Visit Israel this Easter and you will find the battle is on for your heart and wallet. Once again Palestinians seem to be losing
BY THE TIME the tourist bus had made the quick trip from Jerusalem to Bethlehem, the Israeli guide had used the word "terrorist" and "terrorism" no less than 32 times. He informed the passengers that he would take no responsibility for their safety if they strayed far into the town of Bethlehem, a placid warren of ancient streets made to sound like a cross between Belfast and Beirut in the civil war.

The tourists, who had no practical knowledge of Bethlehem, filed nervously into the Church of the Nativity, viewed its Byzantine splendours and 30 minutes later had retreated to the bus. Johny Giacaman, whose family has sold olive-wood statues and mother-of-pearl boxes from their shop in the square outside the church since 1925, watched them go. "Some friends from the US tried to visit me but they were told it was too dangerous to leave the bus. The guides make them afraid," he said.

Competition for visitors has always been intense in Jerusalem and neighbouring towns like Bethlehem. These days the battle of the holy sites mirrors the conflict between Israeli and Palestinian. The guides have become political advocates. Yet few tourists understand that they have entered a minefield of political sensitivities.

IN THE approach to the millennium, when 3 million people are expected to visit Bethlehem, the tourist war is hotting up, and the Palestinians fear they may have lost it already. Hani Abu-Dayyeh, who owns two hotels in East Jerusalem and a bus company, says: "When the Israelis occupied the city in 1967, Palestinian-owned hotels had 2,000 rooms, and because we have been denied licences to build, that number has not gone up in 30 years. We have been marginalised."

Pilgrims and tourists have been the principal business in Jerusalem and the surrounding towns for 2,500 years. When Jesus was alive the population of the city would triple at Passover, which is probably why he stayed at Bethany, then as now a village on the far side of the Mount of Olives where prices were cheaper.

He would find it easier to get a room in Jerusalem today. The consequence of four years of suicide bombs and the failure of the Oslo agreement to produce peace is half-empty hotels. This week the Jewish Passover, Christian Easter and the Muslim Eid al-Adha feast at the end of the Hadj pilgrimage to Mecca coincide, which is unusual, but there are still seats available on planes landing at Tel Aviv.

Some visitors planning to see Megiddo in northern Israel - the presumed site of Armageddon, the last battle between good and evil before the Day of Judgement, which some speculators predict for the year 2,000 - are cancelling because they consider the danger from stone throwers and suicide bombers to be a graver threat. Jerusalem ought to be the world's greatest tourist magnet. As Hani Abu-Dayyeh says: "Here you have a monopoly of three of the holiest sites for three religions. We should be getting more visitors than we can handle, but what we get depends on politics." He is building three new hotels - licences for Palestinian hoteliers becoming easier to obtain in the euphoria that followed Oslo - even though his hotels are only half-full.

The Israeli Tourism Ministry insists things are not that bad, but last weekend you could eat in one of the most popular restaurants in West Jerusalem and be surrounded by empty tables. Hanna Nasser, mayor of Bethlehem, says wryly: "You can't expect tourists to sacrifice themselves." He hopes the concept of "Bethlehem 2000" will prompt the refurbishment of his city of 35,000 people., though local shopkeepers are irritated by the mayor's decision to dig up Manger Square, in front of the Church of the Nativity - one of the finest surviving churches from the early days of Christianity. Nasser believes that among the disadvantages confronting Palestinians is the fact that most tourist guides are Israelis. Only about 50 are Palestinians. He accuses Israeli guides, who emphasise the danger of Palestinian terrorism, of acting out of more than plain political prejudice; their real motive, he says, is to frighten tourists so that they stay in a group and can be conveniently shepherded into a few large souvenir stores, which pay hefty commissions to guides and travel agencies. This is bad business for shops like the Michel family's, which opened 170 years ago. Tony Michel, who gave up a career as a jazz musician in Lebanon 35 years ago to work in the shop, opens an ancient visitors' book. The signatures reflect the history of foreign rule in Bethlehem. In the early years of the First World War there are the neatly written names of Turkish officers travelling south to the front at Beersheba. In 1917 there are German officers such as Major Muller, an engineer from Heidelberg. A year later the Germans and Turks were driven away and the names of British officers become common.

But the most immediate threat to Bethlehem is a hilltop a couple of miles to the north where bulldozers are carving out dusty white tracks in the remains of a pine wood. This is Jebel Abu Ghneim, known as Har Homa to Israelis. Work on a new Jewish township started last year and brought peace talks to a halt. (Robin Cook made a memorable visit there last month.) When complete, Har Homa will stand as a bastion between Bethlehem and East Jerusalem, which was once mainly Palestinian, but which most Palestinians in Bethlehem have been unable to visit since Israel started sealing it off from the West Bank in 1993.

"MANY people in Bethlehem think Har Homa will be their economic ruin," says one local observer. "No wonder they demonstrate against it." According to Giacaman: "Israeli tour guides will use Har Homa as a base for visiting Bethlehem and neighbouring sites. We will get nothing."

Har Homa is one of several misfortunes to damage Bethlehem and East Jerusalem. Because Palestinians on the West Bank are cut off from East Jerusalem, local business languishes. The same is true in Bethlehem. Nasser says that ideally tourists should be able to visit all the sites around the city, but that tourists have to run the gauntlet through Israeli checkpoints which divide the West Bank into a mosaic of competing authorities.

Tourist guides combine religious or nationalist fervour with business opportunism. The first exhibit in the Islamic museum on the Haram esh- Sharif, on which stands the al-Aqsa mosque, is the bloody shirts of 19 Palestinians killed by Israeli troops in 1990. Palestinian guides show rather more interest in the bullet holes in a marble pillar where King Abdullah of Jordan was shot dead in al-Aqsa in 1951 than they do in the eighth-century frescoes. On the other side, a prototype for a medal commemorating Jerusalem had to be withdrawn because ultra-orthodox Jews noticed it pictured the Russian Orthodox church on the Mount of Olives with crosses above its domes. They demanded that the crosses be reduced in size. Contemporary politics are always with us in the places of Christ's birth and death.