BETHLEHEM, West Bank - Bethlehem's first female mayor, Vera Baboun, can't walk through the main square of the biblical town without being stopped by admirers.
"This is our new mayor, who is turning Bethlehem into one of the greatest cities in the world!" a tour guide hollered to a group of Christian tourists passing by the Church of the Nativity, built over the grotto where tradition says Jesus was born.
Starting with Christmas celebrations - the high point of the year in the town - Baboun is hoping to turn things around in the troubled city. For the last seven years, the Islamic extremist group Hamas had a strong presence in Bethlehem's leadership, prompting a cutoff of international aid funds. But they lost their seats in October elections that brought in Baboun, who is Christian, as Bethlehem's mayors traditionally are.
The local economy is battered, with the highest unemployment in the West Bank, and local Christians continue to leave Bethlehem, which years ago moved from a Christian majority to a Muslim one. But Baboun is trying to raise hope, pointing to the Palestinians' recent boost of status at the United Nations.
"We still have a long way to go, but the Christmas season is special this year because not only do we celebrate the birth of Christ, but we are celebrating the birth of the Palestinian state," Baboun said, standing next to a 55-foot Christmas tree. "It is a Christmas of peace, of hope, and love."
The U.N. General Assembly's vote last month to upgrade the Palestinians' status to that of a nonmember observer state set off celebrations across the West Bank. The move changed little on the ground, with Israel opposing the U.N. recognition bid.
Bethlehem, like the rest of the West Bank, fell onto hard times after the violent Palestinian uprising against Israel broke out in late 2000, frightening away tourists and pilgrims. As the fighting has subsided in recent years, the tourists have returned in larger numbers. Last year's Christmas Eve celebration produced the highest turnout in more than a decade, with some 100,000 visitors, including foreigners and Arab Christians from Israel, reaching Bethlehem.
The Israeli Tourism Ministry said it expected 75,000 tourists to arrive for Christmas this year, citing last month's clash between Israel and Palestinian extremists in Gaza as a reason for the drop. It said there was a 12 percent decrease overall in incoming tourism to Israel last month. Foreign tourists heading to Bethlehem must pass through Israel or the Israel-controlled border crossing from Jordan.
Bethlehem officials say all 34 hotels in the town are fully booked for the Christmas season, including 13 built this year.
The Christmas season is the mainstay of Bethlehem's economy. When tourism lags because of politics or violence, the town lurches into depression.