29^th December is the annual cleaning day at Bethlehem's multi- denominational Church of the Nativity. For the rest of the year, the Greek Orthodox, Armenian and Roman Catholic clergy are content to perform their liturgies in different corners of the church, at peace with their central shared beliefs, and each other. But the territorial disputes come to a head after their moment of international television exposure each Christmas. Fifteen years ago, they erupted into what the local Palestinian Arabs now joke about as the Battle of Bethlehem.

The church's raison d'être is the cave over which it is built, the Nativity Grotto, where the Greeks hold sway. Directly above this is the wooden-beamed Armenian chapel: one beam arches over the staircase that leads down to the Greek Orthodox manger chamber. In 1984, a Greek priest perched on this beam to sweep the entrance to the grotto, and in doing so provoked a miniature holy war. Cumchucks, staves and chains that the clergy had secreted under their cassocks were used in running battles. All this must have seemed pantomimic to the Israeli authorities that had to intervene to prevent bloodshed. Under Israeli policing, speedy peace talks resulted in the final status settlement that the beam was Armenian sacred space, not a Greek climbing frame.

The peace process that Israel and the Palestinians are working through under Madeline Albright's policing is also gaining momentum: Rabin's assassination and Netanyahu's hard line stalled it for five years, but new boy Barak has indicated he believes a state of Palestine will come about by the deadline he has agreed with Arafat: 13^th September 2000. Maybe Bethlehem could once again attract the volume of pilgrim-tourism that it had before 1967, when it was in the West Bank of Jordan. The Israeli Tourist Board's current campaign for millennial pilgrims will bring coach loads of baseball-capped American Evangelicals to Jerusalem and Nazareth, but not to David's town, which like the church at its centre, is disputed territory.

The Japanese- and Swedish-sponsored “Bethlehem 2000” project is rebuilding the central Manger Square: I stand reading the contractor's information board, and watch as two giant Israeli soldiers, carrying heavy machine guns, run along the brightly sunlit, dusty road. Little boys are shouting at them in Arabic, throwing little pebbles defiantly at this symbol of the occupying enemy. Role-reversal, perhaps: I seem to remember a story about a little Jewish boy throwing stones at a Philistine giant.

There are girls there too, but they aren't throwing stones, only the boys. The girls are carrying water back home, for the hill top town has been in drought for three months. A stone's throw away, Jewish settlers in the surrounding villages swim in their private pools.

Perhaps the different religious groups sharing the church in Bethlehem are able to find a way forward because their purposes, their central beliefs, their dreams, if you like, are shared. And the Christians aren't the only dreamers: Israel was born out of a dream, an exodus from persecution in Europe, to the relative safety of a land of spiritual significance to the Jews. Palestine is another people's dream, a dream of freedom and identity.

The story of David and Goliath (the word Palestine derives from Philistine) suggests to me that the Palestinian claim to this land is at least as old as any Judaic one. The strife and tension on this Holy Land was apparent at the birth of the Holy One, whose parents were in David's town at the order of the occupying army. Overhead, the angels sang of peace, goodwill to all men. “ … The air over Jerusalem [or Bethlehem]”, Herman Melville has written, “ … is saturated with prayers and dreams … it is hard to breathe … ”. At the close of the millennium, as both sides begin to show each other more good will, to give each other more breathing space, than for many years, the hope of a new peace becomes a closer dream. And here in the cradle of monotheism, everyone is dreaming.

Tom Cooper