 All is quiet in Bethlehem. On Manger Square, the Church of the Nativity stands in the pale gloom of dusk, its doors open to passing pilgrims. But inside, the nave is empty of visitors and the collection boxes depleted of coins. In the candlelit grotto downstairs, a silver star marks the spot where Jesus is supposed to have been born.
It is one of the most sacred sites in Christendom, but there are no tourists queuing to see it. Just 500 yards down the road, Joseph Canawati is not looking forward to Christmas. The expansive lobby of his 77-room Hotel Alexander is empty and he says: "There is no hope for the future of the Christian community. We don't think things are going to get better. For us, it is finished."
Life for Palestinian Christians such as 50-year-old Joseph has become increasingly difficult in Bethlehem - and many of them are leaving. The town's Christian population has dwindled from more than 85 per cent in 1948 to 12 per cent of its 60,000 inhabitants in 2006. There are reports of religious persecution, in the form of murders, beatings and land grabs.
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Meanwhile, the breakdown in security is putting off tourists, leading to economic hardship for Christians, who own most of the town's hotels, restaurants and souvenir shops. The situation has become so desperate that the Archbishop of Canterbury, Dr Rowan Williams, and Cardinal Cormac Murphy O'Connor, the head of the Roman Catholic Church in England and Wales, are to lead a joint delegation to Bethlehem this week to express their solidarity with the beleaguered Christian populace.
The town, according to the Cardinal, is being "steadily strangled". The sense of a creeping Islamic fundamentalism is all around in Bethlehem.
A mosque on one side of Manger Square stands directly opposite the Greek Orthodox and Roman Catholic churches, while in the evening the muezzin's call to prayer clashes with the peal of church bells.
Shops selling Santa Claus outfits and mother-of-pearl statuettes of the Virgin Mary have their shutters painted a sun-bleached green, the colour of Islam. And in the Al-Jacir Palace, Bethlehem's only luxury hotel, there is a baubled Christmas tree in reception and a card showing the direction of Mecca in the rooms.
George Rabie, a 22-year-old taxi driver from the Bethlehem suburb of Beit Jala, is proud of his Christianity, even though it puts him in daily danger. Two months ago, he was beaten up by a gang of Muslims who were visiting Bethlehem from nearby Hebron and who had spotted the crucifix hanging on his windscreen. "Every day, I experience discrimination," he says. "It is a type of racism. We are a minority so we are an easier target. Many extremists from the villages are coming into Bethlehem."
Jeriez Moussa Amaro, a 27-year-old aluminium craftsman from Beit Jala is another with first-hand experience of the appalling violence that Christians face. Five years ago, his two sisters, Rada, 24, and Dunya, 18, were shot dead by Muslim gunmen in their own home. Their crime was to be young, attractive Christian women who wore Western clothes and no veil. Rada had been sleeping with a Muslim man in the months before her death.
A terrorist organisation, the Al-Aqsa Martyrs Brigades, issued a statement claiming responsibility, which said: "We wanted to clean the Palestinian house of prostitutes."
Jeriez says: "A Christian man is weak compared to a Muslim man. "They have bigger, more powerful families and they know people high up in the Palestinian authority."
The fear of attack has prompted many Christian families to emigrate, including Mr Canawati's sister, her husband and their three children who now live in New Jersey in America. "I want to leave but nobody will buy my business," Mr Canawati says. "I feel trapped. We are isolated."
This isolation was heightened when, last year, Bethlehem found itself behind Israel's security wall, a 400-mile-long concrete barrier which separates Jewish and Palestinian areas and is designed to stop suicide bombers - in 2004, half the Israeli fatalities caused by such attacks were committed by extremists from Bethlehem.
Last year, tourists trying to get to the town were forced to queue for hours as their papers were checked, while Bethlehem inhabitants going the other way must now apply for an infrequently granted permit to visit Jerusalem, barely ten minutes away by car. "It is like living in a prison," says Shadt Abu-Ayash, a 29-year-old Roman Catholic shopkeeper.
The Roman Catholic Mayor of Bethlehem, Dr Victor Batarseh, says: "The political situation in Lebanon and the instability of politics in Palestine has affected tourism and pilgrimage. "Hotels, restaurants and souvenir shops are owned by mostly Christians so it affects them badly. We have 65 per cent unemployment and about 2,000 bedrooms in hotels that are empty."
Bethlehem's hotel owners estimate that tourist numbers have dropped sharply, from 91,276 each month for the millennium celebrations in 2000 to little more than 1,500 a month now.
During the past six years, 50 restaurants, 28 hotels and 240 souvenir shops have closed.
Samir Qumsieh is general manager of Al-Mahed - Nativity - which is the only Christian television station in Bethlehem. He has had death threats and visits from armed men demanding three acres of his land - and he is now ready to leave. "As Christians, we have no future here," he says. "We are melting away. Next summer I will leave this country to go to the States. How can I continue? I would rather have a beautiful dream in my head about what my home is like, not the nightmare of the reality." 
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