BETHLEHEM, West Bank – In the handsomely laid-out atrium restaurant, Nat “King” Cole was singing softly “O Little Town of Bethlehem.” Red poinsettias were everywhere, and, just outside in the lobby, the lights on a plump Christmas tree twinkled with holiday cheer: a perfect setting in a perfect city for a Christmas celebration.

Too bad the tables were empty, waiters were nowhere to be seen, and the smell of cooking was definitely not wafting across the room. Johnny Kattan, the general manager of the Jacir Palace, one of the West Bank’s grandest hotels, admitted one recent day that, despite the hopeful preparations, not only was lunch going unappreciated, but also there were no reservations for dinner that night.

Like the rest of this storied city, where, the Bible says, Jesus was born, a wan melancholy pervades this hotel and this season. Built in the glowing aftermath of the Oslo accord, the Jacir Palace was intended to reap the benefits of peace and the arrival of a Palestinian state.

But the intifadah replaced the peace. The hotel, in the Ottoman-era former palace of a rich Palestinian merchant, was shut down shortly after it was opened in 2000 as bullets flew. Reopened in June 2005, the hotel, a short distance from the gray 30-foot-high wall that Israelis built as a security barrier, pines for customers.

“We are full for Christmas,” Kattan said. “Other than that, we have extremely low occupancy, not more than 10 percent.”

During a walk around the sprawling and well-appointed five-star hotel, the only other people seen were two men who had come to check the fire extinguishers.

“We are losing money, and it is up to the owners to decide whether we will stay open,” Kattan said. “We are yet to have our grand opening.”

Bethlehem is a tourist destination for Christians; its economy depends on them. But the intifadah years, the construction of the wall, and the economic boycott imposed on the Palestinian territories by the West because of the Hamas government have sapped the city’s spirit and reduced the number of visitors to a trickle. Once, as many as 50,000 pilgrims a month came to Bethlehem. Fewer than half that do now. Last Christmas Eve, only 2,500 people braved the bitter, wet weather to be in Manger Square for the procession and midnight Mass.

“All the problems have broken our business,” said Adnan Khalil Sobeh, 36, the owner of a souvenir shop just off Manger Square. “Bethlehem is a religious city. It must be open.”

Sobeh’s only sale in the last 10 days was to two Norwegians who spent $50, he said. A taxi was parked outside his store; Sobeh drives it to supplement his income.

Out on the square, municipal workers were putting up Christmas lights. Otherwise, few Christmas decorations were in evidence. The Hamas government said it would contribute $50,000 to buy more decorations to give the city a sparkle and a bit of a face-lift.

Few tourists were in the square, and there was no need to feel rushed inside the Church of the Nativity, built on the spot believed to be the birthplace of Jesus. A group of Palestinian Muslim women were on an outing from Hebron, foreigners clustered here and there, and there was the occasional Christian Arab.

One, Jack Hazbun, 31, a Bethlehem resident, said he visited the church six days a week.

“I like to light a candle, say a small prayer, and hope for our city,” Hazbun said. Before the intifadah, the church was full at this time of year, he said. Sadly, the graphic designer said, Bethlehem “has come from being a city to being a village, as the wall has taken part of it.”

The wall separates Bethlehem from Jerusalem. It also carves from Bethlehem and puts on the Israeli side Rachel’s Tomb, a revered Jewish site that was the scene of confrontations during the intifadah. While foreign passport holders can pass freely through the wall’s gates, Palestinians, including Christian Arabs, have a tougher time.

The Israelis built the wall to provide a defense against suicide bombers and gunmen trying to cross into Israel to attack civilian targets.

“The wall is the main cause of troubles in the city,” said Bethlehem’s Christian mayor, Victor Baterseh. “It has a bad effect on tourism. It is a hindrance to pilgrimage.”

The sense of something lost is everywhere in Bethlehem. An exhibition of paintings in the gallery of a Lutheran center near Manger Square was devoid of visitors. Street vendors spiraled in from every direction when they spotted a tourist. And shop owners sat idly, enjoying this season’s unusually warm and sunny weather.

Bethlehem has always prided itself as one of the few places left in the Mideast where East and West and different religions intersect in a spirit of harmony.

“We pray the star of the Nativity will shine on Bethlehem and guide all people of goodwill toward our little town to restore its former glory,” Baterseh said.

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