A Brief History of East Jerusalem

In 1967, Israel expanded the borders of Jerusalem, annexing to West Jerusalem approximately 71 km sq. of land occupied during the war, including dozens of Palestinian villages. In these annexed lands Israel built 12 Jewish neighborhoods, wherein reside today approximately 190,000 Israelis.
Approximately 263,232 Palestinians reside in East Jerusalem as permanent residents. They are eligible for National Insurance payments, health and municipal services, but they are not considered citizens, and do not have the right to vote for the Knesset or to bear an Israeli passport. Unofficially, if they reside abroad for any length of time, they lose their Jerusalem residency permit.
The route of the separation barrier in Jerusalem annexes most of East Jerusalem and the settlement blocs of Gush Etzion, Ma’ale Adumim and Giva’t Ze’ev. Approximately 55,000 East Jerusalem Palestinians who are considered residents of Israel, are left beyond the Fence.
East Jerusalem has also become off limits to Palestinian residents of the West Bank, who require special permits issued under strict conditions.

What’s the Problem with Settlements in Jerusalem?
Since Jerusalem is a national and religious symbol for both Palestinians and Israelis, it is pretty clear that a mutually-agreed upon solution solving this conflict will have to include a compromise in which the Palestinian neighborhoods serve as the Palestinian capital and the Israeli neighborhoods as the Israeli capital.

See some maps and information in the following presentation:

There are two kinds of settlements in Jerusalem:

1) Jewish neighborhoods built by the government on land annexed to Jerusalem in 1967, in which 190,000 Israelis presently live; These large settlements were originally built in order to prevent such a solution and to isolate East Jerusalem from the West Bank. Most settlers here are not ideological and almost all suggested solutions for Jerusalem include these settlements within Israeli Jerusalem in the event of an agreement.

2) Small settlement compounds in the middle of the Palestinian neighborhoods surrounding the Old City, housing 2000 settlers, guarded by a similar number of armed guards. These small compounds, are established by ideological right wing settlers, supported by the government and aim to create a mixture of the two populations, to create Israeli presence within clear Palestinian areas, thereby attempting to prevent any division of Jerusalem along neighborhood lines and thus torpedoing the implementation of the two-state solution.

Peace Now will continue to object, protest and draw public condemnation over the plans of the government to expand the existing boundaries of the larger settlements and to continue to establish smaller compounds within Palestinian neighborhoods.

The significance of all of these developments is expanding Israeli control and dominance into Palestinian neighborhoods in Jerusalem.

The continuation of this trend might not only start a fire in Jerusalem, but threatens to undermine any possibility of compromise in Jerusalem.