An Israeli pullout from Arab neighborhoods of Jerusalem as part of a peace accord with the Palestinians is likely to have serious economic repercussions on both Jewish and Arab residents of the city, according to a new study on the future division of Jerusalem prepared by a Jerusalem think tank. The study, which was carried out by the liberal Jerusalem Institute for Israel Studies ahead of this week's US peace conference, concluded that division of the city would be "very difficult," and would be likely to negatively impact both Jews and Arabs living in and around the areas in question. "The separation of the city, if it is carried out, will create a different urban and regional alignment, which will influence the functioning of the whole city's economy, and its geopolitical and metropolitan status," wrote Yisrael Kimche, one of the authors of the study. The report suggests that Jewish residents of the city who live near Arab neighborhoods to be handed over to the Palestinians would be likely to leave their homes, if they can afford to do so, or even leave the city altogether, with the value of real estate in those areas expected to plunge if the city is divided. At the same time, the fact that Arab residents of these areas could find themselves cut off from their jobs in eastern Jerusalem as a result of a division of the city could serve to create even further tension in the area, the study found. In order to alleviate the expected economic hardships for the Arab residents of the city, the report proposes establishing industrial zones in the areas that would be handed over to the Palestinians. Prime Minister Ehud Olmert has suggested ceding as many as six Arab neighborhoods on the periphery of the city as part of a final peace agreement with the Palestinians, while Vice Premier Haim Ramon favors handing over all Arab neighborhoods of the city, except those around the Old City. Palestinians have rejected these ideas, demanding control over all of east Jerusalem, including the Temple Mount. These areas would serve as the capital of their future state. The study concluded that it would be easiest to cede Arab neighborhoods on the southern rim of the city, followed by those on the northern periphery of the capital, while it would be hardest to hand over Arab neighborhoods next to the Old City. The think tank had previously concluded that an Israeli pullout from Arab neighborhoods of east Jerusalem as part of a peace accord with the Palestinians without an agreement regarding the Old City and the Temple Mount would not solve the dispute over Jerusalem, while such a withdrawal without an accord is also likely to have serious security repercussions. Israeli public opinion polls have shown that a majority of Israelis are against any division of Jerusalem, while even the city's Arab residents express mixed opinions over such a move.