For Palestinian leaders, waiting anxiously in the hope that US Secretary of State John Kerry unveils a peace plan when he visits this week, the need to secure East Jerusalem's future has come sharply into relief. The reason is simple: there can be no viable Palestinian state without Jerusalem as its capital.
This was the background to a March 26 pledge by the Arab League to establish a $1 billion fund to protect East Jerusalem's Arab and Islamic characters. Both have been rapidly eroded as Israel has intensified its hold on the occupied half of the city over the past decade. East Jerusalem was annexed by Israel, in violation of international law, following the 1967 war.
The urgent need for action by Arab leaders was suggested at the Doha summit last month. Palestinian president Mahmoud Abbas welcomed the fund, and indicated a lack of US commitment to solving the conflict, presumably gauged during President Barack Obama's brief visit to Ramallah.
Assuming the Arab League makes good on its commitment - similar promises have quietly been broken in the past - the fund will serve only to highlight the very problems it seeks to alleviate.
Following the outbreak of the second intifada in 2000, Israel eradicated all Palestinian institutions in East Jerusalem. Today, Palestinian residents, cut adrift from the hinterland of the West Bank by walls and fences, desperately need a financial and political lifeline - the critical importance of such support was underlined in Gaza at the weekend, when a group of Palestinians stormed an aid compound after the UN decided to scale back some handouts because of a shortage of funding.
In East Jerusalem the question is, how does the Arab League intend to deliver the aid? To whom will the funds go when there are no institutions left to receive them? And how can money be disbursed without giving Israel an oversight role that would defeat the very purpose for which the fund was set up?
The reality is that Mr Abbas and the Arab League are at least a decade too late to protect East Jerusalem. In the current circumstances, such a cash fund will do little more than salve consciences.
The extent of the crisis facing East Jerusalem was underscored in a report published in December by the International Crisis Group, a conflict resolution organisation based in Brussels and Washington. It revealed that, bereft of Palestinian institutions, political parties and security forces to maintain order, there has been rapid social breakdown in East Jerusalem.
Filling the void have been local gangsters, with Israel content to watch crime and drugs deepen social, political and religious divisions, while its own police recruit the criminals to act as informants and agents provocateur.
Israel cracks down on Palestinian nationalism or dissent, with the ultimate aim of encouraging Palestinian migration from the city.
Perhaps not so paradoxically, given the severe restrictions on organised Palestinian activity, the main actors trying to stop the descent into chaos have been Israeli.
Sheikh Raed Salah and the leaders of the Islamic Movement, one of the main parties for Palestinians in Israel, have mobilised support under the slogan "Al Aqsa is in danger", in reference to the compound of mosques in the Old City over which Israel is trying to assert sovereignty.
And Israeli leftists have set up solidarity movements to try to curb the inroads made by settlers in taking over Palestinian neighbourhoods close to the Old City like Sheikh Jarrah and Silwan.
Neither group, however, has been able to reverse East Jerusalem's growing isolation. Instead, Palestinian residents have been abandoned to their individual fates, facing off against a hostile occupier.
The traditional Palestinian strategy in East Jerusalem - of simply wishing Israel away - is clearly no longer tenable. The absence of Palestinian institutions has allowed Israel to entrench settlements, weaken the local population's cohesion, and revoke the residency of a large number of Palestinians each year.
In another sign of how completely the Palestinian Authority has been sidelined, Mr Abbas has reportedly conceded the role of protecting the Muslim holy sites to Jordan, a provision contained in Jordan's 1994 peace treaty with Israel.
Ordinary Palestinians, however, cannot look to Amman for salvation. Sensing they must adapt or perish, growing numbers are rethinking their approach.
Record numbers are applying to upgrade their residency to Israeli citizenship; the Israeli matriculation exam is being preferred over the Palestinian equivalent; more students are enrolling in Israeli colleges; some youths are volunteering for Israeli national service; and Palestinian neighbourhoods are co-operating with the municipality on street-naming.
A recent poll conducted in East Jerusalem even found that, were there a peace agreement, a majority of Palestinians in East Jerusalem would prefer to remain under Israeli rule. Those findings need to be treated with extreme caution, but they will have contributed to the unease of Mr Abbas and the Arab League.
Experts concede that efforts by Palestinians to integrate into Israeli life signal no great love of Israel. Rather, residents of East Jerusalem have understood that denied alternatives, they may have no other hope of surviving in their city. They have looked to the example of the 1.4 million Palestinians in Israel and seen that their citizenship offers limited protections even while it does almost nothing to end discrimination.
Integration, in the view of a growing number, provides a platform for a local struggle for civil rights, even if at the same time it alienates them from the national struggle. Such actions are seen as a reinvention of the Palestinian tradition of sumud (steadfastness), not capitulation.
Nonetheless, the movement of Jerusalem's Palestinians towards Israel, however reluctantly undertaken, is also a rebuke to Mr Abbas and the Arab world. Even with a pledge of $1 billion, it is difficult not to conclude that both have failed Jerusalem.
Jonathan Cook is an independent journalist based in Nazareth