The hotels may not be full and Israel's "wall" may have cut it off from Jerusalem, but after five years of misery, Bethlehem is looking forward to a slightly happier Christmas.
The birthplace of Jesus Christ has been the scene of some of the most notorious episodes of the Palestinian uprising which erupted in Sept. 2000.
The Church of the Nativity was itself the site of a 38-day stand-off between Palestinian militants and the Israeli army in 2002.
PHOTO: AFP
And only this week, militants briefly occupied the offices of the mayor of Bethlehem just across Manger Square from the church to demand their integration as salaried members of the security forces.
In recent years, a black-and-white keffiyeh put on an empty chair during midnight mass to symbolize the absence of then-besieged Palestinian leader Yasser Arafat attracted the media's attention more than any other yuletide image from Bethlehem.
This time, however, civic leaders and businesses are expecting that pilgrims will start coming -- if not quite flooding -- back to celebrate Christmas in the "little town."
PHOTO: AP
A brightly decorated Christmas tree has been put up outside the church off Manger Square where shops are once more bedecked with tinsel and bunting.
Victor Batarse, the Christian mayor of the Muslim-majority town, said things were finally looking up.
"Christmas this year is special. You can see we have many more decorations than in previous years," said Batarse.
PHOTO: EPA
"We are expecting 30,000 tourists in comparison with 18,000 last year."
A symbol of the tentative regene-ration is the recent reopening of the West Bank town's main Intercontinental Hotel, which had been mothballed for four years.
Johnny Qattan, the hotel's general manager, said he was just about breaking even by operating 50 of the 250 rooms.
PHOTO: AFP
"We re-opened the hotel in June this year but we are still only partially operational because we have not had sufficient reservations," he said.
He said that tourist numbers had begun to climb again but had yet to recover to pre-intifada levels.
"People are still afraid of coming due to the unstable situation in the region."
Tourism minister Ziad al-Bandak said that the Palestinian Authority was working with its Israeli counterparts to ensure as many foreign visitors can reach Bethlehem as possible.
Israel had promised to ease travel restrictions and its roadblocks on Christmas Day to guarantee a "smooth passage" for worshippers, Bandak said.
"Our main aim is to attract tourists to come and stay overnight in Bethlehem and enjoy its hotels and restaurants," he said.
The Church of the Nativity is a must-see for Christian pilgrims on a tour of the Holy Land, but Israel's separation barrier is also impossible to miss when in Bethlehem.
In his traditional pre-Christmas message on Wednesday, the Catholic Church's chief cleric in the Holy Land accused Israel of turning the town into a "giant prison" with the barrier, which Israel says is designed to prevent attacks by Palestinian militants.
"It is abnormal for people to live in a prison," said Latin Patriarch Michel Sabbah. "It is influencing the economic and social life of the people of Bethlehem."
Bethlehem lies around 8km from Jerusalem, but the barrier has made travel times for tourists outside organized parties much longer and essentially cut the local population off from their fellow Palestinians living in the occupied east side of the Holy City.
Mahmud, a taxi driver from Bethlehem who has been ferrying locals and tourists for the past nine years, said the barrier and roadblocks were crippling tourism.
"We have no hope for tomorrow," he said. "The economic situation is getting worse and the few tourists who come by bus don't stay here."
On Christmas Eve, however, he might just be a little bit busier this year, taking visitors to midnight mass.
This time there will be no empty chair in the front row. Arafat's successor Mahmud Abbas should be the first Palestinian Authority president to attend since 2000, the last time that Israel allowed Arafat, who died last year, to attend.
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