They'll also have to agree on which territory Israel should give to a future Palestine in exchange for being allowed to keep major settlement blocs in the West Bank. And if they decide not to divide Jerusalem, they'll have to determine how to share it while avoiding the potential security nightmare of an open border.
These are just some of the excruciating challenges faced by Israeli and Palestinian negotiators as they begin discussions Dec. 12 on how to end their conflict -- as agreed upon Tuesday at a U.S.-hosted Mideast peace summit in Annapolis, Md.
The Palestinians want to establish an independent state in the West Bank, Gaza Strip and east Jerusalem -- areas that Israel captured in the 1967 Mideast war.
Of all the obstacles to a peace deal, none looms larger than Jerusalem -- the city at the heart of the Israeli-Palestinian conflict, with its holy sites of such enormous importance to Muslims, Jews and Christians.
Past peace negotiations have made it clear that the city will have to serve as the capital of both Israel and a future Palestine.
But that raises more questions than it answers. How can you transfer east Jerusalem to Palestinian sovereignty without stripping its residents of Israeli social security benefits, for instance, or how can Israelis and Palestinians each have access to the city but not the other's country?
"The Palestinian vision of Jerusalem is what they call an 'open city,' with access to all parts," said Yitzhak Reiter, head of the Truman Institute think tank in Jerusalem. "From an Israeli perspective, this is a problem, because there would be no 'hard borders' between Palestine and Israel."
Most Israelis and Palestinians do not want to divide the city, like the way it was before Israel captured its eastern sector in 1967. However, security concerns may require just that -- unless the sides can come up with an alternative such as erecting checkpoints at all roads leading out of Jerusalem to keep Palestinian militants from entering Israeli cities.