In June 2002, the Israeli government decided to build a "separation barrier", also known as a "security fence" or “security wall”, along the Green Line. Its purpose is to control the entry of Palestinian West Bank residents into Israel. This decision came two years after the outbreak of the Al-Aqsa intifada and the subsequent escalation of terrorist attacks inside Israel. Jerusalem found itself on the front lines. In the first two years of the intifada more than 330 Israelis were killed in it (one third of the total victims of the terrorist attacks); more than 6000 Jerusalemites were injured.

To avoid terminology of "separation", the barrier surrounding Jerusalem was officially called the "Jerusalem envelope”. According to government sources, its length will reach 202 km upon completion. As of May 2010, most of the construction in Jerusalem was completed except for areas at the southeast end of the city (the Gush Etzion area) and the area east of Jerusalem (the Maale Adumim bloc). Recently, work has begun on a wall that will surround the village of Walaja in southern Jerusalem; a number of petitions have been submitted against this route.

The official justification for the barrier is security, namely a physical separation between the Israeli and Palestinian spaces. Yet, in Jerusalem, the barrier does not separate Israelis from the Palestinians, but rather Palestinians from Palestinians. When we examine the route of the separation barrier in Jerusalem, it appears that non-military considerations guided its delineation. These considerations include legitimizing the municipal boundaries of Jerusalem, territorial expansion and demographic considerations. For further details read here.

The route of the separation barrier was designed to leave out large swathes of Palestinian Jerusalemites. De facto, the barrier disconnects residents of the Shuafat refugee camp and the adjacent neighborhoods, Kafr Aqab, Semiramis and part of Walaja, from their center of life in Jerusalem. Now, the residents of these neighborhoods have to pass through checkpoints to enter their own city. Because of severing of these neighborhoods from Jerusalem proper, there has been a severe deterioration in municipal services, which were lacking to begin with. The residents of these neighborhoods are not receiving basic and vital services to which they are entitled by virtue of their Israeli and Jerusalem residency, such as: waste removal, police assistance, health services and more. Former Mayor Ehud Olmert said that leaving the Shuafat refugee camp and Kafr Aqab on the other side of the fence was intended to "extract" Palestinian residents in order to improve the demographic balance in the city.

Presently there are 13 active checkpoints between the West Bank and Jerusalem. Palestinians with West Bank identity cards can only cross through three of these checkpoints: Qalandia in the north, Bethlehem (Checkpoint 300) in the south and the Olive Terminal (Ras Abu Sbitan) in the east. In order to go through these checkpoints, Palestinian residents of the West Bank have to show special permits from the Civil Administration and undergo thorough security inspections. Passing through these checkpoints involves many hours of waiting, harassment and arbitrary closures. Some of the checkpoints are for commercial use only and some are open to Israeli citizens, including Palestinian residents of Jerusalem. At these checkpoints inspections are random and relatively quick.

The implications of the separation fence on the city must be examined from several angles:
1. Security- Since the wall was built there has been a substantial drop in the number of terrorist attacks. However, it is not clear whether this can be exclusively attributed to the separation barrier. Simultaneously, Israel was increasing military action in the Palestinian territories, and the Palestinian Authority was working to prevent terrorist activity from its own territory. Meanwhile, there was a rise in terror attacks by Palestinian residents of Jerusalem. 

2. Political- The fence runs more or less along the municipal boundaries of Jerusalem and includes most of the Palestinian neighborhoods and the Old City. Therefore, it is clear that the separation fence in its current route will not be able to function as the border between Israel and a future Palestinian state.

3. Socio-economic- The fence has socio-economic effects in a number of areas: freedom of movement, health, education, the mass return of Palestinian residents to the city, economic deterioration, access of the Palestinian population of the West Bank to holy sites in Jerusalem and more. For more on this subject see here.