JERUSALEM, April 8 (AP)--Waving palm fronds and singing hymns, Christians marched from the Mount of Olives to Jerusalem's Old City to celebrate Palm Sunday, but the crowd was only a fraction of its size in previous years.

Six months of Israeli-Palestinian fighting have almost wiped out the local tourist industry, dashing expectations that more than three million tourists would visit in 2001, a year after the Holy Land pilgrimage by Pope John Paul II.

The Palm Sunday procession follows the route that Christians believe Jesus took when he entered Jerusalem in his final week.

This year the procession was subdued, without the usual marching bands with their bagpipes and drums. The number of pilgrims at the celebrations has dropped from 30,000 last year to 5,000 this year, said Wadi Abu-Nassar, a spokesman for the Latin Patriarchate in Jerusalem.

Most of the participants were Palestinian Christians or foreign Christians on missions to the Middle East. "Last year, pilgrims had to wait two hours just to get into the Church of the Holy Sepulchre," Abu-Nassar said. "This year it is empty."

In Israel, the government estimates that about 20,000 workers in hotels, restaurants and other industries dependent on tourism have been laid off.

The Palestinian tourist industry is suffering even worse. Elias Naber, 25, who worked at the reception desk of a Jerusalem hotel, said he has not been paid for the past two months and finally quit his job.

Many Palestinian hotels have been closed, said George Abu Aitah, owner of the Paradise Hotel in the biblical city of Bethlehem. The Paradise was closed at the beginning of the fighting.

Last week, Israeli troops fired tank shells at the five-story hotel in response to Palestinian gunfire which the army said came from the building. An Israeli soldier was killed, and two floors of the hotel were destroyed. The Palestinian economy in general has been hard hit by Israeli travel restrictions imposed at the beginning of the fighting. The Palestinian finance minister, Maher al-Masri, said Friday that $20 billion have been lost in the past six months.

For Palm Sunday, Israel issued several hundred entry permits to Palestinian Christians from the West Bank. The pilgrims who came for the celebrations despite the violence sang as they marched, some of them playing guitars.

Donna Andrews, 35, from Baltimore, who was walking with her husband and three children, said she was not frightened off by the violence.

"I'm not afraid to come to celebrate Palm Sunday with Christians from all over the world in the Holy Land, especially in Jerusalem," she said.

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