JERUSALEM // One of the world's most celebrated - and surely its most contentious - cities attracts about three million tourists each year. But you would not know it from the cash register in Ahmad Rizeq's grocery.

Each day, Mr Rizeq is lucky if a single tourist in Jerusalem's bustling Old City crosses the threshold of his shop, even though it is only metres from the Haram Al Sharif, Islam's third-holiest site.

"We're in a sorry state of affairs here," lamented Mr Rizeq, 62, whose shop on a street known as the Khalidiya Ascent has been in the family for 36 years.

The history of Jerusalem is in part a story of successive conquests and occupations starting more than 3,000 years ago. The latest occurred in 1967, with the seizure of the Old City by Israel.

The main instruments of securing the latest conquest are not sword, fire and crucifixion as they have been in past millennia, but tax levies, tour guides and encroaching Jewish settlers.

The result for Mr Rizeq and other residents of the Old City's Muslim quarter is a community that feels like a dying neighbourhood. Businesses have steadily gone bust because of what Jerusalem's 275,000 Palestinian residents have long decried as deliberate Israeli obstacles designed to stifle them.

As if he needed a reminder of his dire financial straits, Mr Rizeq has let his unpaid tax bills of more than 10,000 shekels (Dh9,996) pile up next to the store's checkout counter.

Adding insult to injury, he says, tourists who do pass by rarely seem to sympathise with the plight of everyday Palestinians, let alone show any understanding of it.

"It makes us sad to see so many visitors and know they have no idea about the pain we're experiencing," said Mr Rizeq. "We know they're told bad things about us by the tour guides, like we're terrorists or thieves or bad people. It's hurtful."

His street bears many hallmarks of a centuries-old feud that feels as if it could erupt into fighting at any moment.

Security cameras are installed overhead. Israeli soldiers with rifles slung over their shoulders stand watch nearby.

Increasingly, blue-and-white Israeli flags fly over the growing number of Palestinian homes that Jewish settlers acquire either through financial incentives or brute intimidation. No matter how great the pressure, though, the last thing Abed Natsheh, 49, and the vast majority of Palestinians here want is a return to the misery that accompanied the second intifada, which broke out in late September 2000.

The conflict's lull has created a situation where half the customers of his family's 85-year-old hardware store come from the neighbouring Jewish Quarter, a few metres up the street.

"They know they have a mutual interest to do business here, but we don't usually speak about politics," he said of their relationship, describing it as "transactional". "It's mostly them coming here and doing the business they've come to do, and that's it."

Still, Mr Natsheh says, he is astonished by a lack of understanding by his neighbours and Israelis in general of the challenges Palestinians in Jerusalem face.

He listed draconian restrictions that practically forbid them from building new homes, as well as impromptu tax-payment checkpoints erected by municipal officials that are often overseen by heavily armed security personnel.

"Some of them actually ask me: 'Hey, why is your stuff so cheap? Is it because you don't pay taxes?'," he said of his Jewish neighbours.

Yet roughly two-thirds of his revenue goes towards paying taxes.

"We try to explain this stuff to them, but they don't understand it," he said. "Sometimes I think they think our lives are as comfortable as theirs, that there is no pressure on us."

That is exactly how Daniel Saik, 34, an Israeli lawyer from Jerusalem, described the Palestinian condition in East Jerusalem's Old City.

"Look at these properties. They're probably high-value like establishments on Rothschild, in Tel Aviv," he said of that Israeli city's premier shopping and tourism boulevard.

Mr Saik and another Israeli, 34-year-old Yoni Youssef, were looking for a falafel restaurant recently when asked about the holy city's Palestinians.

"They're facing what young Israelis in Israel are facing. It's an expensive life for everyone in this country," he said, referring to the reasons that prompted demonstrations across Israel against rising living costs.

Some Palestinian merchants put part of the blame of this apparent lack of understanding on their own colleagues.

Lutfi Abu Omar, 60, has complained to neighbouring merchants about their preference for selling T-shirts and other mainly Jewish and Israeli items.

"Tourists who come here don't see enough of Palestine and its culture, which is a huge mistake by us," said Mr Abu Omar, who runs a jewellery shop in the Christian Quarter with his brother.

He prefers merchants sell Palestinian cultural amulets and clothing rather than, for example, T-shirts with Jewish-Israeli slogans, such as "Guns and Moses" or "Don't worry America: Israel is behind you". Sitting inside his struggling grocery, however, Mr Rizeq believes he is going above and beyond what any Palestinian should do to ensure the area's traditional character does not erode.

He said he has repeatedly declined generous offers from Jewish-settler organisations to buy his business.

"They see that my store is dying," he said. "They know I'm suffering, and that only gives them more incentive to come after me."

He is considering converting his store into a home for his brother rather than letting his business fold. While this would put him out of the job, it would at least reduce his monthly tax burden to a more manageable level.

"There's really not much else I can do," he said.

"Under this kind of pressure, there's not much that any of us can do."