The sleek, air-conditioned tourist buses still clog Manager Square in a hopeless jumble of traffic, and camera-laden pilgrims expectantly throng the ancient Church of the Nativity, where Christians believe Jesus was born two millenniums ago.

But out of view of the tourists, in the warren of narrow cobblestoned streets that climb haphazardly up the steep hillsides surrounding the town, all is not so normal.

Crude splashes of red paint on a dozen Arab shops spell out in Hebrew letters the word sagur, which means "closed." The signs are for the convenience of the Army patrols that cruise through the back streets regularly, looking for shopkeepers who may have violated selling bans imposed because stones wer thrown at soldiers in the vicinity.

The resentful faces of Arab men stare out into the street from the shadows of coffee houses as they talk for hours about the state of their town. Business is not good, they say, because the tourists have been told by their guides that all of the occupied West Bank of the Jordan River is very tense, and that it is not safe to stray far from the garish souvenir shops in Manager Square that sell mother-of-pearl trinklets, crowns of thorns and luminescent paintings of the nativity.

In the municipal building, civil servants go through the motions of keeping Bethlehem's bureaucracy functioning. They sit and drink endless cups of mint tea and shuffle papers as they talk to one another.

But little more than the most mundane of official business can be transacted, because the town no longer has a mayor. And under Jordanian laws, which still apply here and elsewhere in the West Bank, executive power is invested only in the mayor. Nobody else can sign checks drawn on the municipal account, and nobody else can sign contracts or other legal documents of any significance.

The mayor, Elias Freij, who for 10 years has been regarded as the consummate Arab moderate and champion of coexistence and cooperation between Arabs and Jews, resigned yesterday in protest against what he calls Israel's "iron-fisted" occupation of the West Bank and, in particular, because of the bombings that crippled Nablus Mayor Bassam Shaka and Ramallah Mayor Karim Khalaf.

Sitting in the living room of his spacious home today, Freij looked as dispirited as his town seems to be. Normally robust and outgoing, he talked about the future in flat, dejected tones, as if detached from any part of it.

"Things are going to get worse and tougher," he said. "The repression will increase as the violence increases. The heavy hand will get heavier, and the demoralization of the people will continue. If we are lost, the Palestinian issue will die."

Coming from Freij, the ebullient, jocular Arab mayor, the words bordered on heresy.

"You know me, I'm an optimist," he added. "There is no mayor who spoke up for peaceful coexistence as I did. But things have changed. A new wind is blowing."

Freij indeed has been the most optimistic of the West Bank mayors. For years, he was held up by the Israelis as a commendable example of moderation, a hard-working municipal manager whose ties were closer to Jordan than to the Palestine Liberation Organization. Freij was an anomaly in the West Bank when he supported, albeit tentatively and hesitatingly, the Camp David peace process in its early stages.

It was Freij who constantly appeared before groups of liberal Israelis, preaching coexistence. And it was Freij who eschewed the militant national Guidance Committee that Shaka and Khalaf helped form to rally Palestinian nationalism.

Today, Freij is a changed man. He still is not a member of the Guidance Committee, but judging from the intensity of his bitterness toward Israel, he might as well be.

"The Israeli hand is so heavy. The people can't bbreathe. They can't move. They [the Israelis] are succeeding in destroying all bridges of understanding between Arabs and Jews. There will be an explosion. The Israeli policy is now like a hurricane, and we have to step aside until ti goes by," he said.

That is why, Freij says, he quit.

"I say, as long as we are silenced, the public will think we are content and happy. The only means of protest left to us is to resign," he said.

But it is the vacuum of leadership in Bethlehem, and not the West Bank, that is of immediate concern to Freij. He said he is certain no other Arab resident of Bethlehem will step forward to fill his place as mayor, and that could mean the next Bethlehem mayor will be an officer of the Israeli Army.

"This is the spiritual capital of the Christian world," said Freij. "Let them put an Israeli Army officer in as mayor and see what will happen."

The major problem would be, he said, the question of protocol between the Roman Catholic, Creek Orthodox, Armenian and Anglican churches and the municipality -- all of which is now handled by Freij, who is a Christian. t

"This is not an ordinary city. This is not Nablus, or Beit Jala or Hebron. All the eyes of the world are on this city, and protocol between the churches and the municpality is very important," Freij said.

Today, Freij went to the Gaza Strip to talk with Gaza Mayor Rashid Shawa, who also resigned in protest of the bombings, but the two decided they would not reconsider until Israel relaxes its policy in the occupied territory.

Freij said many Arab leaders, including deported mayors Fahd Kawasme of Hebron and Mohammed Milhem of Halhaoul in a call today from New York, have urged him to return to work.

"But I won't do, it, not until the heavy hand is lightened," Freij said.