WITH the minarets of Bethlehem visible in one direction, and the former Israeli border kibbutz of Ramat Rahel perched on a hilltop in the other, four yellow Israeli earthmovers yesterday began clearing the ground for the planned Jewish neighbourhood of Har Homa.
From Gaza, the Palestinian President, Mr Yasser Arafat, who seeks to establish the capital of an independent state on this and other territory annexed by Israel in East Jerusalem 30 years ago, issued a radio call to his people to, keep their anger in check.
But in Jerusalem, the Israeli Prime Minister, Mr Benjamin Netanyahu, suggested this was a hypocritical declaration, claiming he had "hard intelligence" that Mr Arafat has secretly given the "green light" for violent demonstrations and terrorist actions against Israeli targets.
In Jordan, a spokesman for the Hamas Islamic movement issued a call for a renewed popular uprising, a new "intifada", and, towards evening, there were several relatively minor clashes between Palestinian youths and Israeli soldiers.
The real Israeli fear, though, is of a resumption of suicide attacks, bus bombings, the last of which took place more than a year ago, discrediting the peace process in many Israeli eyes, and helping bring the hardline Mr Netanyahu to power.
On the site, itself, with hundreds of troops in attendance, the earthmovers were churning up the soil for what are intended to be access roads to the main construction area.
The Israeli Arab Knesset member, Mr Abdel Malik Dehamshe, bespectacled, bearded and resplendent in a bright blue suit, watched his trouser legs gradually turn brown as he played cat and mouse with the heavy machinery, chasing up and down the hillside in the buffeting wind.
The site was declared a closed military zone, and Palestinian protesters were kept about a kilometre away, some of them huddled in small tents with several foreign diplomats for company. Mr Faisal Husseini, the Palestinian minister for Jerusalem affairs, told reporters that "the Palestinian people are full of anger" and that he too, could smell a new intifada dawning.
Mr Netanyahu sent in the bulldozers despite worldwide condemnation and his security advisers' warnings of violence. A cessation of joint Israeli-Palestinian security patrols was ordered, and Jewish students were moved out of a historic tomb at Nablus, scene of heavy fighting last September.
But the prime minister was adamant. Threats or no threats, he said, the building work would go on. "I will not sacrifice Jerusalem," he said. "I will not sacrifice the future of my country."
Nevertheless, he stressed, he was ready to negotiate with the Palestinians, to meet Mr Arafat. And his aides spoke of a package of concessions designed to make the bitter Har Homa pill a little easier to swallow: massive investment in infrastructure and building for Jerusalem's Arabs, fast progress towards the opening of a port in Gaza, pledges of more substantial land handovers to the Palestinians later in the peace process.
Mr Netanyahu had been hoping to offer these proposals to Mr Arafat in person on Monday night, before the bulldozers arrived. But the Palestinian leader did not wish to be seen by his people as being reconciled to the building project.