Centuries before Christianity or Islam existed, Jerusalem was a Jewish community already, and sacred to Judaism. Although the city is an intercultural and interreligious place, it makes no sense to deny the simple fact that it is the capital of Israel.
In June 1967 the Jewish State took control of its capital city. It has no intention of renouncing to it. The international character of Jerusalem is well established. However, the territory of Israel has been a safe haven for inter-religiosity and religious minorities in the Middle East. The nation is practically the only democracy in the region, and the Arab Israeli citizens are represented at its parliament. Israel is clearly entitled to manage Jerusalem in a way that respects the intercultural dimension of the city: it has been doing so for many decades.
As to the sacred meaning of Jerusalem for the Jewish people, it becomes clear as one sees the way the author Karen Armstrong – a Christian nun – describes the events of June 1967.
“On 5 June, the Israeli forces launched a preemptive strike against the United Arab Republic and destroyed almost the entire Egyptian air force on the ground. This inevitably drew Jordan into the war, though Jerusalem was inadequately defended by, perhaps, as few as five thousand troops.”
Events were rather quick:
“On Wednesday, 7 June, the Israel Defense Forces circled the Old City and entered it through the Lion Gate. Most Israeli civilians were still in their air-raid shelters, but news of the capture of Arab Jerusalem spread by word of mouth and a wondering crowd gathered at the Mandelbaum Gate. Meanwhile, Israeli soldiers and officers had one objective: to get as quickly as possible to the Western Wall.”
A new horizon emerged from the Old City:
“The men ran through the narrow winding streets and rushed over the Haram platform, scarcely giving the Muslim shrines a glance. It was not long before seven hundred soldiers with blackened faces and bloodstained uniforms had crowded into the small enclave that had been closed to Jews for almost twenty years.” 
Then came the sense that the city was in Jewish hands again:
“By 11:00 a.m., the generals began to arrive, bringing General Shlomo Goren, chief rabbi of the IDF, who had the honor of blowing the shofar at the wall for the first time since 1929. A platoon commander also sent a jeep to bring Rabbi Zvi Yehuda Kook to the wall. For all these men, whatever their theological beliefs, confronting the wall was a profound – even shocking – religious experience. Only a few days earlier they had faced the possibility of annihilation. Now they had unexpectedly made contact once again with what had become the most holy place in the Jewish world. Secular young paratroopers clung to the stones and wept: others were in shock, finding it impossible to move.” 
The recovery of Jerusalem is of decisive importance in the entire history of Jewish people. A long cycle of injustice and suffering was now coming to its end, in a transcendent level of life:
“When Rabbi Goren blew the shofar and began to intone the psalms, atheistic officers embraced one another, and one young soldier recalled that he became dizzy; his whole body burned. It was a dramatic and unlooked-for return that seemed an almost uncanny repetition of the old Jewish myths. Once again the Jewish people had struggled through the threat of extinction; once again they had come home. The event evoked all the usual experiences of sacred space. The wall was not merely a historical site but a symbol that reached right down to the core of each soldier’s Jewish identity. It was both Other – ‘something big and terrible and from another world’ – and profoundly familiar – ‘an old friend, impossible to mistake’. It was terrible but fascinans; holy, and at the same time a mirror image of the Jewish self. It stood for survival, for continuity, and promised that final reconciliation for which humanity yearns. When he kissed the stones, Avraham Davdevani felt the past, present, and future had come together: ‘There will be no more destruction and the wall will never again be deserted.’ It presaged an end to violence, dereliction, and separation. It was what other generations might have called a return to paradise.” 
Little by little a new age of Justice has been starting, perhaps.
A few years after the Holocaust, the independence of Israel took place in 1948. Nine years more, and the victory in the 1967 war brought about the recovery of Jerusalem.
“Religious Jews, especially the disciples of Rabbi Kook the Younger, were convinced that the Redemption had begun. They recalled their rabbi’s words only a few weeks earlier and became convinced that he had been divinely inspired. Standing before the wall on the day of the conquest, Rabbi Kook announced that ‘under heavenly command’ the Jewish people ‘have just returned home in the elevations of holiness and our own holy city’. One of his students, Israel ‘Ariel’ Stitieglitz, left the wall and walked on the Haram platform, heedless of the purity laws and the forbidden areas, bloodstained and dirty he was. ‘I stood there in the place where the High Priest would enter once a year, barefoot, after five plunges in the mikveh’, he remembered later. ‘But I was shod, armed, and helmeted. And I say to myself, This is how the conquering generation looks.’ The last battle had been fought, and Israel was now a nation of priests; all Jews could enter the Holy of Holies. The whole Israeli army, as Rabbi Kook repeatedly pointed out, was ‘holy’ and its soldiers could step forward boldly into the Presence of God.”
