JERUSALEM, Israel -- One of the first things President Barack Obama did on his first full morning in the Oval Office was to place telephone calls to Israeli Prime Minister Ehud Olmert and Palestinian leader Mahmoud Abbas.
Although a peace agreement seemed as elusive as ever after Israel's recent offensive to root out Hamas terrorists in Gaza -- who had been pounding southern Israel with rockets for eight years -- the President said he remained committed to forging a two-state solution.
Click the player to watch the report from CBN News Terrorism Analyst Erick Stakelbeck.
He's already named a special envoy to the Middle East, former Senator George Mitchell, whose job is help do just that.
Bone of Contention: Jerusalem
But one major roadblock to any peace deal is the status of Israel's capital city: Jerusalem.
Obama has already seen firsthand the passions that surround the world's holiest city. He created a firestorm during his campaign last year when he said, "Jerusalem will remain the capital of Israel, and it must remain undivided."
The President-to-be quickly clarified his statement, saying the final status of Jerusalem should be left up to Israelis and Palestinians to negotiate.
His backtrack delighted some and disappointed others.
But the President recently made clear his ultimate goal of a lasting peace between Israel and the Palestinians.
"I will sustain an active commitment to seek two states living side by side in peace and security," he said on January 22.
A major sticking point is the Palestinian demand that East Jerusalem serve as the capital of a potential Palestinian state.
That means Palestinians would control half of Judaism's most sacred city--including, potentially, Jerusalem's Old City area, which is home the Western Wall, arguably Judaism's holiest site.
East Jerusalem is predominantly Arab. The city's Western portion is mainly Jewish. Israel has controlled the entire city since capturing it from the Arabs in 1967's Six-Day War.
Israel's Ties to the 'The Eternal City'
But emotional and physical ties to what the Jewish people call "The Eternal City" go back much further.
"It's from our earliest education, it's from our earliest Jewish stories," said Nathan Diament, Director of Public Policy for the Union of Orthodox Jewish Congregations of America.
"And then, over the millennia, Jews have always focused on Jerusalem in their religious life.during Yom Kippur, we pray to return to Jerusalem," Diament explained. "At the end of the Passover seder, we pray to return to Jerusalem. When Jews pray three times a day, they face toward Jerusalem."
Diament says dividing Jerusalem could put Jewish and Christian holy sites under Palestinian control, which was the case before the Six Day War.
"Jews were not allowed access to their holy sites," Diament said. "Christians were not allowed much access to their holy sites, and synagogues and churches and other holy sites were destroyed. And only since Israeli sovereignty over Jerusalem began in 1967 has Jerusalem been a free and open city where all people of all faiths are able to visit all of their holy sites uninterrupted."
Those sites include the Western Wall and the Church of the Holy Sepulchre -- built atop the area where some Christians believe Jesus was crucified and buried.
Jerusalem is mentioned in the Bible hundreds of times. Biblical giants from King David to the prophet Elijah to Jesus spent significant time there and considered the city sacred ground.
Islamic 'Ties' to Jerusalem
Although Jerusalem is never mentioned in the Koran, Muslims consider it the third holiest place in Islam.
It is the site of the Al-Aqsa Mosque and the Dome of the Rock--where Muslims believe their prophet, Mohammed, ascended to heaven.
"They also consider it a very important place for them, " said Ori Nir of Americans for Peace Now. "Geographically and in their hearts."
For Israelis, however, a unified Jerusalem is about more than just history--it's about security.
Critics Sound off on Two-State Solution
Critics of the proposed division of Jerusalem warn that if the Palestinian Authority were to take control of the eastern part of the city, it would serve as a base for terror groups like Hamas to launch attacks against Israelis.
Critics point to Israel's withdrawal from Gaza in 2005 -- and the subsequent barrage of rockets from the Strip into southern Israel -- as proof that any time a country as small as Israel gives up land that will be occupied by long-time enemies, it's a recipe for disaster.
"Distance protects us," said Mickey Levy. "If we give them another land, and other places, that comes to be very close to the Israeli area, something like what is happening right now in the Gaza Strip could happen, or will happen, in Jerusalem."
Levy was Jerusalem's police commander from 2000 until 2004, during the second Palestinian intifada--or uprising. Back then, Jews in Jerusalem were targeted repeatedly by Palestinian suicide bombers. Two hundred fifty-six Israelis were killed and over 1,500 more were injured during that period.
"Jerusalem was a crazy city, more than New York, in that time," Levy said. "Twenty-four hours a day, something would happen. To protect the city, it was very, very difficult."
Levy says Israel's decision to build a security fence between Jewish and Palestinian areas in the West Bank and some sections of Jerusalem helped put an end to the suicide bombings.
"Right now, it is very quiet," Levy said. "The reason is, we built a fence. We built a fence, and the intelligence is much better than it was four years ago. And the fence between us and the Palestinian area protects us-that's it."
Conditions in the West Bank have improved under the rule of Mahmoud Abbas and the Palestinian Authority--but with heavy assistance from the Israeli government.
Although Hamas was badly damaged by Israel's recent operation in Gaza, the terror group continues to target Israeli troops along the Gaza border.
'Time is Ripe for Peace Deal'
Still, some say now is the time to push for a peace deal.
"The Palestinian Authority definitely is the partner for peace with Israel," said Jerusalem native Ori Nir. "And the trick will be to try to harness Hamas and try to bear hug Hamas in some way through the Palestinian Authority."
Nir is a spokesman for Americans for Peace Now, a group which works towards Mideast peace. The former Israeli journalist says placing East Jerusalem under Palestinian control is necessary to achieve that goal.
"It will be the capital of the future Palestinian state, and West Jerusalem will continue to be the capital of Israel," he envisioned. "The whole world -- including the Arab world, which now does not recognize West Jerusalem being Israel's capital -- will. Which would be a great day for Israel."
"There are portions of Jerusalem that are for all practical purposes already divided," he added.
As Israel prepares to select a new prime minister, the future of Jerusalem is an issue that will continue to stir passions.
"Read the Bible. And you can check," Levy said. "Three thousand years ago, Jerusalem belonged to us as a nation. It's our capital. It's the Jewish heart. It belongs to us. We can't live without Jerusalem."
Israeli elections will be held on February 10. Of the two leading contenders for prime minister, Likud's Benjamin Netanyahu has made it clear that he adamantly opposes the division of Jerusalem. Netanyahu said recently that terrorists would target the Church of the Holy Sepulchre if Palestinians took control of East Jerusalem.
"This will incur a chain reaction we can't even envision," he said. "We will witness an escalation of religious conflict above and beyond the regional conflict we have now."
Netanyahu also said that Hamas would set up shop in the area and use it as a base to attack Israel, much like the group has done in Gaza.
Netanyahu's main competitor for the office, Kadima's Tzippe Livni, has been less clear about her position on the Jerusalem issue -- although her fellow Kadima Party member and current Prime Minister Ehud Olmert supports the city's division.
Palestine: No Division, No Peace
When it comes to the Palestinian side, however, there is little debate. CBN News recently spoke to a leading Palestinian official who said that without the division of Jerusalem, there can be no peace between Israelis and Palestinians.