JISH, Israel — Nestled in the rocky hills of northern Israel near the Lebanon border, this small Arab town holds the key to what many in Israel say is their future — a handful of bouncy Jewish, Muslim and Christian kids.

Chatting and chewing on pita, the children discuss three religions in four languages in what they see as fun afterschool activities. Hameh Saleem Essa, a resident of Jish and co-coordinator of the program, sees it as a miracle.

"Most Jewish kids have the prejudice that all Arabs are enemy terrorists," she said. "In the first few years there was so much animosity among the kids, we spent most of our time keeping them secured. This year, it's like magic — there's none of that."

Jish is not on any tourist map and few Israelis know about the town. But it's on the map of the S.F.-based Jewish Community Federation, which first funded Essa's program in 1994 as part of its yearly allocation to the upper Galilee, JCF's partner region in Israel.

This year, JCF has earmarked nearly $500,000 for social programs in the area, including developing Arab community centers, an outdoor activities program for challenged children and funds for computers in Kiryat Shmona.

Jish could use the attention. The economically slow town consists of about 3,000 Arab Christians, displaced from areas on the disputed border between Israel and Lebanon.

In 1948, then-Prime Minister David Ben-Gurion told the displaced Arabs they could return home in two weeks. "It's been 50 years," Essa said.

Jish is surrounded by kibbutzim and a small pocket of some 500 Cherkasian Muslims, a tiny minority exiled from the lower Ukraine in the 1600s. Essa, a second-grade teacher in the town, said she barely knew her neighbors until about seven years ago.

Her program now helps fill the gap among the communities, she said.

And it seems to be just in time, Essa added. Israelis will rally behind the beleaguered northern Galilee, often rocked by Katyusha rockets from Lebanon and adjacent to the contested Golan Heights. But few investors consider it a stable enough area in which to plant their development money.

Consequently, the government funnels plenty of military aid but little assistance for social programs to the border towns. One farming cooperative in the area calls itself "the kibbutz at the end of the world."

Essa's program was born when she bumped into a woman from a kibbutz five years ago. She asked the Jewish woman for a stick of gum. Friendship followed. It snowballed into the two forming an educational afterschool program for children from the diverse areas.

Through the Amuta, the JCF's Israeli volunteer advisory committee, the JCF sent a seed grant of $8,000 in 1994. Once the program got on its feet, the area's regional councils offered further funding.

Now, approximately 300 kids ages 8 through 15 are linked in the program, participating in basketball and soccer leagues as well as educational activities.

On a mild winter day last month, after harvesting edible moss from the hills, the children meshed the plant with sesame oil and spread the mixture on cooked pita bread. Then they exchanged gifts and helped each other celebrate Chanukah, Christmas and Ramadan, all of which occurred within the same week.

Adi, a shy 8-year-old Muslim girl from Jish, said she's most "happy about meeting new children from the area."

Achlam, an energetic 8-year-old Jewish girl, grabbed Adi with a smile, adding she's also "excited about her new friends."

Sabrine, who is also 8, understands Achlam's Hebrew. Sabrine, a Christian Arab, honed her language skills while attending the program. She said she "enjoys studying and also cooking with everyone."

Essa said such interaction was unthinkable just a few years ago.

"It's exciting and it's hard work," she said. "It took two years for the Jewish kids to feel comfortable entering Arab households. We pick the kids up at the kibbutz so they are safe. We've created a real special group with our neighbors."

Gila Noam, director of JCF's Israel office, has seen a dramatic change in the kids — and herself. "It sounds strange, but after living for several decades in Israel, this is what has really renewed my faith in Zionism."