The ancient stone walls of Jerusalem’s Old City vanish behind me as I descend a steep, narrow road into the Arab neighborhood of Silwan accompanied by a rabbi and a CD of Yiddish music streaming from the stereo.

“I grew up on this,” explains Rabbi Yehiel Grenimann, humming a bar from the song “Sheine Maidele” (A Pretty Girl). His parents both survived the Holocuast, his father as a partisan fighting in the forests of Poland. His mother spent a long period after the war living in Displaced Persons camps, and it is her example and commitment to human rights, he says, that guided him to become an activist in Israel.

Rabbi Grenimann works for a a group called Rabbis for Human Rights, an organization which, among other things, has been active in efforts to halt and speak out against evictions and demolitions of Arab homes in Jerusalem.

While most eyes are cast on the West Bank for a showdown over Jewish settlements there, there is another important battle going on - one that could also shape the future of the conflict’s resolution. It centers on the creation of Jewish enclaves in predominately Arab East Jerusalem. It has begun to heat up in the area in and around the Old City called the “holy” or “historic basin,” a patch of land chocker-blocked with sites holy to Judaism, Islam, and Christianity. The Israeli government says Jewish Israeli citizens are allowed to live in any part of the capital. Critics say it’s a cynical attempt to make East Jerusalem as “Jewish” as possible and foil any future attempts to divide the city as part of a future peace deal.

This week a plan for building a housing project with 104 apartments for Jewish Israelis was filed for approval with the city south of the Mount of Olives.

The Obama White House has come out strongly against Jewish Israeli building in East Jerusalem, the part of the city captured and later annexed by Israel during the 1967 Mideast War, what Israelis call the Six Day War.

But today there were reports that the U.S. has agreed to exclude East Jerusalem from its broader call for Israel declare a freeze of settlement construction in the West Bank.

Silwan is something of an epicenter of the struggle. In a valley in the lower reaches of the neighborhood almost 88 houses stand slated for destruction in order to make way for an archeological park that authorities hope will become a major tourism draw. The homes were built without permits, a common issue in East Jerusalem where local Palestinians say they find it difficult, if not impossible, to obtain building permits from the city. (They suspect municipal officials of discriminating against them.)

Three houses have already been bulldozed into piles of rubble. Their remains are now left as collapsed slabs of concrete among knee-high weeds, the only visitors the neighborhood children who play nearby, climbing trees.

On the roof the neighborhood community center a protest tent has been set up. Inside are tattered old couches, hand-written posters with slogans written in Hebrew, Arabic and English pleading for the homes’ survival.

Sitting under the shade of its black tarp covering, Morad Shafah, 33, a teacher and activist inhales his cigarette and reveals his suspicion that a greater plan is at work to reduce the Palestinian population in the city. “The problem is not my house and land,” Shafah says. “The problem is me.” But, Shafah, for his part, has no plans to back down. “I won’t leave Jerusalem,” he adds.

After seeing the poverty of the area - its ramshackle houses and trash-littered plots of land along the side of pot-hole riddled roads, driving back up the winding hill to the top of Silwan one finds quite a contrast: a sleek and modern visitors’ center for an archeological park called “The City of David.” (City of David, or Ir David in Hebrew, is what the area is called by the Jewish group of the same name that has bought dozens of houses there. They now have some 500 residents living in houses bought from Palestinian owners at top dollar.)

Inside the complex are plaques thanking generous American donors like Irving Moskowitz, the Miami bingo parlor king who is one of the major backers of the drive to settle East Jerusalem with nationalist Jewish enclaves.

About $25.4 million has been donated by Americans for the project of buying property for Jewish groups in East Jerusalem.

It is in Silwan, just outside Jerusalem’s Old City that it is believed that King David laid the original foundations of Jerusalem. At the visitors’ center tourists are treated to a 3-D movie about the history of the city under the slogan, “This is where it all began.”

Tourists in baseball caps shooting photos with digital cameras mill about on its wide wooden decks and scenic overlooks. Some slosh through the water with flashlights as they tour an ancient water shaft.

“The City of David is not only a museum, in the sense that one feels the past, it is also the expression that the Jewish People have returned to their land,” wrote Doron Spielman, director of the City of David’s foundation’s overseas division wrote me in an emailed comment for an article I wrote on the controversy.

Yossi Klein Halevi, a senior fellow at the Adelson Institute for Strategic Studies at the Shalem Center and long-time resident of Jerusalem, said he looks at both sides of the debate and emerges with a deep sense of ambivalence.

As a Jewish Israeli he feels safer in Jerusalem’s eastern neighborhoods, including the Old City’s Muslim Quarter where there is a now a Jewish presence. He also understands the impulse to focus on a Jewish narrative in the face of Palestinian denials of a Jewish historic connection to the city.

“But I worry about the fabric of Arab-Jewish relations by inserting armed camps into Arab Jerusalem,” said Klein Halevi, wondering openly how the presence of such an ideologically charged Jewish population might effect what he describes as a remarkable pragmatism of everyday coexistence by both Jewish and Arab residents in the city.

So far, he notes, the changes underfoot have not caused the proverbial tinder-box of Jerusalem to explode. “I don’t know what to think, that’s the truth - I can lay out both sides of the argument and argue both sides compellingly and at the end of the day I am left with the puzzle of Jerusalem.”

(Photos by Dina Kraft)