Bethlehem to be encircled in steel as 'security fence' snakes its way around holy city

"We're not celebrating Christmas this year," says Yaqub Kasis, a member of Bethlehem's dwindling community of Palestinian Christians.

It should be a time of celebration for the city where Christ was born. Unlike last year, this Christmas there are no Israeli soldiers in Bethlehem's streets and the tanks have gone. "This Christmas is quieter than before," Mr Kasis says. "But it's worse. It's worse because of the wall."

Israel's "security fence" has arrived in Bethlehem. It snakes through the suburbs, close to the old stone houses. But the term "fence" is misleading. The section built in Bethlehem is made up of a triple layer concrete wall and two metal fences, one equipped with electronic sensors. The space between the two fences is patrolled by Israeli army jeeps. Israel is building hundreds of miles of fence across the West Bank. The pilgrims who travelto Bethlehem for Christmas this year will find that the city of Christ's birth is being walled off. Fears are growing that the city may soon be surrounded. The Israeli army says that the wall will not encircle the city - one quarter will remain open to the West Bank, it says.

But the Palestinian group Arij, which monitors Israeli construction in the West Bank, claims that the Israelis are planning to close the last quarter with two bypass roads. One road has already been completed near the north-eastern edge of the city and is cut off by its own protective fence. The Israelis say the new roads will be open to Palestinians, but Dr Jad Isaac, the head of Arij, says that even if they are, they will separate Bethlehem from its farmland and prevent expansion. "They are turning Bethlehem into a ghetto," he says.

It is a fate which has already befallen the Palestinian cities of Qalqilya and Tulkarem further north in the West Bank. Qalqilya is surrounded by a concrete wall complete with pillboxes from which Israeli soldiers look down on the city. The only way in and out is through Israeli army checkpoints.

Israel says the wall will stop suicide bombers crossing from the West Bank into Israel. "If that were true, why don't they build it on the Green Line?" says Dr Isaac. The Israeli government refuses to build the fence on the Green Line, the internationally recognised border between the West Bank and Israel. Instead, it cuts many miles into the West Bank, so that Jewish settlements can be included on the "Israeli" side.

International observers, including President George Bush's National Security Adviser, Condoleezza Rice, claim that Israel is attempting to establish a new de facto border. Last week, the Israeli Deputy Prime Minister, Ehud Olmert, said he wanted Israel to withdraw unilaterally from part of the West Bank and set its own borders. In an ultimatum to the Palestinians on Thursday, Ariel Sharon, the Israeli Prime Minister, warned he would embark on a "unilateral separation" plan within months if the Palestinians failed to arrest the gunmen and the suicide bombers as part of a negotiated peace. "If you look at the map you can see what Olmert is saying," says Dr Isaac. "They are saying that a Palestinian state will be limited to 40 per cent of the West Bank and Gaza Strip, crammed into separate cantons."

Palestinians who live outside the planned route of the fence face an uncertain future. Where the fence has been completed, the Israeli army has ordered that only Palestinians with permits can live between the fence and the Green Line. These permits will be issued at the discretion of the Israeli army. But the order exempts not only Israeli citizens but anyone of Jewish origin.

The situation is just as bleak for those inside the fence. The Israeli army wants to demolish Mr Kasis's home in Beit Sahour, a suburb of Bethlehem with a large Christian population, to make way for the fence. "If they demolish it, I will live on the rubble," says Mr Kasis. "I have nowhere else to take my children." Mr Kasis used to work in Israel, but since the Israeli military closures that have been imposed during the intifada, he has been unemployed. Mr Kasis lives on land that was given free for new housing by the Greek Orthodox Patriarchate of Jerusalem. He invested his savings in the cooperative that built his home. The fence will increase Bethlehem's economic problems. Workers will no longer be able to cross illegally into Israel in search of jobs.

Those living near the fence will not be the only ones to suffer, Dr Isaac said. The land either side of the proposed route was set aside for the city's future development. If Bethlehem is completely enclosed, he says, the population will become increasingly crammed in as it continues togrow. Bethlehem could come to resemble the already fenced Gaza Strip, where the cities cannot expand and the population density is 4,500 people per square kilometre - one of the world's most crowded places.

The fence has accelerated another of Bethlehem's problems: the Palestinians are leaving. Many feel that their future in the city is stark and are applying for visas for America or Europe. Mr Kasis has two relatives who have already left. Several of his friends have left too. It seems everyone in Beit Sahour knows someone who has left. They say as many as 1,000 families have left Beit Sahour since the intifada began in September 2000.

George Ibrahim, a Christian who is preparing to leave for Sweden, said: "I don't want to leave. I don't support leaving. I am doing it in spite of myself. When I look at my children, I think, 'I don't have the right to make them suffer this life'."

It is easier for Palestinian Christians to get visas and work permits than Muslims. Many have relatives in Europe and the US, and tend to be more highly educated and better qualified than Muslims. Bethlehem's Christian population is, therefore, in danger of disappearing.

Mr Kasis said: "Can you imagine Bethlehem without Christians? The Church of the Nativity without Christians?". He looks from his balcony to where the route of the fence is being prepared. "That's why they are doing this," he said. "To make us leave."