What is the capital city of Israel?
The naive answer might be that the capital city of Israel is whichever city the Israeli government designates as its capital city; formerly Tel Aviv, it has been Jerusalem since 1980. But no, the BBC today consistently referred to Tel Aviv as the Israeli capital, later nuanced to call Tel Aviv the “commercial” capital. Like pretty much everything else to do with Israel, this is a highly contentious issue — the city of Jerusalem is also claimed as the capital of the (somewhat virtual) state of Palestine.
The United Nations position is that Jerusalem should be an international city, and that Israel claiming it as its capital is a violation of international law. This status as an international city was intended, but not enacted, at the time of Israel’s creation as a nation.
So, it is incorrect to refer to Tel Aviv as Israel’s capital, but internationally unacceptable to refer to Jerusalem as Israel’s capital.
Does that mean that Israel doesn’t have a capital city?
The United Nations position is that Jerusalem should be an international city, and that Israel claiming it as its capital is a violation of international law. This status as an international city was intended, but not enacted, at the time of Israel’s creation as a nation.
So, it is incorrect to refer to Tel Aviv as Israel’s capital, but internationally unacceptable to refer to Jerusalem as Israel’s capital.
Does that mean that Israel doesn’t have a capital city?
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I'd say that the capital city is where the government is. And the Knesset is in Jerusalem.
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The BBC seem to have a bit of a problem with referring to Jerusalem as the capital; as well as yesterday's reporting about Tel Aviv, they also missed it off the Israeli information on their Olympic site earlier this year (all of the other counties on the site have a capital city listed; for Israel they just note where the government is based):
http://www.bbc.co.uk/sport/olympics/2012/countries/israel
And the Guardian published corretion after correction on the same issue earlier this year.
http://www.pcc.org.uk/cases/adjudicated.html?article=ODAyNw==
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But then the whole area is a massive disaster that's not getting settled any time soon.
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While I think the BBC probably made a mistake by referring to Tel Aviv as the capital, it seems reasonable to me that they would avoid acknowledging Jerusalem. Although we tend to concentrate on the BBC's domestic responsibilities, it's worth remembering that it has a role in the UK's foreign relations and gratuitously hacking off those who oppose Jerusalem's recognition would be as bad as hacking off the Israelis by naming Tel Aviv.
Whatever the choice of terminology, it won't affect the internal realities of Israel, but being a bit mealy-mouthed can minimise, if not eliminate, international offence.