In Jerusalem's Old City, fallout from the Gaza war deepens the woes of Israel's occupation

Home to Muslims, Christians and Jews, the Old City offers a glimmer of hope – but not enough to bring harmony

Tension between Jews and Muslims in the Old City is palpable, our correspondent notes. AFP

The Old City of Jerusalem is perhaps the only place on Earth where you can simultaneously hear the muezzin's call for Muslim prayers and see Jews make their way to the Western Wall while hearing church bells tolling.

These are moments that paint a picture of a place in perfect harmony, somewhere followers of different religions coexist peacefully while sharing a tiny area.

But appearances can be deceptive, and in the case of Jerusalem's Old City, they may well be.

Tension between Jews and Muslims in the Old City is palpable, simmering just beneath the surface in what is perhaps the most contested piece of real estate in the decades-old Arab-Israeli conflict.

"There is no other city in the whole world that's like it. And when I say that, I say it as an academic," said Youssef Al Natsheh, a British-educated Palestinian historian and an expert on Islamic architecture.

"The city is no bigger than one square kilometre that followers of the three Abrahamic religions are competing over while at once revering it and trying to control it. It’s a city that’s on Earth, but its roots are in the high heavens."

Shuttered stores in Jerusalem’s Old City, where many small businesses have closed. Hamza Hendawi / The National

The mainly Arab East Jerusalem, which includes the Old City, was captured by Israel in the 1967 Middle East war and annexed in 1980.

In nearly 60 years of Israeli occupation, the Old City's fortunes have frequently shifted, more often for the worse than otherwise. But nothing seen before is as bad as things are now.

The Gaza war, which began in October 2023, has had wide-ranging consequences for the Old City, with Israelis effectively boycotting Arab businesses there. Foreign tourists are staying away, and Israeli police are embracing harsher-than-usual, sometimes brutal, tactics towards Palestinians.

As a result, all shops along several of the Old City's alleys are shuttered. Shopkeepers of those that remain open complain about the scarcity of buyers, with some saying it is not uncommon for an entire day to go by without a single sale.

The disappearance of many of the handicrafts and high-quality goods that the Old City was once famous for has contributed to the slump. For example, olive presses have disappeared, most butchers are gone, along with spice shops. Some of them have been replaced by stores selling cheap clothes or toys. Others turned into souvenir shops, catering to tourists who do not come.

The sight of grim-faced shopkeepers sitting outside their stores smoking or sipping coffee is not uncommon, and is perhaps the most potent evidence of the slump suffered by small businesses in the Old City.

Others spend the day playing backgammon or glued to their mobile phones.

Storekeepers in Jerusalem’s Old City playing a game of backgammon. Hamza Hendawi / The National

Rigid restrictions placed by Israel on the access of Palestinians to the Old City and Jerusalem as a whole have meant that they do their shopping elsewhere, like nearby Ramallah in the occupied West Bank.

"Business died during the Covid pandemic, bounced back after, and is back to being slow again after the Gaza war broke out," said Gouda Al Hasheem, who owns a shop selling leather products and souvenirs within sight of the Church of the Holy Sepulchre.

"There are days when I don't sell anything, but God is generous! I am too old to leave my business and get a job. The shop is what I know. Besides, what job will I get? The Israelis will likely offer me a cleaning job or find me work as a porter."

Mansour Qawas, 35, has a shop near the Old City's Hebron Gate, an area where Israelis and Jewish tourists are found in relatively large numbers. He is not doing well either.

"Few tourists come since the Gaza war erupted. Things got much worse with the Israel-Iran war in June. It's like the Israelis and foreign Jews, too, are boycotting us," he said as he sipped Turkish coffee from a tiny paper cup.

An Israeli Orthodox Jew man walks past a Palestinian souvenir shop in the Old City of Jerusalem on August 28, 2025. AFP

Besides the souvenirs, Mr Qawas has been trying to capture a slice of the "Jewish market", selling yarmulkes, shofars and menorahs.

