BETHLEHEM, West Bank, 25 December 2003 — Protest banners overshadowed festive lights in Bethlehem yesterday as the town of Jesus’ birth observed another bleak Christmas encircled by the Israeli Army.

Israel said it was easing its military blockade imposed in the West Bank against a three-year-old Palestinian uprising to make it easier for pilgrims to reach the ancient, rose-hued town and its Church of the Nativity for Christmas celebrations.

Thousands of people gathered in Manger Square to watch the traditional pre-mass procession of clergymen led by Michel Sabbah, Roman Catholic Patriarch in the Holy Land, and a marching fife-and-drum band of boy scouts.

But almost all the spectators were poor locals, along with desperate souvenir sellers, rather than foreign pilgrims who once flocked to Bethlehem and swelled the municipal coffers.

“People used to wait all year in anticipation of Christmas. Now Christmas is like any other day,” taxi driver Naef Al-Moadi said mournfully.

Fragile calm returned to Bethlehem last summer when Israeli tanks and troops withdrew, transferring security control to local police of the Palestinian Authority, after it agreed to keep local militants in check.

But army checkpoints that still coop up the 140,000 people of Bethlehem and adjacent villages, and a massive barrier Israel is building along nearby hillsides, have left many with little hope of deliverance from isolation and impoverishment.

Draped over facades above Manger Square shops starved for customers were new protest banners saying “Stop the Wall. Don’t Turn Bethlehem into a Ghetto” and “The Holy Land Doesn’t Need Walls, But Bridges,” along with a huge portrait of Palestinian President Yasser Arafat.

Palestinians want Israel to scrap a barrier rising in the West Bank and incorporating Jewish settlements in occupied territory they seek for a state.

Fifty Palestinians added to the grim mood in Manger Square with a sit-down protest to demand the return of relatives who were militants expelled abroad in a May 2002 deal that ended an Israeli siege of gunmen hiding inside the Nativity church.

Religious pageantry once lit up the square but there was little color again this time aside from the ornaments on a towering Christmas tree outside the church and the windows of shops with ignored displays of olivewood nativity scenes.

“There are almost no tourists, only local people. There has been no work here for three years because there are no tourists,” Caroline Mickel said, standing with arms folded outside her family souvenir shop.

An elderly French tour group arrived but went quickly inside the Nativity church to attend Mass rather than check out shops.

“This is my fourth time here. I don’t like war but I’m not afraid. It is a poor place but still very nice,” said Marie-Louise Froge, 81, a member of the group.

“So many people are afraid to come. The checkpoints are such a burden. Many people think it’s better just to stay home,” said Christine Jildeh, 26, a Christian Arab from Jerusalem.

As if to punctuate her point, some Palestinian Muslim youths threw stones at Israeli soldiers guarding Rachel’s Tomb, a Jewish shrine on the main pilgrim route into Bethlehem, then at a group of Roman Catholic nuns en route to Manger Square.

Palestinian police scattered the youths. No one was hurt.

Palestinian Christians number around 50,000 out of the 3.6 million people in the occupied territories, but in Bethlehem they make up almost half the population.

For a third year in a row Israel banned Arafat from going to the Christmas Eve Mass in the 1,700-year-old Nativity church.

Arafat, a Muslim with a Christian wife, settled for lighting a Christmas tree in his half-demolished West Bank compound in Ramallah where he has been largely confined since 2001.