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Tuesday, 24 December, 2002, 09:37 GMT
Business in Bethlehem lies in tatters
The aftermath of the violence in Manger Square
Manger Square: once the scene of a vibrant market

For the first time in living memory the West Bank city of Bethlehem has no tree or decorations in Manger Square this Christmas.

The old stone streets around the Church of the Nativity should have been crowded with tourists.

Basically nothing functions - there are huge restrictions on the movement of individuals and the movement of goods

Salah Abdul Shafi
Gaza economist
Workshops should have been turning out olive wood souvenirs ahead of the Christmas rush.

But business has ground to a standstill since the latest bout of unrest broke out just over two years ago.

Only Bethlehem's food markets are still crowded as shoppers scour the stalls for bargains to feed their families.

Tourist spot in tatters

Bethlehem's mayor, Hannah Nasser, is disappointed that the great expectations for the new millennium lie in ruins.

"We had succeeded in promoting this city as a lovely tourist spot, but after October 2000 we have had five incursions and this has affected our economy very badly."

The Church of the Nativity got of lightly, although there are still bullet holes on the exterior of the building following the 40-day siege of the church in April and May.

And the resulting effect on a huge number of tourist businesses has helped push the unemployment rate up to more than 60%.

Scarce visitors

"There's more than 65 factories which produce olive wood articles, more than 15 mother of pearl factories and many families work in their homes embroidering gifts," explains Lewis Michael a tourist guide in Bethlehem.

Church of the nativity with jeeps outside
Few visitors are coming to the Church of the Nativity
During the past two years, 12 hotels and 10 restaurants have closed down, and more than 100 Palestinian guides are without work, he says.

In the neighbouring village of Beit Sahour, where the angels are said to have appeared to shepherds, the Alternative Tourism travel agency is struggling on.

"Our expectations are not high, we've received 28 delegations this year, that's almost nothing compared to the first half of the year 2000," said Ayman Abu Zorloff, a director at the travel agency.

"But at least we can say we are trying to do something," he adds.

No fees

Back in Bethlehem, the town's biggest employer, Bethlehem University, remains open, although its catchment area has shrunk.

Where once it was taking in students from the West Bank and Gaza Strip, closures and restrictions on Palestinian movement mean students largely come from the immediate vicinity.

Brother Cyril Litecky, assistant to the president, says the university is maintaining the payroll but times are hard.

"The economy is in very difficult circumstances, a number of our students have difficulty paying their tuition because their parents are unemployed or under-employed," Mr Litecky explains.

Isolation

The unrest has also stopped business being conducted between the West Bank and its fellow occupied territory, the Gaza strip.

Palestinian woman with child
The occupied territories are increasingly isolated
Gaza economist, Salah Abdul Shafi, says the situation there is a disaster.

"Basically nothing functions. There are huge restrictions on the movement of individuals and the movement of goods," he says.

"There's internal closures within Gaza stopping supplies of goods getting to manufacturers and stopping manufacturers getting those goods to market."

In need of aid

The UN estimates the losses to the Palestinian economy at more than $1bn (975m euros; 624m).

Donors are now the primary source of revenue for the Palestinians.

Three years ago, the EU's budget for assistance to the Palestinian economy was 60m euros a year.

That has now risen to 300m euros.

Bleak prospects

The EU representative in Jerusalem, Jean Bretechet, says any economic activity still left should be maintained, otherwise no future Palestinian state can be viable.

Many companies have already gone bankrupt, but some continue to be active despite the very difficult situations.

"We are going to help them maintain at least a minimum level of activity so that they can re-start as soon as possible," Mr Bretechet says.

But the chances of the economy being able to recover are looking increasingly remote.

See also:

18 Dec 02 | Business
17 Nov 02 | Middle East
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