Israel in dilemma after bulldozer attack

By Jeffrey Heller

JERUSALEM (Reuters) - A deadly rampage in a bulldozer by a Palestinian resident of Jerusalem left Israel grappling on Thursday with the dilemma of how to maintain security in the city along with the premise it is undivided.

Israel captured Arab East Jerusalem in the 1967 Middle East war and annexed it along with nearby villages in a move that is not recognised internationally, granting Palestinian residents Israeli identity cards that gave them wide freedom of movement.

In issuing the same documents used by Jews, Israel was sending a signal that East Jerusalem -- which Palestinians want as the capital of a future state in the West Bank and Gaza Strip -- was part of the "indivisible capital" of the Jewish state.

But Wednesday's attack on Jerusalem's busy Jaffa Road in which three Israelis died and a shooting spree, also in Jewish west Jerusalem, which killed eight Israelis in a religious seminary in March have combined to raise particular concern.

Both attacks were carried out by Palestinians from areas Israel regards as part of East Jerusalem. Unlike Palestinians from the West Bank, where Israel has built a controversial barrier, the two men could work and travel in all of Jerusalem.

Prime Minister Ehud Olmert proposed after Wednesday's incident the demolition of the homes of East Jerusalem residents who carry out attacks against Israelis, government aides said.

"We must use a punishment that would deter. We have to act with a tough hand, to negate social rights and to destroy immediately the houses of every terrorist from Jerusalem," one official quoted Olmert as saying.

But demolition notices would likely draw legal countermoves by Palestinians from East Jerusalem in Israeli courts, as well as international protests that destroying a home the attacker shared with other family members was collective punishment.