“City of God” co-director Katia Lund is attached to helm “Dancing Arabs,” which will be her first feature since she directed “City” with Fernando Meirelles.

The $5 million “Dancing” is a bigscreen adaptation of Sayed Kashua’s autobiographical novel of the same title, about growing up as an Arab in Israel. Kashua will adapt his own book.

“Dancing” is set up at Denise O’Dell’s Kanzaman France and Tel Aviv-based UCM, co-owned by Israeli entrepreneur Abraham Pirchi. Madrid sales house 6 Sales will handle international rights and raise financing on “Dancing.”

Novel “Dancing” relates how Kashua, as a small-town Arab-Israeli whose good grades gained him admission to a Hebrew boarding school, found advantages in life by assuming the Jewish-Israeli identity of a friend, who is confined to his home.

“It’s an ironic but good-humored coming-of-ager about someone’s choice of identity,” said O’Dell.

Lund herself was born in Sao Paulo of American parents and graduated from Brown U.

“Growing up bicultural in Brazil raised questions about identity, which are not mine alone, but have driven me as a filmmaker,” said Lund. ” ‘Dancing Arabs’ exposes the strains and fractures of identity in a childhood and adolescence where borders are increasingly confused,” she added.

Lund will live in Israel beginning in June. As with “City of God,” she will likely use non-professional or little-known actors. “Dancing” will shoot in Jerusalem in Hebrew and Arabic from late 2009 or early 2010.

Based out of Paris, Madrid, Monaco and Valencia, Kanzaman produced Milos Forman’s “Goya’s Ghosts” and co-produced Nia Vardalos-starrer “My Life in Ruins.”