Jerusalem (CNN) US President Donald Trump recognized Jerusalem as Israel's capital on Wednesday and announced plans to relocate the US embassy there, upending seven decades of US foreign policy in a move expected to inflame tensions in the region and unsettle the prospects for peace.

Trump also signed a waiver officially delaying the move of the US embassy from Tel Aviv to Jerusalem for six months, a National Security Council official said. But the State Department's security arm is planning for potentially violent protests at US embassies and consulates.

CNN's Oren Liebermann, who is based in Jerusalem, walks us through what's at stake.

Why is declaring Jerusalem the capital such a big deal?

The final status of Jerusalem has always been one of the most difficult and sensitive questions in the Israeli-Palestinian conflict. For years, US policy has been to avoid declaring Jerusalem the capital of Israel in the absence of an Israeli-Palestinian peace deal, as the Palestinians also claim Jerusalem as their capital. It was argued that a unilateral decision would break with international consensus and prejudge an issue that was supposed to be left to negotiations.

Recognizing Jerusalem as the capital has also moved the United States a big step closer to relocating the embassy from Tel Aviv to Jerusalem, which would be seen as cementing Israeli sovereignty over the city.

How would the embassy move work?

In theory, moving the embassy from Tel Aviv to Jerusalem could be simple. There is already a US consulate in Jerusalem -- but the US has decided against simply switching the names on the doors, upgrading the consulate to an embassy in Jerusalem and declaring the Tel Aviv location a consulate.

Instead, Trump directed the State Department "to begin preparations to move the embassy from Tel Aviv to Jerusalem." His directive, Trump said, would allow the State Department to begin hiring architects and building contractors to build an embassy that would be "a magnificent tribute to peace."

But the challenges are not simply logistic. Moving the embassy risks setting off diplomatic crises with Arab states that could include widespread protests outside US diplomatic offices in those and other countries. There was widespread condemnation from the Arab world after Trump's decision was announced.

Give me some history ...

The United Nations partition plan drawn up in 1947 envisaged Jerusalem as a separate "international city." But the war that followed Israel's declaration of independence one year later left the city divided. When fighting ended in 1949, the armistice border -- often called the Green Line because it was drawn in green ink -- saw Israel in control of the western half, and Jordan in control of the eastern half, which included the famous Old City.

When did that change?

During the 1967 Six-Day War, Israel occupied East Jerusalem. Since then, all of the city has been under Israel's authority. The city marks "Jerusalem Day" in late May or early June. But Palestinians, and many in the international community, continue to see East Jerusalem as the capital of a future Palestinian state.

Who lives in Jerusalem?

Roughly 850,000 people live in Jerusalem -- 37% are Arab and 61% are Jewish, according to the independent think tank Jerusalem Institute. The Jewish population includes around 200,000 ultra-Orthodox Jews, with the rest split generally between religious Zionist and secular Jews. Of the city's Arab population, 96% is Muslim; the other 4% is Christian.

The vast majority of the Palestinian population lives in East Jerusalem. Although there are some mixed neighborhoods in Jerusalem where both Israelis and Arabs live, most of the neighborhoods are split.

Have any countries ever had their embassy in Jerusalem?

Yes. Before 1980 a number of countries did, including the Netherlands and Costa Rica. But in July of that year, Israel passed a law that declared Jerusalem the united capital of Israel. The United Nations Security Council responded with a resolution condemning Israel's annexation of East Jerusalem and declared it a violation of international law.

So countries moved their embassies out of the city?

Correct. In 2006, Costa Rica and El Salvador were the last to move their embassies out of Jerusalem, joining the rest of the world in locating their embassies in Tel Aviv.

What about consulates?

Some countries do maintain consulates in Jerusalem, including the United States, which has one in the western part of the city. Other countries -- such as Britain and France, for instance -- have a consulate in the eastern part of the city, which serve as their countries' main representation in the Palestinian territories.

What was America's position before Trump's announcement?

The US has never had its embassy in Jerusalem. It has always been in Tel Aviv, with the Ambassador's residence in Herzliya Pituach, about 30 minutes north.

That sounds pretty straightforward ...

Wait a minute, it gets more complicated. In 1989, Israel began leasing to the US a plot of land in Jerusalem for a new embassy. The 99-year lease cost $1 per year. To this day, the plot has not been developed, and it remains an empty field.

OK. Keep going...

In 1995, the US Congress passed a law requiring America to move the embassy from Tel Aviv to Jerusalem. Proponents said the US should respect Israel's choice of Jerusalem as its capital, and recognize it as such.

So why hasn't the embassy moved before now?

Every President since 1995 -- Presidents Clinton, Bush and Obama -- has declined to move the embassy, citing national security interests. Every six months, the President has used the presidential waiver to circumvent the embassy move.

How have Israelis responded to this?

The Israeli government has lauded Trump's pledge to follow through with the embassy move. Prime Minister Benjamin Netanyahu praised Trump for making the decision and called the move an "important step towards peace, for there is no peace that doesn't include Jerusalem as the capital of the State of Israel."

Jerusalem Mayor Nir Barkat, one of the most outspoken advocates of the move, told CNN that Trump's decision was "the right thing to do, and here in Jerusalem and Israel we applaud the President."

Netanyahu said he hoped other countries will follow the US lead and relocate their envoys.

And what do the Palestinians make of it all?

Palestinian leaders are adamant that an embassy move to Jerusalem would be a violation of international law, and a huge setback to peace hopes.

President Mahmoud Abbas has turned to other world leaders, including Russian President Vladimir Putin and Jordan's King Abdullah, to help pressure Trump to change his mind. The Palestine Liberation Organization has suggested it would consider revoking its recognition of Israel, and canceling all agreements between Israelis and Palestinians, should the move take place.

In the aftermath of the announcement, Abbas said it would stoke extremism in the region. Hanan Ashrawi, an executive committee member of the Palestine Liberation Organization, said it meant the "death knell of any peace process."

More immediately, there are fears it could set off a wave of unrest -- perhaps even street protests and violence -- in the Palestinian territories and across the Arab world.