Arabs Struggle to Keep Toehold in Their Crumbling Section of Jerusalem : Mideast: Israelis aren’t only force limiting Muslim Quarter. Overcrowding, poverty and disrepair also threaten its future.

Host to sites sacred to Muslims, Christians and Jews, Jerusalem’s walled Old City is ground zero in the sometimes deadly struggle between Arabs and Jews over this ancient city.

Inside the stone walls whose foundations were laid by Saladin, the Kurd who defeated the Crusaders and restored Muslim rule here 800 years ago, the three communities have for centuries alternated between uneasy coexistence and open warfare.

Now, a year from the start of Palestinian-Israeli talks on the final status of Jerusalem, both sides are maneuvering on the ground and in international forums to strengthen their competing claims to the city’s past and future.

On Monday, the Palestinians won a major victory when the Israeli government froze a decision it had reaffirmed May 14 to confiscate 131 acres of mostly Palestinian-owned land in Jerusalem to build Jewish neighborhoods.

The government’s decision--forced by the threat of a no-confidence motion in the Israeli Knesset, or Parliament, brought by small Arab-dominated parties--was welcomed by Arab nations. Arab leaders canceled a summit planned for Saturday in Morocco.

But Palestinians here cautioned that the fight for Jerusalem is far from over. They urged that diplomatic efforts be backed up immediately by concrete action to strengthen the local Palestinian community.

Nowhere is there more at stake than in the Old City’s Muslim Quarter, where nearly 20,000 Muslims live alongside Jewish, Armenian and Christian quarters.

The district contains not only the most vibrant marketplace in East Jerusalem but also the Haram al Sharif, known to Jews as the Temple Mount. Muslims built Islam’s third-holiest site on the hillock atop the ruins of the First and Second Jewish Temples.

Each year, tens of thousands of tourists and pilgrims visit the site and wander through the narrow stone streets of the Old City with its colorful spice shops, street vendors and souvenir sellers. They hear the muezzin call the Muslim faithful to prayer, see observant Jews pray before the Western Wall--last remnant of the Second Temple--and watch Israeli soldiers patrol the alleys.

But they rarely glimpse the daily life behind the stone walls of the ancient houses crammed above the shops and behind the churches, mosques and synagogues.

It is that life that Palestinians say they are determined to preserve and strengthen as part of their effort to lay claim to part of Jerusalem, a city Israelis say will remain their undivided capital.

The Palestinians hope eventually to make at least East Jerusalem--including the Old City--the capital of a future Palestinian state. Palestinian planners say their only hope of advancing their claim is to bolster the Palestinian presence in a city where they are outnumbered three-to-one by Jews.

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After allowing the Muslim Quarter to deteriorate physically, economically and socially for years, Palestinians say they are now working on plans to infuse millions of dollars into it. But those involved in the effort acknowledge that they are bedeviled by political rivalries within the Palestinian community and the larger Arab world.

As they watched Arab leaders plan the now-canceled summit to discuss Jerusalem’s future, Palestinians asked: What have these same leaders done since Israel captured East Jerusalem in the 1967 Middle East War to preserve the Islamic character of the Old City, or to strengthen the Palestinian community?

“Over the years, they have sent us only pennies for Jerusalem,” fumed Adnan Husseini, head of the Waqf, the Islamic Trust that owns half the property in the Muslim Quarter and administers Muslim holy sites in Jerusalem.

“We have no strategies, no hopes, no aspirations,” Husseini said of the Arabs. “Whenever we want to do anything to improve the situation here, we have to struggle against each other--against each other in the same country, against each other in the same room.”

Nowhere are the political divisions and bitter rivalries among the Arabs more evident--or more damaging--than in the cramped confines of the Old City, Palestinian critics such as Husseini charge.

At the moment, the most intense rivalry is between Jordan and the self-governing Palestinian Authority, which says that East Jerusalem, where the Old City lies, will one day be the capital of a Palestinian state established in the West Bank.

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But Jordan’s King Hussein, who controlled the West Bank and East Jerusalem until Israel captured the territory in 1967, says he is the guardian of the Arab part of the city until the Palestinians establish it as their capital. Hussein recently paid millions of dollars to restore the Dome of the Rock, the dazzling mosque that is Jerusalem’s single most identifiable landmark.