History is not made of casual and isolated facts. Humans evolve according to the One Law of Equilibrium.
In theosophical parlance, the Law of Karma has been slowly generating Justice after long centuries of hatred and persecution. The year of 1967 is a watershed moment in the Middle East, and Karen Armstrong proceeds:
“The phrase ‘Never again!’ now sprang instantly to Jewish lips in connection with the Nazi Holocaust. This tragedy had become inextricably fused with the identity of the new state. Many Jews saw the State of Israel as an attempt to create new life in the face of that darkness. Memories of the Holocaust had inevitably surfaced in the weeks before the Six-Day War, as Israelis listened to Nasser’s rhetoric of hatred. Now that they had returned to the Western Wall, the words ‘Never again!’ were immediately heard in this new context. ‘We shall never move out of here’, Rabbi Kook had announced, hours after the victory. General Moshe Dayan, an avowed secularist, stood before the wall and proclaimed that the divided city of Jerusalem had been ‘reunited’ by the IDF; ‘We have returned to our most holy places; we have returned and we shall never leave them’. He gave orders that all the city gates be opened and the barbed wire and mines of No Man’s Land be removed. There could be no going back.” 
Such an event has great significance from a theosophical and intercultural point of view.
Respect for the Jewish nation is not a goal to be obtained by the Jews alone. Far from that: it is the moral duty of every human being. The happiness of every nation is the obligation of all.
No Arab or Muslim community will be happier by hating people of another religion, or of no religion.
The Druze, the Christians, the Atheists, Hindus, Parses and people of every philosophy and faith must be free to live and to think as they wish, as long as they respect cultural diversity as a central principle of respect for life. It is enough to see the way Israel manages the Temple Mount to realize that the Jewish State understands that principle. Muslim countries also make progress in the direction of interreligious respect.
The diseases of anti-Semitism, Nazism and terrorism have no future in a balanced and just civilization. Eastern philosophy and wisdom offer a renewing angle from which to look at Jerusalem, and Karen writes in the opening of her book:
“Religion can perhaps be described as a moral aesthetic. It is not enough to experience the divine or the transcendent; the experience must then be incarnated in our behaviour towards others. All the great religions insist that the test of true spirituality is practical compassion. The Buddha once said that after experiencing enlightenment, a man must leave the mountaintop and return to the marketplace and there practice compassion for all living beings. This also applies to the spirituality of a holy place. Crucial to the cult of Jerusalem from the very first was the importance of practical charity and social justice. The city cannot be holy unless it is also just and compassionate to the weak and vulnerable.” 
Compassion is inseparable from an ability to see unity in diversity.
Brotherhood is not a synonym to uniformity. Contrast is part of life, and fruitful cooperation needs mutual help between opposites. From the beginning Judaism has been essentially intercultural. For instance, Phoenicia, Egypt and other nations and religions had several degrees of influence on its origin. 
The ideal of universal brotherhood, which is present in one way or another in many religions and philosophies, gives us the key to the future. The future of course does not come by trying to annihilate nations. It will emerge by restoring justice and harmony among them, thanks to an unconditional respect for truth, and a healthy acceptance of difference.
 “Jerusalem, One City, Three Faiths”, by Karen Armstrong, Alfred A. Knopf, New York, 1996, 471 pp., p. 398.
 “Jerusalem, One City, Three Faiths”, Karen Armstrong, pp. 398-399.
 “Jerusalem, One City, Three Faiths”, pp. 399-400.
 “Jerusalem, One City, Three Faiths”, p. 400.
 “Jerusalem, One City, Three Faiths”, p. xxi.
 See for instance “Jerusalem, an Archaeological Biography”, by Hershel Shanks, Random House, 1995, pp. 56 and 57 among others. As to Eastern and Vedic influences on the origin of Judaism, see “The Secret Doctrine”, H. P. Blavatsky, Theosophy Co., volume I, Introductory, p. xxxi – and elsewhere.