Owners of stores selling carved nativity sets and other Christian souvenirs sat glumly on Tuesday in shops around Manger Square two days before Christmas, with little hope of an upturn in trade. 

"So far today there have been no tourists," said Joseph Giacaman, as he sorted yellowing postcards that have sat on his shelves since before the Palestinian uprising erupted more than three years ago. 

"When there are a few tourists they do not come here. They go to the church and then they leave," he said despondently. Giacaman's family began making and selling olive wood souvenirs about 150 years ago. 

"Many times in the past there used to be trouble but still tourists would come," he said. "But now..." he gestured at the near-empty square in front of the Church of the Nativity, in better days the centre of Christmas festivities. 

An officer for the Palestinian Tourist Police counts the handful of tourists each day, entering the statistics on his clipboard. 

"So far we have had around 20 today," said Rami the policeman. During the heyday of Middle East peacemaking in the 1990s, Bethlehem was visited by as many as 6000 tourists a day, he said. A modern bus station built then now stands empty. 

Gloomy birthplace 

Since 2000, there have been gun battles near Manger Square, Israeli army raids and a standoff between Palestinian gunmen holed up in the Church of the Nativity and besieging Israeli forces. 

Church of Nativity is the place
where Jesus is believed to be born

On Tuesday, the Byzantine-era Church of the Nativity built over the spot where Jesus is believed to have been born, was deserted, but for two guards and a monk hanging incense burners. 

Once, pilgrims would queue for hours for a brief glimpse of the manger. These days there is no wait.  

"Factories are closing. Souvenir shops are going bankrupt," he told Reuters. "Tourists are not coming and Bethlehem depends on tourism." 

Nasir said the per capita income of Bethlehem people had dropped from $2400 a year before the uprising to only $400, while unemployment had risen to 60% . 

Local Palestinians stared dejectedly as the few tourists who had braved the Israeli military checkpoints briefly visited the Church of Nativity and then left quickly. 

"The people of Bethlehem are not laughing. They are not smiling," said Rami the tourist policeman.