The city of Bethlehem passes from Israeli to Palestinian control.

On December 21, 1995, Israeli troops withdrew from Bethlehem, and three days later the city came under the complete administration and military control of the Palestinian National Authority in conformance with the Interim Agreement on the West Bank and the Gaza Strip in 1995.During the Second Palestinian Intifada in 2000–2005, Bethlehem’s infrastructure and tourism industry were damaged. In 2002, it was a primary combat zone in Operation Defensive Shield, a major military counteroffensive by the Israeli Defense Forces (IDF). During the counteroffensive, the IDF besieged the Church of the Nativity, where dozens of Palestinian militants had sought refuge. The siege lasted for 39 days. Several militants were killed. It ended with an agreement to exile 13 of the wanted militants to various foreign countries.