Pilgrims flock to most peaceful Bethlehem in years

BETHLEHEM, West Bank (Reuters) - Thousands of pilgrims gathered in Bethlehem on Monday for a Christmas mass promoted by Palestinian President Mahmoud Abbas and Western powers as a chance to highlight the benefits of peacemaking.

Christmas carols played through a packed Manger Square ahead of the traditional midnight mass, though the majority of those gathered were Palestinians and not the foreign tourists local vendors were hoping for.

Earlier in the day religious and political leaders arrived in the town where Christians believe Jesus was born.

At a U.S.-sponsored peace conference last month, Abbas and Israeli Prime Minister Ehud Olmert launched negotiations with the goal of reaching a statehood agreement by the end of 2008.

"The new year, God willing, will be a year of security and economic stability," Abbas said in Bethlehem. "We pray next year will be the year of independence for the Palestinian people."

Ahead of the festivities, Palestinian security forces, many carrying newly issued rifles, took up positions on the streets of Bethlehem in numbers not seen in years.

"Despite all the security, people couldn't be more friendly," said Eaddy Kiernan, 22, on holiday from the United States, about the large number of armed guards. "It's the most special place you could celebrate Christmas."

Bethlehem was particularly affected when tourism slumped during the early years of a Palestinian uprising -- or Intifada -- that erupted in 2000.

Most residents still cannot work in Jerusalem and travel freely to other Palestinian towns because of Israeli restrictions and the barrier that cuts into West Bank land that Palestinians want for a state.

Israel says the barrier, made up of a mix of wired fence and concrete walls, is meant to keep out suicide bombers. Israel allowed dozens of Christians from Gaza to travel to Bethlehem to take part in the festivities.

NO ROOM

But this year store owners say they are celebrating their most peaceful -- and profitable -- Christmas in seven years.

"We are more satisfied. The economic situation is getting a little better," said Khaled Msalam, a 42-year-old Bethlehem shop owner. "Still, people have financial trouble and can't afford a lot of our products."

Tourism, the lifeblood of Bethlehem's economy, has improved as Western powers have sought to bolster Abbas in his power struggle with Hamas Islamists who took over the Gaza Strip in June.

Nadia Hazboun, who manages a souvenir store opposite the Church of the Nativity said: "This year is better than other years because this peace process is making people feel more calm."

After struggling for years to fill rooms, many Bethlehem hotels are fully booked for Christmas.

Middle East envoy Tony Blair has been trying to improve tourist access and facilities in Bethlehem. The former British prime minister recently stayed overnight in one of the city's best hotels to send a message it is safe.

But local leaders remain cautious; tourism numbers still hover at just 60-70 percent of pre-Intifada levels, and many Western governments still warn against non-essential travel. (Writing by Adam Entous; editing by Giles Elgood)