As Israel announced that its troops would remain on the streets of Christ’s birthplace and that Yassir Arafat would be barred from attending celebrations, church and civic leaders announced that festivities would be kept to a minimum. The 25ft Christmas tree in the grounds of Manger Square would remain unadorned and the £130,000 display of street lights unlit.

Hanna Nasser, the Mayor of Bethlehem, said that the decision had been simple: there was no stomach for festivities in a town whose 30,000 Palestinian inhabitants have nothing to spend, little to eat and are forced to stay in their homes for days at a time.

“Our infrastructure, our buildings, streets and pavements have been destroyed. We are not able to fix the millions of pounds of damage because the Israelis have only lifted the curfew for a few days in the last three weeks,” Mr Nasser, a Christian, said.

“When people are allowed out for a few hours, they must rush to buy food and bring their sick to hospital. Nobody feels like celebrating.”

The Israeli Government insists that tanks and troops must remain on the streets to ensure security for its own citizens after a wave of suicide bombings. Israeli armour rolled back into Bethlehem after a Hamas suicide bomber living in the city killed 11 bus passengers in Jerusalem on November 21.

Yesterday Israel said that while Mr Arafat’s presence would be prohibited for the second year running, Bethlehem would remain open to everyone else. The news was greeted with anger and resignation in Manger Square.

Until last year Mr Arafat, a Muslim married into a prominent Christian family, had attended every Christmas Mass since 1995. His wife, Suha, usually turns on the tree lights.

Mr Nasser said that the Israeli action broke a tradition dating back to the British mandate, and subsequent Jordanian and Israeli control, that dignitaries were invited from the ruling authority. “This is unwise and unhelpful. They are mixing religion and politics,” he said.

Israel accuses Mr Arafat of cynically portraying himself as a guardian of Christian shrines while allowing Muslim gunmen to make the Christian population’s life a misery.

Clerics in the 4th-century Church of the Nativity — shared between Franciscans, Greek Orthodox and Armenians — insisted that Midnight Mass and other ceremonies would remain unchanged. However, in a town where 60 per cent of the population is dependent on a tourist trade that vanished upon the outbreak of the intifada, storage rooms inside the church are filled with charity parcels of flour, pasta, pulses and wheat.

Father Ibrahim Faltas, a spokesman for the Franciscans, said: “Across the world billions of people will be celebrating the birth of Jesus Christ, but here, at the centre of all this attention, Christians cannot celebrate. We don’t have the money and it is not right with people in such miserable circumstances. Our main concern is not decorations, it is getting food for the people.”

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