London-based Arabic daily al-Quds al-Arabi reported that Palestinian Authority President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert agreed to a peace deal that would determine sovereignty over Jerusalem’s Temple Mount—the holiest site in Judaism and the third holiest in Islam.

According to the report…

• Neighborhoods east of Jerusalem would be transferred to Palestinian control and become the future capital of an independent state.

• Jordan would become guardian of Jerusalem’s Muslim holy sites.

• The plan would be jointly supervised by Jordan, Israel, Egypt, the Palestinian Authority and the United Nations.

• The Old City’s 90,000 Arab residents would be granted Jordanian citizenship.

However, Prime Minister Olmert’s office denies giving up control of the Old City and neighboring areas, stating that “no agreement has been reached.”

Meanwhile, the Palestinian Minister for Jerusalem Affairs told The Jerusalem Post, “The outline for Jerusalem is very clear. East Jerusalem is for the Palestinians and west Jerusalem is for the Israelis.”