Several thousand pilgrims celebrated Christmas Eve in the traditional birthplace of Jesus yesterday, welcoming the new thaw in Israeli-Palestinian relations since the death last...

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BETHLEHEM, West Bank — Several thousand pilgrims celebrated Christmas Eve in the traditional birthplace of Jesus yesterday, welcoming the new thaw in Israeli-Palestinian relations since the death last month of Yasser Arafat.

While the crowds were larger than in any year since the fighting began in 2000, the numbers were far smaller than during the boom period of the 1990s, when tens of thousands of people would flood in for Christmas. Many of yesterday’s visitors were West Bank Palestinians, and in a cold, bitter rain, shopkeepers lamented that business remained in the doldrums.

In a sign of the growing cooperation, interim Palestinian leader Mahmoud Abbas was allowed to join the celebration, where he was greeted by cheering crowds. Israel prevented Arafat, his predecessor, from attending the celebration since 2001, accusing him of advocating violence.

“It’s a troubled time in the Middle East, but we live in hope,” said Joyce Maykut, 55, a Canadian lawyer who came from her home in the United Arab Emirates. She said the hopeful atmosphere in the region attracted her to Bethlehem, despite safety concerns.

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The celebrations in Bethlehem came as Christians around the world marked the holiday. At the Vatican, Pope John Paul II lit a candle for peace in his window before celebrating a midnight Mass in St. Peter’s Basilica. The service was attended by some 10,000 people and watched by tens of millions live on television in more than 70 countries, including several predominantly Muslim nations.

The 84-year-old pope, who has difficulty speaking, limited his sermon to a mere eight paragraphs — the shortest of his 27 Christmas seasons as pontiff. They included a plea that “peace, announced by the angels on this holy night, is enjoyed by all the humanity that God loves.”

All through the day, pilgrims descended on St. Peter’s Square, admiring the 105-foot Christmas tree and a new fleet of Italian police minicars deployed in the latest security measure for the already heavily protected piazza.

Welcome change

In Bethlehem, the celebratory atmosphere was a welcome contrast to recent years. During the fighting, Bethlehem has been ringed by Israeli checkpoints and a huge separation barrier has been erected. However, on Christmas Eve, troops handed out candy as they allowed pilgrims, including Palestinians, to pass easily through the roadblocks.

The celebration gave an important boost to Abbas, who is seen as the front-runner in the Palestinian presidential election Jan. 9. He received a loud ovation when he arrived and was mobbed by Palestinians whenever he appeared in public. Abbas, a Muslim, also stopped at a mosque to pray.

“We ask God and wish that all the religions in this country will live in peace and security,” Abbas said. “I hope next year will be much better than the previous ones.”

Israeli Prime Minister Ariel Sharon sent Christmas greetings.

The Israeli army said about 5,000 people had come to Bethlehem, including nearly 300 Palestinians permitted to travel across Israel from the Gaza Strip.

Bethlehem, battered by more than four years of bitter fighting between Palestinians and Israelis, wonders whether it can ever revitalize a tourism industry that was once its lifeblood. And city fathers sadly concede that the long-standing exodus of Palestinian Christians, a living link to Bethlehem’s place in the biblical canon, is probably irreversible.

Still, the city was able to conjure up something of its centuries-old Christmas spirit.

Festive crowds packed Manger Square — the stone-paved courtyard outside the Church of the Nativity, which Christians believe is built on the grotto where Jesus was born — with Santa-shaped balloons bobbing in night air scented by the deep-fried aroma of falafel, the quintessential Middle Eastern snack food. Most of the celebrants in Bethlehem were local Palestinians, including throngs of young Muslim men and boys seeking any excuse for a night out from one of the city’s grim Palestinian refugee camps.

The few foreign tourists mostly belonged to organized church groups, rather than the solo travelers who could be found venturing to the West Bank on their own in the years before the intifada broke out in September 2000.

“I’m just delighted to be here,” said Chris Shepherd, 41, of Columbus, Ohio. “It’s absolutely incredible. I’ve just been overwhelmed by the friendliness of people.”

The four years of violence have dealt a severe blow to Bethlehem’s economy, which relies heavily on tourism. Dozens of souvenir shops and restaurants have shut down. Hotel rooms have remained mostly barren, and Christians have been moving abroad.

Palestinian shop owners said business remained weak.

“It’s better than any [recent] year, but it’s also bad,” said Rony Tabash, a 23-year-old shopkeeper. He said he had rung up a mere $40 in sales, compared with thousands of dollars during the boom years.

But there were signs of better times on the horizon. Bethlehem’s landmark Paradise Hotel, which was wrecked by fighting early in the intifada, completed a remodeling that allowed it to reopen for this Christmas with a modest but welcome clientele.

“Hope hasn’t disappeared here,” said Muslim housewife Mariam Jamal, toting her 4-year-old son Ramis across Manger Square. “But we are still waiting for better times.”

Material from Reuters is included in this report.