The Old City was affected by the first and second Palestinian intifadas in the 1980s and the 2000s. The violence led to a series of draconian security measures by Israel to limit Palestinian access to Jerusalem, thus choking off small businesses in the Old City.

The separation wall built by Israel during the second intifada also cut off some East Jerusalem neighbourhoods from the rest of the city, robbing the Old City's economy of more of its traditional patrons.

A multitude of high taxes is also hurting small businesses, sinking some storekeepers into debt they cannot repay and forcing others to close down.

But after the Hamas-led attack on Israel on October 7, 2023 that left 1,200 dead and triggered the Gaza war, it is the growing distrust between Arabs and Israelis – about 30,000 Palestinians live in the Old City alongside 7,000 Israelis, according to some estimates – that is hurting the Old City the most.

A Palestinian woman walks through Jerusalem’s Old City. Hamza Hendawi / The National

Israelis are rarely seen buying from the Old City's Arab stores or frequenting their eateries. The Israelis who live in the Old City, visit to pray at the Western Wall or shop at Jewish shops, are rarely seen exchanging words or even making eye contact with Palestinians.

That leaves on-duty policemen the only Israelis that Palestinians in the Old City are in regular contact with, and it is only when the latter are asked to show their IDs or where they are headed.

Moreover, security cameras installed by Israeli authorities or Jewish settlers seem to cover every square inch of public space in the Old City, something that Palestinians view as intrusive and are uncomfortable with.

The Souk Al Atareen, or spice market, in Jerusalem’s Old City. Hamza Hendawi / The National

Scores of Israeli policemen are routinely deployed at the Old City's gates and throughout the neighbourhood, frequently stopping Palestinian males to check their IDs or, when outside Al Aqsa mosque - Islam's third holiest shrine - turning them away.

"Since the Gaza war began, the police often ask to see my ID in one spot of the Old City and search me in another. Moreover, I have been denied entry to Al Aqsa mosque several times for no obvious reason," said Abdul Rahman Al Halawany, 32, at his sweets shop in the Old City's Muslim quarter.

"The Jews don’t see me and I don’t see them. Not all Jews hate us, I don't think, but most of them just don’t want to see us here."

Mr Al Natsheh, the historian, added: "After nearly 60 years of occupation, Jewish Israelis and Palestinians in the Old City are unable to find common ground. In the Old City, there is an Arab majority and a Christian minority on one side and a Jewish group on the other," he said at the Old City campus of the Al Quds University as two black-clad, Orthodox Jewish boys pushed the street gate open and looked inquisitively at the courtyard.

A sweets shop in Jerusalem’s Old City Hamza Hendawi / The National

To Palestinians, however, the lack of interaction with Israelis is much more than just mutual obliviousness.

Bahaa El Deen, a 37-year-old Palestinian who sells handmade leatherwear and accessories in the Old City, recalled a beating he received from Israeli soldiers enraged by the Hamas attack on Israel in 2023.

"I was not aware of the attack and I opened my store at 7am on October 7, 2023. The soldiers came and beat me up inside my shop. They said opening the shop for business on that day was an insult to Israelis," he recounted as he sat at his shop, a stone's throw away from the heavily guarded entrance to the Western Wall, known in Arabic as Ha'it Al Buraq.

"But, to be honest, as a human being and a father, I cannot be happy about the killing of innocent people. I am unhappy with the killing of women and children in Gaza, but I also don’t wish that to happen to Jewish kids and women," he said.

Mr Bahaa El Deen, who declined to give his last name for fear of Israeli reprisals, makes the sandals, bags and belts that he sells. He shares with his family ownership of the shop and and the tiny, three-storey house above it. He says he occasionally gets generous offers from Israelis who want to buy the house, but he has so far turned them down.

"I can sell my house to the Jews for a really good price if I want to. But I cannot. How can I face my neighbours, my family and people if I do?" he said as scores of smartly dressed Israeli families made their way to the Western Wall on a Saturday afternoon.