The Palestinian Authority last year appointed a new grand mufti of Jerusalem--but so did King Hussein. The two rival muftis maintain offices in the Old City, and each claims to be the chief religious leader of Jerusalem’s Muslims.

“The competition between Jordan and the sulta [Palestinian Authority] has paralyzed everything,” Husseini complained.

Over the years, such rivalries have kept the Muslim Quarter looking much the way it did 100 years ago. Palestinians fear that unless the area is upgraded soon, residents will eventually move outside the walls in search of more space and better conditions. The specter of a Muslim Quarter emptying of Muslims frightens them because it might invite Jews to take their places.

In nearly 28 years of Israeli rule over the historic site, the Jewish Quarter has enjoyed physical renovation and economic rejuvenation and has become a popular tourist attraction boasting outdoor cafes, museums and crafts shops.

In the same period, housing in the Muslim Quarter of the Old City--at 109 acres, the largest quarter--has steadily deteriorated. Wealthy families have moved out. The poor have stayed behind in overcrowded apartments. The crime rate has soared, and the district has gained a reputation as a haven for drug traffickers.

Husseini said the Muslim Quarter’s deterioration is partly a result of political rivalry among Arab regimes and within the Palestinian community. But the policies of successive Israeli governments, and of the Jerusalem municipality, he added, have also damaged the district.

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The Israelis, Husseini charged, have refused to give the Waqf permits to build more housing on its property. They have also allowed militant Jews--from former Defense Minister Ariel Sharon to the Ateret Cohanim group--to buy property in the Muslim Quarter and move in.

“There are now 42 sites in our quarter that are Jewish settlements,” Husseini said. “These people bring tension with them. They make a bad atmosphere that makes people not want to live or work here.”

Israel never developed a master development plan for the Muslim Quarter because it feared the political consequences of such an act, said Avraham Kahilla, former deputy mayor and head of the city’s planning commission.

“The population is just too dense there,” Kahilla said. “We would have had to reduce it by as much as two-thirds to improve the quality of life, and no Jewish government could do that. So we left it alone.”

Now, the Palestinian Authority and other Palestinian groups are trying to devise their own master plan for renovating the quarter and for bolstering the social and economic conditions of the estimated 19,600 Muslims who live there.

But they are hampered by political rivalries, conflicting plans and uncertain funding.

Last month, Faisal Husseini--Adnan’s cousin and minister without portfolio in the Palestinian Authority--carried a renovation plan worked out by his staff at the Arab Studies Council to Saudi Arabia, seeking financing. The Saudis promised to help finance the $28-million, 10-year project.

But the Waqf did not participate in the survey that forms the basis of the plan because, aides to Faisal Husseini say, it feared the reaction of King Hussein, who is still paying Jerusalem Waqf salaries. Since the Waqf owns much of the Muslim Quarter, it is unclear how accurate the plan’s findings are. Adnan Husseini dismisses the plan commissioned by his cousin as incomplete.

Mohammed Nakhal, a master’s candidate in urban planning at Jerusalem’s Hebrew University who conducted a survey of the Muslim Quarter for Faisal Husseini, said that “for many years, Arabs thought that the [Jewish] settlements were the main issue. They are an issue, but not the only issue.”

Nakhal, who was born in the Muslim Quarter, called overcrowding its worst problem. About two-thirds of the population of the Old City lives in the area, he said.

An average of 44 people live in each quarter-acre of land in the Muslim Quarter, compared to 17 per quarter-acre in the Jewish Quarter, 18 in the Armenian Quarter and 26 in the Christian Quarter.

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Nakhal spent four months trekking through the Muslim Quarter, talking to merchants and residents about their problems and putting together a plan for refurbishing homes and shops. He said the needs are vast and complex--from social services such as drug rehabilitation programs to loans to help small businesses survive.

A few blocks from Nakhal’s office in Orient House--Faisal Husseini’s headquarters in East Jerusalem--Amin Khatib, head of the newly created Social Welfare Committee, says that he too is preparing to launch a survey of the Palestinian neighborhoods of the Old City, both the Muslim Quarter and the Christian Quarter.

Khatib, whose brother was the mayor of East Jerusalem under Jordanian rule, says he has watched unhappily for decades as Arab leaders allowed their conflicting claims to jurisdiction in Jerusalem prevent any real redevelopment.

“But now,” he said, “the situation is so serious that I believe there will be Arab unity this time. I hope.”