OCCUPIED JERUSALEM, December 15 (IslamOnline & News Agencies) - In a bold move likely to stir up feelings over occupied Jerusalem, Israel's Labor party, facing an uphill battle in January elections, said Sunday, December 15, it was ready to renounce Israeli claims to the annexed eastern sector of the holy city.

Labor's Secretary General Ofer Pines said his party was ready to give up the Jewish state's claim to Arab districts of Jerusalem annexed after the eastern part of the city was seized by Israeli forces in the 1967 Middle East war, Agence France-Presse (AFP) reported.

"We want Jerusalem to become a city where one can live a normal life and the annexed Arab neighborhoods are not part of the city. This measure was taken to enlarge Jerusalem," Pines told public radio.

"To manage to have the Jewish part recognized as the eternal capital of Israel by the whole world, in return for a renunciation of the Arab areas and as a way to peace, that would be the best news possible for the people of Israel," he said.

Israel has built dozens of Jewish settlements in the occupied Arab east part of the holy city since taking it over in the 1967 War.

But the annexation has never been recognized by the international community, with almost all states keeping their embassies in Tel Aviv.

During Israeli-Palestinian peace talks in the United States in July 2000, U.S. president Bill Clinton proposed a compromise formula on occupied Jerusalem whereby Jewish areas of the city would remain under Israeli sovereignty while Arab quarters would become the capital of a future Palestinian state.

The talks however broke down on the question of occupied Jerusalem, with sovereignty over the Old City's Muslim and Jewish holy sites the main sticking point.

Palestinians and Arabs maintain that the implementation of UN resolutions 181, 242 and 338 are the key to a durable and comprehensive settlement of the Arab-Israeli conflict.

Labor's election campaign plan was to be submitted Sunday for adoption by the newly-elected party chief Amram Mitzna.

Mitzna has already set his party apart from its Likud rivals by promising a swift Israeli withdrawal from Jewish settlements in the Gaza Strip, with a partial pullback from some West Bank settlements to follow.

Meanwhile the governing right-wing Likud, which has seen its lead shrink but is still tipped to win the general elections, faces a police inquiry into reports of corruption during its own internal leadership polls last month.

Likud, whose leadership by Prime Minister Ariel Sharon was confirmed in last month's primary elections, was shaken Saturday by a votes-for-cash scandal stemming from the internal polls.

Three Likud aspirants charged they were asked for money in exchange for support from party central committee members who voted on a slate for the elections, and a criminal investigation has been opened.

Police have opened investigations into bribery allegations in the Likud internal elections, which determined the party slate.

Israeli Attorney General Elyakim Rubinstein instructed Police Commissioner Shlomo Aharonisky to start a criminal investigation after various contenders, including MK Nehama Ronen, reported vote-paying, reported the Israeli Ha’aretz newspaper.

Rubinstein stressed there was no time to waste and everything must be done to conclude the investigation before the January 28 election.

Israeli police feel it will be hard to prove any bribery before election day.

In an interview on "Meet the Press" on Channel Two on Saturday, December 15, Rubinstein said the Likud elections seem to reflect a serious deterioration of Israel's democracy.

Several people, mainly from occupied Jerusalem, have offered bribes in return for support at the ballots.

The police will also investigate if and how organized crime played a part in these elections and will check the connections between the Gavrieli and Alperon families - which are known to have ties in the underworld - and Likud candidates.

The police will check whether known criminals have tried, and maybe succeeded, in getting their people on the Likud slate.

One of the contenders who will probably make it into the Knesset is Inbal Gavrieli, whose family has been followed by the police for many years.

Labor MK Haim Ramon said Saturday that the committee set up by Sharon, led by Justice Minister Meir Sheetrit, to look into the possibilities to change the way that the Likud elects its Knesset slate, "is a cover-up committee."

Likud is concerned the police investigation and media publications of serious irregularities in the internal elections might chase away voters and turn into the main theme in the upcoming elections.

Meanwhile, Sharon said Sunday his forces will remain in Bethlehem during Christmas celebrations and Palestinian President Yasser Arafat will not be allowed to attend midnight mass in the West Bank city, a senior Israeli official told AFP.

Last Christmas, Arafat, who had been besieged by Israel for weeks in the central West Bank town of Ramallah, was banned from traveling to Bethlehem for the midnight mass on December 24 held in the church marking the birth site of Jesus.

He had previously attended the mass every year since 1995 when his Palestinian Authority, set up a year earlier, took control of Bethlehem, just south of  occupied Jerusalem.