Calm brings record tourism to Bethlehem

Yet the economy has a deep hole to climb out of. Hemmed in by hundreds of Israeli military checkpoints, Palestinians have been struggling, with international donors contributing $1.75 billion to keep the government running. The private sector has been in retreat. A recent World Bank report said that the economy won't fully recover unless Israel removes more restrictions on movement and allows West Bank residents access to agricultural land.

"These are wonderful sparks of potential," says one Western diplomat who requested anonymity. "But now the Israelis have to enable it to explode."

When the Bush administration convened Israelis, Palestinians, and Middle East allies in Annapolis a year ago, boosting prosperity in the West Bank was part of a plan to encourage support for peace negotiations and the government of Palestinian President Mahmoud Abbas – at the expense of Hamas, which controls Gaza.

Since then, negotiators failed to meet a deadline for a political accord set for the end of the year. The political vacuum opened up by change in Israeli and US governments has left progress on the economy in the West Bank as one of the sole bulwarks of the peace process.

For Christmas Eve and morning, Israel's Tourism Ministry arranged a free shuttle to ferry pilgrims hourly between Jerusalem and Bethlehem. At the Bethlehem crossing point this week, a soldier hung a Tourism Ministry banner with holiday greetings for tourists. Israeli officials say they see Bethlehem and Jerusalem as part of the same package for tourists.

In Manger Square, Montreal native Ryan Roe says he is vacationing in the region for the first time since moving to Abu Dhabi to work as an investment banker. The passage from Jerusalem to Bethlehem was unexpectedly hassle-free. "We showed up at the wall and there was no one in line," he says. "They didn't even check our passports. It was like zero security."

Palestinians complain that they're getting only a fraction of tourism revenues because most of the visitors' time and cash is spent in Israel. And Israel has approved only about 40 of about 200 requests for entry permits for Palestinian tour guides.

Moreover the tourism revival is concentrated in Bethlehem and Jericho. If in 1999 the industry was 10 percent of Palestinian gross domestic product, in 2008 it accounted for only 4 percent, according to the World Bank.

At a souvenir shop near Shepherds' Field, owner Linda Elias says that anywhere from 10 to 30 buses show up daily, but few tourists linger. "We want this wall to go and we want our rights. But we don't want another war. We want peace," she said. "I pray some people will come."

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