If current demographic trends continue, Jerusalem could become a minority-Jewish city as early as 2045, according to a report by the Jerusalem and Brussels-based International Crisis Group (ICG).
And to stop this trend Israel may excise Palestinian neighbourhoods located east of its separation barrier, entrenching its de facto annexation of most of occupied East Jerusalem, according to the report.
Palestinian-populated areas that are part of the Jerusalem municipality, but beyond the barrier (Kafr Aqab, Shuafat refugee camp/Anata, al-Sawahra and al-Walaja) may be removed and placed in separate Israeli administrative units outside of Jerusalem's jurisdiction after a new coalition government forms following the Knesset election on September 17.
For Palestinian inhabitants, the excision would put at risk their status as Israeli residents. They - like Palestinians in the rest of the occupied West Bank would be required to obtain permits to enter East Jerusalem or Israel.
Despite all the extensive construction for Israeli Jews in both West and East Jerusalem and "severe impediments" imposed on the growth of Palestinian neighbourhoods, the Jewish-majority population has continued to shrink over the decades.
In 1967, the population ratio of Israeli Jews to Palestinians in Jerusalem stood at 74:26. In 2016, this ratio for Israeli Jews declined to 62:38, ICG wrote.
Israel's neglect of East Jerusalem has failed to push Palestinians - forced to pay municipal taxes, yet receive almost no municipal services - to leave.
A number of Israeli leaders across the political spectrum have advocated for excising Palestinian-inhabited areas of occupied East Jerusalem.
Commenting on the Palestinian population growth, Jerusalem affairs minister and candidate in the 2018 mayoral race, Ze'ev Elkin warned Jerusalemites that by 2023 municipal elections, the city may no longer have a Jewish majority.
According to Jerusalem expert Nadav Shragai, excision would turn the demographic ratio to 69 percent for Jewish Israelis and a 31 percent Palestinian population.
Political analyst of the ICG Ofer Zalzberg told Al Jazeera that if a Netanyahu-led right-wing government emerges from the upcoming elections, then it is likely they will pursue excision.
"We have already seen that Netanyahu along with virtually all the Likud supported the enabling of excision and were stopped in the last few hours by hawkish religious Zionist politicians who deemed this a perilous precedent for partition," Zalzberg said.
"Former Minister Elkin has engaged with these hawks since the failed vote and has had success in winning over some of them. This makes excision a likely scenario even if Netanyahu leads a coalition which depends on hawkish religious Zionist politicians."
Excising these areas could set a dangerous precedent, offering a model for how Israel could annex large parts of the occupied West Bank, ICG wrote.
Absorbing East Jerusalem into Israel
Along with excising the Palestinian neighbourhoods, the next Israeli government - regardless of the coalition - will "almost certainly" attempt to continue Israel's incomplete annexation by continuing to implement the five-year socio-economic plan, now in its second year.
After decades of neglecting occupied East Jerusalem, the plan was introduced in May 2018 with huge fanfare.
Allocating over $500m for 2018-2023, focussing on improving education, employment and public spaces, the plan's real goal is to assert Israeli sovereignty and ignores the dire problems in neglected areas of occupied East Jerusalem, the report noted.
Additionally, it's unlikely Israel will achieve its objective of redressing socio-economic inequality as $106m per year falls far short of the amount needed to address the gaps accumulated during more than five decades of neglect.
"The plan does not stipulate that spending is to be done only on the western side of the barrier," ICG wrote.
The increase in Israeli government and municipal presence in these areas of occupied East Jerusalem marks a "shift from broad neglect of Palestinian areas to the beginning of what is intended to be a decades-long process of absorbing most of East Jerusalem into Israel", ICG wrote.
Likud ministers, both in favour of a two-state solution and annexation, who support this shift see it as long-term policy to remould the national identity of Palestinian Jerusalemites from "Palestinian" to an "Arab of Jerusalem".
But as Israel continues to neglect these Palestinian-populated areas, they will likely deteriorate further; as such, Israel should end its ban on Palestinian Authority activities in the area and allow Palestinians to establish civic leadership bodies, the report noted.
'Exacerbate the conflict'
Israel appears intent on advancing two of the plan's most inflammatory policies - cataloguing all occupied East Jerusalem lands in the Israel Lands Registry and inducing Palestinian schools in occupied East Jerusalem to adopt Israeli curricula, both of which Palestinians staunchly oppose, ICG wrote.
Palestinians remain sceptical that Israel plans to use lands in occupied East Jerusalem to address their needs, rather than transfer them to settlers, as has been its practice over the decades.
Registering lands in Israel's registry, which would secure legal ownership for some Palestinian lands could also put much illegally built housing at increased risk of demolition and open the door to Israeli confiscation of unregistered lands.
Additionally, nearly half the plan's education budget is predicated on the acceptance of an Israeli curriculum, which Palestinians see as a threat to their identity.
"These unilateral policies would exacerbate the conflict in and over Jerusalem. They would harm hundreds of thousands of Palestinians in East Jerusalem, particularly the more than one hundred thousand Palestinians in areas Israel may excise, and present a perilous precedent for Israeli annexationist ambitions in the West Bank," the report noted.
"All stakeholders opposed to such a move should do what they can to halt these policies as a first step toward reversing Israel's de facto annexation of East Jerusalem."
Last week, the US ambassador said Israel has the right to annex at least "some" of the occupied West Bank.
"Under certain circumstances, I think Israel has the right to retain some, but unlikely all, of the West Bank," David Friedman, the US ambassador to Israel, told New York Times newspaper.
Additional reporting by Mersiha Gadzo in Doha.