Officials accused of quietly forming institutions in Israel's capital
By Aaron Klein
Jerusalem
JERUSALEM – The Palestinian Authority has been quietly attempting to establish elements of a functioning government in Jerusalem, WND has learned.
According to security officials, earlier this week Israeli police arrested Hatem Abdel Khader, a member of Palestinian Authority President Mahmad Abbas' Fatah party and a former member of the Palestinian Legislative Council, accusing him of setting up a Palestinian council in Jerusalem to attend to the needs of the city's Israeli Arab population.
Khader, who was released from custody after a few hours, also was accused of trying to set up a community police unit in Jerusalem that would answer to the PA.
In line with previous Israeli-Palestinian accords, the PA has been barred from conducting political activity in Jerusalem, although it maintained an office, called Orient House, in an eastern Jerusalem neighborhood that previously functioned as a de facto PA headquarters. 
Orient House was closed down by Israel in 2001 following a series of suicide bombings in Jerusalem and information Israel said indicated the House was used to plan and fund terrorism.
Thousands of documents and copies of bank certificates and checks captured by Israel from Orient House – including many documents obtained by WND – showed the offices were used to finance terrorism, including direct payments to the Al Aqsa Martyrs Brigades terror group.
Palestinian officials speaking to WND said they recently urged the U.S. to support what they said is a key demand allowing the PA to open official institutions and to reopen Orient House to serve as their Jerusalem headquarters. The U.S. brought the request to Olmert, who is said to be studying it.
Opening of any PA offices or services in Jerusalem could serve as a major statement the city is slated to become the capital of a future Palestinian state.
Olmert is facing major opposition from the Israeli Shas party, a member of his governing coalition whose leadership has stated it would bolt Olmert's government if he negotiated over Jerusalem.
Olmert previously hinted he would be willing to divide Jerusalem, asking during a December speech whether it was "really necessary" to retain certain Arab neighborhoods in Judaism's capital. His vice premier, Haim Ramon, a member of Olmert's ruling Kadima party, last month reportedly mapped out a future partition of Jerusalem under a deal with the Palestinians.
But following Shas threats to bolt his coalition, Olmert has denied he is negotiating over Jerusalem, a claim strongly contested by Palestinian negotiators speaking to WND.
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