Slumped on a cheap plastic chair in the protest tent that has become his second home, Jawad's eyes blazed momentarily as he vented his rage. "Just because we're Palestinian, does that mean we have to believe their lies?" he spat, when asked how he felt about the claim that Jerusalem was now a "united" city.

"Everything's become worse [since the occupation]", he continued. "We pay almost 50% of the municipality's budget, and get less than 2% of the services in return. Our families are scared to visit us in Silwan, ever since the settlers set up home here; the settlers have stolen all of our trade by encouraging the tourists to only buy from them; they're trying to turn the whole of our village Jewish – and there's every likelihood that they'll succeed".

Jawad, a veteran activist who has been taking on the settlers in his home town for years, was in no mood to join in the celebrations that had engulfed the Jewish population of Jerusalem. Yards from where he was sitting, hundreds of jubilant partygoers had swarmed in to the grounds of Ir David (City of David), where a free concert was in full flow to mark Yom Yerushalayim, the 41st anniversary of Jerusalem's unification.

"I call it 'Occupation Day'", muttered Jawad bitterly. "I am very pessimistic about the future; I don't see a peaceful solution whilst the settlers have all the power". Those same settlers were making their presence fully felt with the sound and light show they had put on in the middle of the predominantly Arab district of Silwan. Sponsored by rightwing millionaire Irving Moskowitz, the event had attracted an enormous audience, including notorious Women in Green head Nadia Matar.

"What does unification mean to me? [Ultimately], from the Nile to the Euphrates", she declared, when asked by my friend. Her sentiments were shared by almost everyone we met inside the venue, many of whom were utterly unconcerned with the side-effects of their fervent nationalism.

"I don't feel guilty at all about capturing their territory", said a wiry man sprawled on the grass listening intently to the music blaring out from the sound system. "If they don't like it, they can leave".

"Life's tough", shrugged Rabbi Pesach Lerner, an associate of Moskowitz who had flown in from New York for the show. "They kicked us out of here first, so now we're taking back what's ours", he boomed, warming to his theme and brushing away any dissenting opinion espoused by my friends and me.

We then fell into conversation with a young religious man who had been tasked with interviewing members of the audience for a promotional film commissioned by the organisers. He quickly realised his mistake in seeking our opinion and, once he turned off his camera, it was our turn to quiz him on his reasons for celebrating the event in such a brazen and provocative fashion in the midst of a Palestinian village.

Pointing at the scores of Arab houses with a front row view of the open-air concert, my friend asked him "Is this event a hand reaching out in peace to our fellow residents of Jerusalem?" "I'm not sure", came the man's hesitant reply. "You have to understand, this is an event for Zionism; not an event for world peace…"

That much was clear; as Jawad and his peers sat listlessly in their protest tent over the road, listening to the jubilation and joy with which their neighbours celebrated the conquest of the Arab half of the city, his anger was matched only by his sad air of defeat. The sheer number of celebrants he watched stream in and out of Ir David only served to convince him how futile his struggle was to bring justice to the village of Silwan, as well as to the Palestinian people at large.

"There are the ideological settlers, of course", he said. "But [compounding the problem] is the majority of the Israeli population. Either they are naïve and have no idea what is being carried out in their name, or they simply don't care about the Palestinians' suffering. We try our best to educate the Israeli public about what is going on, but we have less than one percent of the funds that the settler groups have with which to publicise the reality".

The contrast between the unrestrained delight on one side of the street and the despair and resignation on the other was stark: the Jewish joy was the Palestinians' pain. The streets were filled with buoyant, buccaneering gangs of Jewish youths proudly waving outsized Israeli flags as they marched round the Old City, as well as the occasional Palestinian walking past with head bowed, hoping to avoid bearing witness to the carnival of conquest.

If this was the unity that the authorities spoke of when promoting Yom Yerushalayim, then clearly they were lacking etymological prowess, tact or simple understanding of the reality of life for the non-Jewish half of Jerusalem that had been forced to become part of the "unified" city.

For Jawad and his peers in Silwan, there was no question that the event was just another chance for the Zionist nationalists to kick them while they were down – and, it seemed, those doing the kicking weren't denying it either. "Life's tough"; "I don't feel guilty…"; "From the Nile to the Euphrates"; phrases that rang out far louder than the music emanating from the stage, and sentiments that showed the true colours of those championing the cause of conquest and capture for another year.