Ahmed Abedat was wondering this week how much longer he will be able to enjoy the spectacular view from his grocery shop in Ras Al-Amud – from the ancient Mount of Olives cemetery across the valley to the majestic golden Dome of the Rock soaring above the walls of Jerusalem's Old City.

Abedat's father opened the store a half-century ago under Jordanian rule, when Ras Al-Amud was the first bend out of Jerusalem on the ancient road to Jericho. The shop continued to thrive after the 1967 Six Day War, when the Israelis captured East Jerusalem and the West Bank, despite an Israeli security checkpoint 100 metres down the road outside the regional headquarters of the Israeli police.

Today the checkpoint has gone, replaced by Israel's nine-metre high concrete security barrier that severs the road to Jericho and cuts off East Jerusalem from nearby villages. The police station is empty, slated as the site of new houses for 104 Jewish families.

Abedat, 60, never thought he would miss the police and the checkpoint, but as he counted his meagre $5 in takings one morning this week he doubted aloud whether his little store will be able to continue. He doesn't expect any business from his new neighbours.

"They don't talk to us. They never come to my shop to buy anything. We hardly see them," Abedat told the Star. "They want the Arabs to leave Jerusalem. They want it for themselves."

"They" are the Israeli residents of Ma'aleh HaZeitim, a half-finished compound behind Abedat's grocery. With the police station site, Ras Al-Amud will soon be home to 1,000 Israelis, the largest concentration of Jews in any Arab-populated neighbourhood of East Jerusalem. Israeli groups that encourage such migration say they are merely returning to the Jewish heartland of Jerusalem. Palestinians describe them as settlers.

"There's no reason in the world why the Jewish people can't live here and other places like it," said Daniel Luria, executive director of Ateret Cohanim, an educational organization that builds yeshivas and student housing. "This is the heart of Jerusalem, the homeland of the Jewish people and the pumping-station of the Jewish world."

The site is owned by Irving Moskowitz, a Miami casino billionaire who has spent millions of dollars buying up properties in East Jerusalem for right-wing religious groups. Moskowitz's money has helped move 50 Jewish families into the Palestinian village of Silwan, site of the ancient city of King David, as well as purchase houses in the Muslim and Christian Quarters of the Old City.

Last month, the United States demanded that Israel halt plans for 20 apartments in another Moskowitz property in Sheikh Jarrah, north of the Old City. Approval for another 200 units nearby is pending. The issue sparked a collision between the government of Israeli Prime Minister Benjamin Netanyahu and the Obama administration.

U.S. special envoy George Mitchell is trying to get Israel to freeze its construction of Jewish settlements, a Palestinian condition for resuming peace talks. He has also asked Arab states to offer gestures toward normalization of ties with Israel. A Israeli delegation will meet the U.S. envoy again next week.

Palestinian mapping expert Khalil Tafakgi said the police station project was part of a plan to keep East Jerusalem under Israeli control.

"The aim of this outpost inside the Palestinian built-up area is so as to not divide Jerusalem another time. It means that Jerusalem, east and west, will be under Israel's control and East Jerusalem will not be capital of the Palestinian state. This is the aim," said Tafakgi.

Ateret Cohanim argues that the property deals are legal.

Its opponents say that moving ultra-nationalist Jews into the heart of Arab neighbourhoods is causing irreparable damage to urban relations.

"The whole issue of settlement in East Jerusalem, which all countries except Israel recognize as occupied territory, is part of what is contributing to tension in the city rather than the good faith that could lead to a negotiated peace," said Sarah Kramer, associate director of Ir Amim, a group working for Israeli-Palestinian coexistence.