JERUSALEM, Aug. 16 (JTA) — Tensions ran high here last Friday. According to Israeli intelligence reports, radical Muslims intended to stir up trouble during their noon prayers following an Israeli decision to seal off a window the Palestinians had carved out in the southern wall of the Old City. Police did not take any chances. A large number of officers were deployed around the Temple Mount to prevent a possible outburst. Potential troublemakers got the message, the majority of worshipers went home quietly and another mine had been removed in the battle over Jerusalem. Although Israel and the Palestinians agreed to leave the sensitive issue of the city to the end of the negotiations, the fact is that both sides are engaged in a race for control on the ground. Jerusalem is not only the most sensitive issue standing between Israel and the Palestinians. It is also the destination of some 4 million pilgrims expected to visit the Holy Land at the turn of the millennium, which raises the possibility of new violence in the “City of Peace.” Less than five months before “M-Day,” all sorts of people with personal, religious and political agendas are converging on Jerusalem: Jewish extremists seeking to replace the mosques on the Temple Mount with the Third Temple; Christians dreaming of an Armageddon to speed up the second coming of Jesus; and Palestinians who insist that all of eastern Jerusalem should become the capital of an independent Palestinian state. From Israel’s point of view, it is in the nation’s best interest to preserve the status quo in Jerusalem if it wants to overcome the obstacles and the challenges of this millennium year. The Israeli government realizes that it will be very difficult to make peace — and political concessions — if there is unrest in Jerusalem. On the other hand, Palestinian Authority Chairman Yasser Arafat needs to prove to his supporters that regardless of the ups and downs in negotiations, his ultimate goal is the establishment of eastern Jerusalem as the capital of a future Palestinian state. Recently, Arafat has made frequent statements that he will not rest until the Palestinians take over “the walls, the mosques and the churches” in eastern Jerusalem. As he bargains with Barak over a timetable for future Israeli withdrawals from portions of the West Bank, he is also preparing himself for final-status negotiations — in which Jerusalem will be the key issue. So far, Israelis and Palestinians are maintaining a delicate balance of gains and losses in Jerusalem. True, Israel has built a network of Jewish neighborhoods in eastern Jerusalem — the Palestinians call them settlements — in which some 170,000 Israelis live. But the Palestinians have succeeded in preserving a clear division between the eastern and western parts of the city. While the Palestinians had to acquiesce to the opening of the Western Wall tunnel, they have also conducted massive reconstruction work in the Al-Aksa Mosque. The opening carved out last week was, in fact, an opening to “ancient Al-Aksa,” a reconstructed part of the mosque. It will soon be inaugurated as part of a festive ceremony. The controversial construction at Har Homa, a Jewish neighborhood in eastern Jerusalem, has continued unimpeded — and the first apartments are being sold — even though the Palestinians previously threatened that it could lead to a renewed intifada, or uprising. But the Palestinians, too, have continued, almost undisturbed, with large-scale private construction throughout the eastern part of the city. Most of the building is unlicensed, and despite Israel’s occasional demolition of illegal housing, by and large the construction cannot be stopped. Israel had closed off a number of offices of the Palestinian Authority in eastern Jerusalem. But Orient House continues to operate as the Palestinian Authority’s Jerusalem headquarters. One of the main issues of controversy in recent years has been Israeli action to cut down on the number of Arabs living in Jerusalem, a policy that has been known as “the silent transfer.” The government of Israeli Prime Minister Benjamin Netanyahu, specifically former Interior Minister Eliahu Suissa, had revoked residency rights from residents of eastern Jerusalem who have not lived in the city for more than seven years. Although the Interior Ministry claims that the regulation applies to all residents who are not Israeli citizens — regardless of their ethnic origin — the regulation, in practice, discriminated against Arabs. Whereas Israelis born in Jerusalem who have resided most of their lives overseas can return home any time, their Palestinian neighbors will, at best, receive a tourist visa. The vast majority of the Arab residents of Jerusalem don’t apply for Israeli citizenship as a matter of principle. Moreover, Palestinians who applied for Israeli citizenship were asked to give up their Jordanian citizenship, a condition most Palestinians don’t want because of their strong family ties to the West Bank and Jordan and their desire to travel freely in the Arab world. Mohammad Alian, 59, left Jerusalem after the Six-Day War to study in Yugoslavia. He married a local woman and has stayed there ever since, working as an accountant for government agencies. Last week, Alian came for a family visit with his wife, Lidia, and two children. The Alian family would have liked to stay here. Past applications by his brother, Adib, for family reunions were all turned down. The reason: “Jerusalem is no longer the center of life for the family.” The newly appointed interior minister, Natan Sharansky, has promised to review the policy. “One cannot talk of a united Jerusalem without proper treatment of the residents of east Jerusalem,” Sharansky said.