As thousands danced and cheered, PLO Chairman Yasser Arafat's wife lit the Christmas tree in Manger Square on Friday, ushering in Bethlehem's first Christmas under Palestinian rule.
"We are very proud to finally be in liberated Bethlehem, the home of Christ," said Suha Arafat, flipping the switch that set a 30-foot pine aglow with red, green and yellow lights.
The Palestinian leader's wife held up for the crowd the couple's 5-month-old daughter, Zahwa.
Arriving in Bethlehem the day after Israeli troops pulled out, Mrs. Arafat was welcomed by a crowd of thousands. They danced, sang and milled cheerfully in the small plaza outside the Church of the Nativity, where the Palestinian flag and pictures of Arafat hung alongside Christmas decorations.
The church was built over the grotto where tradition says Jesus was born under a shining star.
Mrs. Arafat was born a Roman Catholic but converted to Islam before her marriage. After Zahwa's birth, Mrs. Arafat said she would teach the Bible to her child.
Arafat himself plans to address the crowds Christmas Eve from the roof of the church.
"It is the moment we have waited for since 1967," said Joma Yussuf, 25, a student at Bethlehem University. "Two days ago, the occupation was here, but under our own forces we have freedom."
Earlier, French Foreign Minister Herve de Charette saluted the crowd from a balcony overlooking the square, his palms pressed together in a salute of peace.
"I share the Palestinians' happiness," De Charette said.
The Israeli pullout Thursday ended nearly three decades of Israeli rule in the West Bank town, just five miles south of Jerusalem, which Israel occupied after the 1967 Middle East War. The Israeli troops were replaced with 850 Palestinian policemen.
Elias Freij, Bethlehem's normally conciliatory mayor, said Israeli officials were not welcome to attend the celebrations in his town.
"For 28 years, Israelis were represented here by their military governors. Maybe in three years we'll invite them," said Freij, whose town has 35,000 Muslims and 15,000 Christians.
"This is a historical night," said Freij, a Greek Orthodox Christian who is also Arafat's tourism minister. "It's time for us to prove that we are capable of running our affairs by ourselves."