For the second year in a row Christmas will come and go almost without notice in Bethlehem, the place where it all began. Christmas Eve in Manger Square used to begin with chaotic arrival of the Latin Patriarch's procession and traffic ground to a halt as tourist buses jammed the narrow streets. Boy Scouts paraded and children on holiday from school crammed into the square. In the evening choirs from around the world sang carols for the crowd of locals and pilgrims waiting for midnight mass to begin. Souvenir sellers rang up sales amounting to one third of their annual takings. This year, the only concession to the festive atmosphere will be a possible lifting of the Israeli military curfew from 8 am to 4 pm. The spirit is not there any more.

On this Monday morning the place looks dismal. Grey skies and intermittent rain set the scene. Even though curfew has been lifted, the streets are largely deserted. People are either not in the mood to go out or else don't have even the price of a cup of coffee or a falafel. After two years of being either sealed off from Jerusalem and the surrounding villages or under curfew, everyone's wallets are empty. In many homes in the Christian communities of Bethlehem and neighbouring Beit Sahour, no one has had any regular paid work since March. For the children in these families Santa Claus will not be coming to town.

On days when the curfew is lifted for a few hours, the Israeli soldiers withdraw to the outskirts where they man a series of checkpoints. Early in December, Israeli President Moshe Katsav during an official visit to the Vatican, told Pope John Paul II the military occupation of Bethlehem would end in time for the Christmas holiday but this idea was swiftly quashed by the Sharon government.

Suzan Sahori lives in Beit Sahour, a town of 13,000, mostly Christians, adjoining Bethlehem. "It's so depressing, we used to decorate the town with lights all the way down the hill from Bethlehem," she says, "but this year, nothing." She too misses having tourists around and hearing Christmas carols. "Thank God I'm still working and my two children will be getting a few presents. But what about families who haven't had any income for a whole year and they have five or six kids?" Suzan says hardship and deprivation in the community are widespread, "the economy never suffered like this." The Sahori home will be dark and quiet on Christmas day, Suzan has decided to accept an invitation from a relative who lives in Germany and spend the holiday there. In her heart she'd rather be at home but says anything is better than spending Christmas morning in a church with an Israeli tank parked outside. For people with no opportunity to travel, their main hope is that the easing of the curfew which began on Dec 15th will continue over the holiday.

The Israeli cabinet has decided that Yasser Aright will also be missing Christmas in Bethlehem again this year. The Palestinian leader is a Muslim but celebrated Christ's birth in the Church of the Nativity since control of Bethlehem passed to the Palestinian Authority in 1995. Arafat cannot make the journey from his headquarters in Ramallah to Bethlehem unless the Israelis permit it and a friendly government loans a helicopter. His presence in the Ramallah office compound also guarantees the safety of Palestinians the Israelis want to apprehend who have taken refuge there.

Bethlehem's' souvenir shops are shuttered and at The Star Hotel the phone rings unanswered. A workman outside the small church at Shepherd's Fields in Beit Sahour can't recall when he last saw a tourist. The few foreigners in town are either NGO workers or human rights activists like Georgina Reeves who come to show some solidarity with the Palestinians. Georgina has spent eighteen months in Bethlehem and will soon be returning to the UK. She believes the total lack of Christmas joy reflects a deeper malaise, which is wearing down everyone in Bethlehem, Christians and Muslims alike. "People are very despondent about the situation and many want to leave," she says and describes a bleak situation where young people, unable to either attend school or earn a living, are making strenuous efforts to get to America or Europe. "Parents are terrified about what kind of future their children will have here," says Reeves, "it's so depressing even hope is dying."

Before deciding to spend the holiday in Germany, Suzan Sahori sent a bleak Christmas letter by e-mail to friends around the world. In it she wrote, "Is Christmas Day going to be just another day that passes by with our lives continuing to be a waste? Life for us is with no hope for the future, no hope for peace and justice to prevail in our region. We are terrified of the expected action against Iraq, which appears to be imminent.