It is undisputed that East Jerusalem falls under Israel's sovereignty.
East Jerusalem . In 2000 , the Palestinian Authority passed a law proclaiming Jerusalem as such , and in 2002 , this law was ratified by then chairman Yasser Arafat , although Israel does not allow Palestinian government offices in East Jerusalem . Israel . The Palestinian Authority sees East Jerusalem as the capital of a future Palestinian state . It extended its laws to the Golan Heights and East Jerusalem , but not the West Bank . The country 's second largest group of citizens are Arabs , at 20.8 % ( including the Druze and most East Jerusalem Arabs ) .