There will be no lasting, comprehensive peace between Israel, the Palestinians and the Arab world without a compromise solution in Jerusalem.

The dilemma is only whether to leave the question open and try and tackle it only after all other matters are resolved and implemented in interim agreements, or to try and solve it now in the framework of a final peace agreement.

Israeli Prime Minister Ehud Barak chose the option of starting from the end. He did not check it with the other side: Can Palestinian leader Yasser Arafat accept at this stage the kind of agreement that is acceptable to Israel? And even if Arafat personally agrees, can he muster the support he needs among the Palestinians and in the Arab and Muslim world?

President Clinton has faced the gravest task of his presidency: Trying to forge a compromise between two tough clients and negotiators, and, at the same time, sell it to the influential leaders of the Arab world as well as to Congress, which will have to help foot the bill.

Almost all the world's Jews until now viewed Jerusalem as sacred, and totally refused any compromise in the status of Holy City. This is changing because people are beginning to understand that the question of Jerusalem is not a simple one.

Jerusalem is sacred not only to the Jewish people, and almost no country in the world has recognized Jerusalem — even western Jerusalem — as Israel's capital.

Yes, our claim to Jerusalem is the most ancient one. We are the only people who dreamed and prayed for Jerusalem for so many ages. But what is the geographical definition of our Jerusalem? David's or Solomon's city? Herod's town? When we prayed "next year in Jerusalem," did we really include Shuafat, Kalandia or Abu Dis, the subject of the most recent land transfers, in our dreams?

I was fortunate to work with former Jerusalem Mayor Teddy Kollek during those glorious, historic days of June 1967. When we crossed the walls that had separated the two parts of Jerusalem, we were rushing to the Western Wall, to the Old City's Jewish Quarter, to the roads leading to Mount Scopus and to the Mount of Olives. For those of us who were born in Jerusalem before 1948, that was our ancient and holy city.

Then the Israeli government quickly annexed eastern Jerusalem and some of its periphery because the leadership, recalling the international pressure of the Sinai Campaign of 1956, was ready to give up almost all the territories in exchange for peace — except Jerusalem.

But when one asked those in charge of drawing the new boundaries of Jerusalem why they included in it areas that were never an integral part of our ancient capital, their answer was, "We did it in order to have room for negotiations and compromise."

Apparently it was a wise move. Due to Kollek's achievements, nobody in the world suggests a physical separation of Jerusalem. Jerusalem is envisaged as one megacity, with open borders and joint municipal services, but one that needs creative solutions because of the complexities of its human composition — national, ethnic and religious.

Jerusalem could become a city of peace and peaceful coexistence if we can give each national and religious group some satisfaction and at least a partial fulfillment of its dreams. There is nothing wrong with exchanging some Arab areas in today's greater Jerusalem for Jewish towns outside its boundaries. No harm will occur if the Palestinian state can establish its capital in one of the Arab sections of the city, and it will be a wise way to accord a special status to the holy places of each of the three great religions.

It is not an impossible dream to achieve, through a reasonable compromise on Jerusalem, a capital of Israel and under full Israeli sovereignty. The question of Jerusalem should not remain open, as it may become the time bomb for the next conflict. Under a workable compromise, the following steps would be taken:

*Israel would retain under its full control sufficiently wide security zones — in both the east and the west. The Jordan Valley, in its broadest sense, would be the eastern security zone of Israel. This includes the steep eastern slopes of the hill ridge of the West Bank overlooking the valley. Israel would maintain contiguous presence and control of the entire valley up to the Jordan River, including the border passes. The western security zone would include the line of hills commanding the coastal plain and controlling Israel's vital underground water sources. Strategic routes would be retained under Israel's control.

*Jewish towns, villages and communities in the West Bank and Gaza, as well as access roads leading to them, including sufficient security margins along them, would remain under full Israeli control.

*The solution to the problem of Palestinian refugees from 1948 to 1967 would be based on their resettlement and rehabilitation in the places where they live today — Jordan, Syria, Lebanon, etc. Israel does not accept under any circumstances the Palestinian demand for the right of return. Israel bears no moral or economic responsibility for the refugees' predicament.

*As a vital existential need, Israel must continue to control the underground fresh water aquifers in the western West Bank, which provide a major portion of Israel's water. The Palestinians are obligated to prevent contamination of Israel's water resources.

*Security arrangements: All the territories under control of the Palestinian Authority would be demilitarized. The Palestinians would not have an army, only a police force. Israel would maintain complete control of the whole air space over the West Bank and Gaza.

I believe any government in Israel that will adopt and implement these principles will strengthen Israel's deterrence and could reach a better, more secure peace.