Holy Week pilgrims to Nazareth must have thought at first that they were in the wrong town. Crimson banners bearing the hammer & sickle and Picasso peace doves hung from street lights, and Marxist slogans were plastered on the centuries-old walls of the Church of the Annunciation. Turbaned Communist orators belabored street-corner crowds. Nazareth, the boyhood home of Jesus Christ, was electing 15 city councilmen.
Since 1948, the 21,000 inhabitants of Nazareth, the only all-Arab town in the state of Israel, have lived under the rule of a Jewish military governor. In that time, they have worked up a full...