As the Israeli flag flapped overhead, about 40 celebrants and less than half as many pro-Palestinian protesters observed Israel Independence Day Wednesday on the steps of San Francisco City Hall.

Except for a few brief verbal exchanges, the morning event was peaceful. It took place under the watchful eyes of about 10 uniformed police officers.

Inside, Mayor Willie Brown signed a proclamation honoring the day at a reception attended by Israeli Consul General Yossi Amrani and about 30 representatives of the local Jewish community.

Fearing a violent clash, city workers quietly raised the blue and white flag from a second-floor walkway two hours before the 11 a.m. ceremony. "There was nobody here — me and two officers," said one police sergeant standing nearby.

Before attending the ceremony, Amrani stopped outside to address the contingent of Israel supporters, many of whom were elderly Russian emigres. "Thank you for joining us on this day," he said. "It's my celebration. It's your celebration."

Referring to the nearby protesters, the consul general said, "We would like to see a Palestinian state one day. [We'd] like to live in peace."

This was not the first time the Israeli flag has flown at City Hall. According to Rabbi Stephen Pearce, who attended the indoor reception, the city extends that opportunity on the independence day of any country with a consulate in San Francisco.

Of the protest, "I would call it a non-event," observed Pearce, spiritual leader of San Francisco's Congregation Emanu-El after walking past the demonstrators. The contingent waved Palestinian flags and held signs with anti-Israel slogans.

Wendy Campbell, an Oakland woman with a group called Americans for Justice in Palestine/ Israel, said: "We don't believe they should raise the flag of an apartheid, racist country."

Other protesters held signs bearing photos of Rachel Corrie, the 23-year-old American woman who was run over and killed in March while trying to stop an Israeli bulldozer from demolishing a Palestinian home in the Gaza Strip.

Russian emigre Alex Cherkas said he came to City Hall not knowing whether he'd encounter a celebration or a protest. He wound up experiencing both.

"I never felt stronger about being a Jew or being allied to Israel as I do now," he said.

Standing on the far end of the steps from the pro-Palestinian group, Cherkas said: "I can't stand them. I'm trying to hold myself back, not to have confrontations, not to have fights."

Fellow Israel supporter Bill Kennedy Kedem observed, "It's very wonderful that the city has recognized the only democracy in the Middle East by raising the flag on its independence day." Kedem is organizing a protest of his own on Wednesday, May 14 against what he considers National Public Radio's biased coverage of Israel and India.

Of Wednesday's anti-Israel demonstration, Kedem said, while unsettling, "I think these folks have a right to express themselves."

He said he looks forward to a day when a flag representing a democratic Palestinian government would fly over City Hall as well. "But before that happens, Arab terrorism in Israel must stop," he said.

Leonid Nakhodkin, a Russian emigre who heads a group called United Humanitarian Mission, said he asked for the Israel flag raising and was proud to see it happen. "This is a big, big, big celebration," he said.

John Rothmann, a Jewish community activist and KGO radio talk-show host who attended the indoor reception, commented that the anti-Israel demonstrators "have a right to protest, but it would have been wonderful if their signs said, 'We want peace.'"

Forty minutes after the demonstration began, most of the Israel supporters had left, leaving behind the pro-Palestinian contingent. They were joined by a group of bikers lobbying city officials for a "motorcycle bill of rights."