[BBC - Monday, 24 December, 2001, 15:56 GMT]: An atmosphere of tension and expectation has descended on Bethlehem as Palestinians wait to see whether their leader, Yasser Arafat, will successfully defy an Israeli ban on his travelling to the town for a highly symbolic Christmas Mass.

Israel has declared that Mr Arafat, who is effectively hemmed into the West Bank town of Ramallah by Israeli forces, can only attend the Mass if he arrests the killers of an Israeli government minister before midnight.

The decision has drawn wide condemnation both at home and abroad. On Monday, the Vatican weighed into the row, stepping up the pressure on Israel to reverse what it denounced as an "arbitrarily imposed" ban.

Mr Arafat has said he intends to defy the restrictions, and declared he would walk the 12 miles to Bethlehem if need be.

"No one can humiliate the Palestinians or make them lose their determination," Mr Arafat said from his Ramallah headquarters.

Elsewhere in the West Bank, Palestinian gunmen critically wounded a Jewish settler near Nablus, declaring their attack to be a direct response to the ban. One of their gunmen was killed during the exchange of fire.

But as the traditional parades got underway in Bethlehem, Israel was sending reinforcements to checkpoints around Ramallah.

According to some reports, Israeli troops were carrying out stop and search operations on several convoys leaving the city, determined to maintain the travel ban.

Raanan Gissin, a spokesman for Israeli Prime Minister Ariel Sharon, said Israel would not let Mr Arafat go to Bethlehem unless he arrests the killers of the right-wing tourism minister Rehavam Zeevi, who was shot dead in October.

Israel also wants Mr Arafat to arrest Ahmed Saadat and Jihad Ghoulmi, the two leaders of the Popular Front for the Liberation of Palestine, the militant Palestinian faction behind the attack.

"Both of them (Saadat and Ghoulmi), and the two killers (of Zeevi) are in Ramallah, and Arafat knows exactly where they are. Yet he has not arrested them," Mr Gissin said.

The United Nations, the European Union and the United States are all involved in efforts to persuade Israel to change its mind.

Belgium, which holds the EU presidency, has called on Israel to lift the ban, warning the country's reputation was at stake.

"We believe that this decision spoils a lot of positive points that Israel had gained in European opinion in the past few weeks," said the Belgian ambassador to Israel, Wilfred Geens.

"It would look very bad if Arafat were prevented from attending the Mass."

Members of Mr Sharon's cabinet have also been openly critical of the decision.

"This is a silly, inflammatory and unjustified decision," said Industry and Trade Minister Dalia Itzik of the Labor party. And the Palestinians have expressed outrage.

"This is an example of the arrogance of occupation. It's a humiliation for the entire Palestinian people, Christians and Muslims," Palestinian cabinet minister Yasser Abed Rabbo said.

Mr Sharon, he said, "is playing with fire - he wants blood and tears instead of Christmas carols".

Mr Arafat has attended Christmas Eve Mass in Bethlehem every year since the town was handed over to the Palestinian Authority in 1995.

Although a Muslim, Mr Arafat enjoys ecumenical support among Palestinians, and his wife Suha comes from a prominent Christian family.

But his talk of reaching Bethlehem by foot is thought to be optimistic, given the 72-year-old leader's age and poor health.

Even if he evaded Israeli checkpoints he would face a long, difficult hike across hilly terrain.

The likely absence of the leader comes as another blow to a town which has witnessed a drastic decline in tourism since the Palestinian uprising began in September 2000.

And correspondents say that whether Mr Arafat reaches Bethlehem or not, this year's celebrations are still likely to be a subdued affair.