas in and around the walled Old City, which is in occupied east Jerusalem.

In some cases, colonists have secured court orders to evict Palestinians from homes, arguing their case using 19th-century Ottoman documents claiming Jewish ownership.

Critics of this trend, including Israeli human rights groups, say it will render even more difficult any division of the city, while fuelling Palestinian anger.

 What are the prospects for violence?

Palestinians widely believe Israel aims to "Judaise" the city, pushing out Arabs and expanding the Jewish population and construction.

That is a concern at the heart of anger that spilled into clashes between Palestinian youths and Israeli forces in and around the city this month. Tension in occupied Jerusalem can spread beyond it.

A visit by Israeli politician Ariel Sharon to Al Haram Al Qudsi Al Sharif, the holy site in the Old City that contains Al Aqsa Mosque and the Dome of the Rock provided a spark that set off the second Palestinian intifada, or uprising, in 2000.