Jerusalem - A right-wing Israeli settlement group has been put in charge of two controversial new projects to develop the area around al-Haram al-Sharif, or Noble Sanctuary, the compound of holy sites that includes al-Aqsa mosque and the golden-topped Dome of the Rock.

Elad received planning approval this month to develop a huge visitors’ centre, called the Kedem complex, in a former car park just outside the Old City walls in the Palestinian neighbourhood of Silwan. While the visitors’ centre will give Elad a base less than 20 metres from the Old City, a second project could extend its reach to the retaining wall of al-Aqsa mosque itself.

Al-Haram al-Sharif compound has been the most contested piece of territory in the Holy Land since Israel occupied Jerusalem’s Old City in 1967, along with the West Bank and Gaza Strip. Tensions have been heightened recently, as extremist Jews have begun entering the compound in larger numbers, with quiet backing from Israeli officials. The groups have sought to overturn a long-standing rabbinical prohibition on praying on the Temple Mount.

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Israeli housing minister Uri Ariel, a hardline settler himself, chose Elad to manage an area known as the Jerusalem Archaeological Park, immediately south of the Western Wall. Renovations there will extend the prayer area for Jews. Last week, the Jerusalem Magistrates Court put Elad’s management of the park on hold until it ruled on the deal.

Yehudit Oppenheimer, director of Ir Amim, an Israeli group advocating fair treatment for Palestinians in Jerusalem, said the Kedem complex was the final piece Israel needed to secure its complete control over the area around al-Haram al-Sharif: "Now tourists will enter from Jaffa Gate [an entrance from West Jerusalem into the Old City], walk through the Jewish quarter, see the Western Wall, visit the City of David and get their information from the Kedem complex," she told Al Jazeera.

It is an organisation with a clear agenda to bring settlers into Palestinian parts of East Jerusalem. Now its control will reach right up to the limits of the mosques. - Kais Nasser, Palestinian lawyer

She said the experience would reinforce both the idea of Israel’s physical control of the area and a hardline nationalist narrative associated with Israel’s far right. "The sites and signs will look Israeli; all the information and tours will consolidate an exclusively Jewish narrative," Oppenheimer said. "Most Israeli and foreign tourists will have no idea that they are in Palestinian territory. It will feel to them like they are still in Israel."

Israeli authorities have already given Elad large areas of Silwan, even though it is located in occupied East Jerusalem, to excavate an archaeological park called the City of David, disrupting the lives of 35,000 Palestinians. Elad had helped some 300 settlers take over Palestinian homes in the area, creating armed encampments around the park, according to Ahmed Qaraeen, a Silwan community leader.

The City of David is the only example of a private organisation gaining control of a national park in Israel, giving it effectively governmental powers. Normally, an archaeological park would be jointly run by the Antiquities Authority and the Nature and Parks Authority. Israel’s High Court backed the special arrangement with Elad in 2012 after receiving assurances that its work would be closely supervised by the Parks Authority. An internal report from the authority in January, however, revealed the promise was ignored and Elad had unchecked control over the City of David and provided almost all of the information and tours to visitors.

According to Kais Nasser, a Palestinian lawyer who represents "The Islamic Council within the Green Line", a coalition of Islamic groups inside Israel, allowing Elad to develop the two sites is "outrageous".

"It is an organisation with a clear agenda to bring settlers into Palestinian parts of East Jerusalem. Now its control will reach right up to the limits of the mosques," Nasser told Al Jazeera.

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Last month, European Union diplomats in Jerusalem warned in an internal report leaked to the Israeli media: "There remains a significant risk that incidents at this highly sensitive site, or perceived threats to the status quo, may spark extreme reactions locally as well as across the Arab and Muslim world." They were especially concerned that changes by Israel might serve as a prelude to dividing control of the al-Haram al-Sharif compound, or to offering separate prayer times for Muslims and Jews.

That would echo what happened in Hebron, where extremist settlers were given rights over part of the Ibrahimi mosque – or what Israelis call the Tomb of the Patriarchs. The site quickly turned into a flashpoint that is remembered for the massacre of Muslim worshippers by a Jewish settler, Baruch Goldstein, in 1994.

Israel wants to make sure visitors don’t interact with us or hear our stories. - Ahmed Qaraeen, community activist

Daniel Seideman, a lawyer who is an expert on Israeli policies in Jerusalem, said the Israeli government was increasing its efforts to create “settlement enclaves” in Palestinian neighbourhoods and thereby "Hebronise Jerusalem".

Elad’s visitor centre is expected to substantially increase the number of Israeli and foreign visitors to the City of David. The Jerusalem municipality, which backed the project, has said the Kedem complex was the cornerstone of its efforts to increase the number of tourists to the City of David to "some 20 million annually". Tourism to the site has grown quickly over the past decade, with the number of visitors rocketing from 25,000 in 2001 to some 500,000 today.

Uniquely, the new visitor centre, which will reportedly be more than 16,000sqr m, is to be built over important archaeological remains that have been excavated over the past decade.

"Elad says the building will protect these remains, but the reality is that they will inevitably be damaged. Nowhere else in the world would you find a site of this importance being treated this way," said Yonathan Mizrachi, head of Emek Shaveh, an organisation of Israeli archaeologists opposed to using archaeology for political ends.

The Jerusalem municipality was unavailable for comment.

Zeev Orenstein, a spokesman for Elad, denied suggestions that the Kedem complex would promote an exclusively Jewish narrative of Jerusalem. He said it would exhibit the "antiquities of the many civilisations that once inhabited ancient Jerusalem… in a way in which all people will be able to appreciate their significance".

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Community activists in Silwan, meanwhile, warned that their homes were being physically damaged by the excavations, some of which extend under their houses. Qaraeen, who lives a few metres from the intended site of the Kedem complex, said his home - like many in Silwan - was subject to a demolition order.

"The municipality says we cannot have planning permits because Silwan lacks a master plan. And yet this massive visitor centre can get planning approval from the municipality and the planning authorities, even though it is supposed to be in a national park. Elad is like a state within a state - different rules apply."

He added that Israel was trying to force Palestinians into "ghettos".

"None of us can get permits to create businesses, such as a restaurant or guest house, to benefit from the tourism. Israel wants to make sure visitors don’t interact with us or hear our stories."