During the first 4 decades or so of Israeli rule in East Jerusalem, the city's Palestinian residents were subjected to neglect and discrimination. Most un-built land in East Jerusalem was expropriated and turned into settlements.  They found it nearly impossible to get building permits for the remaining land.  When they built without permits, they faced fines and demolitions.  They encountered overt inequities in municipal services and even efforts to revoke their residency rights.  

But while the situation wasn't pretty, there were always lines Israel did not cross - lines that Israel is crossing today, apparently utterly unconcerned by the consequences.