Palestinians may get their very own Jerusalem

"Palestinian Authority: Economics Studies Centre", reads the grimy Arabic sign high on the wall of the imposing new building rising on a rocky, ragged hillside in the West Bank village of Abu Dis.

As we pick our way inside, through the rubble and raw cement, planks and ladders, the only economics lesson taught by the genial young site engineer, Hussam Mousa, is that Yasser Arafat's government in the making doesn't have enough money to finish the job. No one is hurrying to fill the dusty, completed shell.

Yet even if its reputation had not gone before it, this doesn't look like a business school. The main, two-storey building is a vast chamber; the adjacent seven storeys an office block. The architect is Jaffer Touqan, the man who designed the Jordanian parliament two hours' drive away in Amman. The choice was no accident.

Like an enigma from the Arabian story of The Thousand and One Nights, the building is a parliament that is not a parliament for a capital that is not a capital, in a state that is not a state. Not yet, anyway.

Abu Dis, on the eastern fringe of Jerusalem, is currently under Palestinian civil administration, but Israeli security supervision.

Part of it falls within the negligent jurisdiction of the Israeli Jerusalem municipality, which acquired it when the victors expanded the city limits after the 1967 Six-Day War. Although they are not Israeli citizens, about 20 per cent of its 14,000 Arab inhabitants hold Israeli Jerusalem identity cards, which makes it easier for them to cross the border that is not a border.

The new building's assembly hall is in "Palestine", but the office block is in "Israeli" Jerusalem. This may yet prove more than a bureaucratic curiosity. Abu Dis is one of three neighbouring Arab villages that the Israeli Prime Minister, Ehud Barak, is planning to deliver to full Palestinian self-rule as a "down payment" towards a Palestinian state.

Optimistic Israelis suggest that Mr Arafat could call it Al Quds (Arabic for Jerusalem) and establish his capital there. Al Aqsa, Islam's third-holiest mosque, is barely a mile away as the crow flies (the same distance as the Israeli Knesset is from the Wailing Wall).

So, the spin goes, Palestine would have its capital in Al Quds, as Mr Arafat promises his people daily, and Israel would retain Jerusalem as the "eternal, undivided capital of the Jewish people".

Except that, as Othman Muhamad Qurei, the 72-year-old mukhtar (village headman), explains: "We are proud that we are going to have a parliament here, but we are not proud that they say this is Jerusalem." Abu Dis is a suburban village, he says,Jerusalem is where you go if you want to buy shoes.

In the "Jerusal" internet café, Samer Saman, an electronics student, says: "I am Palestinian, and I want my government to be Palestinian. At the moment we have no proper government here. It has to be better. I hope so."

Yet not everyone in Abu Dis shares even such qualified enthusiasm. "Many people don't want the Palestinian Authority," says Nasser Arar, 30, a labourer who works on Israeli construction sites.

"It's going to be difficult. We are afraid we'll lose our ID cards, along with the health and national insurance benefits that go with them. The authority gives us nothing."

Yousef Idais, 28, a greengrocer, who moved to Abu Dis from Hebron, is worried about the abuses for which the Palestinian security services have become notorious. "They arrested five of my brothers and cousins there," he says. "They said they'd made passes at girls. The police shaved their heads and beat them, then threw them out in the street."

Like the best enigmas, Abu Dis remains hard to read. Not least because no one is sure Mr Barak really will hand it over. And if so, when? "The problem with Abu Dis," says Rami Mahmoud, a savvy 16-year-old, "is that people are afraid of both Israel and the Palestinian Authority. Don't believe a word anyone says."