Local politics in Jerusalem is deeply rooted in the broader ethno-nati
onal and political conflict between Israelis and Palestinians. Notwith
standing the broader political processes, the nature of local politics
is also shaped by specific, local contingencies - patterns of segrega
tion and interaction, the nature of local government and the local com
munities, types of local leaders and the special features of each soci
al group. The paper shows that local politics in Jerusalem is inherent
ly biased, reflecting the political reality of ethnic power. Following
an analysis of these issues the paper suggests a functional approach
to the Jerusalem problem, one that is based on the idea of bounded sov
ereignty and the pragmatic dispersion of governmental functions and au
thority over several political-geographic layers.