Dozens of apartment towers sprouting up illicitly in an Arab neighborhood of Jerusalem are creating a fraught new dynamic in the struggle for control of the sacred city at the core of the Israeli-Palestinian conflict.

Kufr Aqab is one of several Arab areas within Jerusalem's municipal borders that have been separated from the city by the meandering barrier Israel has built to wall off the West Bank.

While Israel tightly controls development anywhere inside the barrier, anything seems to go in Arab neighborhoods outside the structure, like Kufr Aqab.

Palestinians believe Israel is turning a blind eye to the hundreds of cheap wildcat apartments being built there, hoping the abundant housing will lure the city's Arabs to the other side of the barrier. They fear Israel will one day make the barrier the new municipal line to cement a Jewish majority in the city, whose eastern part, including the Old City with its major religious shrines, the Palestinians claim as a future capital.

"They want to empty Jerusalem of Arabs," said Ayoub Burkan, one of the newcomers in Kufr Aqab.

The 45-year-old driving instructor said he couldn't afford to buy in his old neighborhood of Ras al-Amud, close to the Old City, and moved to Kufr Aqab, where apartments cost 75 percent less. Israeli restrictions on Arab construction in the city have produced a drastic housing shortage and priced most Palestinians out of the housing market there.

Israeli officials deny they plan to change Jerusalem's boundary unilaterally.

Since Israel captured east Jerusalem in 1967, Israel has built a ring of settlements to tighten its grip on the area. These settlements, which Israel calls neighborhoods, are now home to nearly 200,000 Jews, compared to 300,000 Palestinians in east Jerusalem. In all, Jerusalem has just over 800,000 residents.

Last summer, Jerusalem Mayor Nir Barkat fueled fears of a status change for city neighborhoods outside the barrier when, citing "security-related difficulties" in providing services there, he proposed the Israeli military take over the task. The mayor denied that his idea, which was rejected by the army, was a precursor to changing Jerusalem's boundaries.

Israeli government spokesman Mark Regev said the separation barrier is not a political border, and that a future border between Israel and a Palestinian state can only arise in negotiations. Prime Minister Benjamin Netanyahu opposes giving up any part of east Jerusalem.

The mini-Manhattan going up helter-skelter on Jerusalem's northern edge is just the most visible sign of a chain reaction of Arab migration triggered by the barrier.

Kufr Aqab started out as a West Bank hamlet, but became part of Jerusalem after Israel captured the eastern sector of the city and the West Bank from Jordan. It extended the city's boundaries eastward into the West Bank, tripling Jerusalem's size in an annexation that is not internationally recognized. Israel included Kufr Aqab, some nine kilometers (six miles) from the city center, because it wanted to add a nearby airfield to Jerusalem's territory, historians say.

In 2002, Israel began building the barrier, portraying it as a temporary defense against Palestinian militants who had killed hundreds of Israelis in an armed uprising.

City officials say the route of the Jerusalem segment, which keeps an estimated 80,000 Palestinians in Kufr Aqab and the Shuafat refugee camp on the West Bank side, was drawn up according to security considerations. However, Haim Ramon, at one point a government minister for Jerusalem affairs, later acknowledged the barrier was also meant to ensure a Jewish majority in the city.

By 2005, the barrier in northern Jerusalem was finished and Kufr Aqab residents now had to endure long waits at barrier checkpoints to reach jobs and schools in their city.

Initially, many Arab city residents moved to areas inside the barrier to avoid such hardships. But this drove up already high housing prices in east Jerusalem.

Moving to cheaper West Bank suburbs was a dangerous option. Leaving Jerusalem's city limits would put them at risk of being stripped by Israel of their Jerusalem residency permits, which grant them freedom of movement and access to Israel's health care and social services.

Suddenly, Kufr Aqab became an attractive option again. After the barrier was built, city building inspectors stopped coming to Kufr Aqab, residents said. Contractors responding to a huge demand began building densely packed apartment towers — a jarring sight in generally low-rise Jerusalem.

These days, Kufr Aqab's main road, which leads from the Jerusalem barrier's Qalandiya crossing to the West Bank city of Ramallah, the seat of the Palestinian self-rule government, is lined with high-rises, many still under construction.

Khaled Matouk, his wife Suhair and their four children are among the thousands of recent arrivals.

The physician, who grew up in the Old City, said he was forced to leave his previous home in the West Bank when Israel suspended his health and pension benefits for living outside the city limits. Matouk, 48, said he couldn't afford to rent or buy in areas inside the barrier, leaving him only with Kufr Aqab.

Burkan, the driving teacher, said in some ways, the absence of any local authority makes life in Kufr Aqab more relaxed. "But it's (also) difficult because there are no good streets, no (proper) sewage system, no green areas and only random building," he said.

Barak Cohen, a city spokesman, said the city continues to provide health and education services, but that a security threat in the area hampers other city services. He did not elaborate.

There are no firm population figures because of the neighborhood's administrative limbo, but estimates range from 40,000 to 60,000. In all, about 120,000 of Jerusalem's 300,000 Arabs live outside the barrier, estimates Ahmad Sublaban of Ir Amim, a group that promotes an equitable solution for Jerusalem.

There are barely any signs of an Israeli presence in Kufr Aqab, except for a clinic linked to Israel's health care service and a city-funded community center. An Israeli army marker near Kufr Aqab, spraypainted in Hebrew on a large cement block, reads "Entrance to Ramallah," a warning to errant Israelis that they should turn back at this point.

Daniel Seidemann, an Israeli lawyer and Jerusalem activist, called the chaos in Kufr Aqab an expression of the "absurdity and unsustainability" of Israeli policy in the Arab areas of the city.

It appears only an Israeli-Palestinian partition deal could end Kufr Aqab's limbo, but that seems increasingly unlikely.

Netanyahu and Palestinian leader Mahmoud Abbas have failed over the past four years to agree on the framework for renewing negotiations, and Netanyahu seems poised to be re-elected next week. At the same time, Israel has announced ambitious plans for more Jewish settlements in east Jerusalem.

In the meantime, the unregulated construction boom is causing long-term damage to areas like Kufr Aqab that would form the urban core of a future Palestine, said Ahmed Saleh, an official in the Palestinian Planning Ministry.

"One day, when we have a state, this area will be a huge obstacle to any planning and development," he said.