The hundreds who flocked to the fourth annual Oktoberfest in Taybeh, near Ramallah, had a choice: the eponymous golden draught beer readily available at discount prices, or a non-alcoholic alternative.

This alcohol-free beverage was "halal" beer, according to the appropriately green (the colour of Islam) label on the bottle.

But it was the booze that was most popular at this event, aimed as much at boosting the spirits of the dwindling local Christian community as at promoting the Taybeh Brewing Company, its sponsor.

Pressed between Israeli occupation, the growing power of Hamas and economic downturn, Taybeh, with only 1,200 residents, is losing scores of its young people to emigration each year, mostly to the United States.

"This is the only purely Christian village in Palestine, people here do not sell their property to people of other religions or even rent," boasts Mary Michael, a teacher. "This festival lets the world know the village of Taybeh is on the map and all these visitors give us the feeling we are not so isolated."

The brewery launched in 1995 when owner Nadim Khoury, influenced by microbreweries in Boston, where he attended university, decided to put Palestine on the international beverage map for patriotism and profit. The company sells 30 per cent of its beer to Israel, including to pubs in Tel Aviv. The main foreign markets are Germany and Japan.

But the malty non-alcoholic brew is for domestic consumption. It marks the company's adaptation to the reality of the growing power of Hamas, according to Maria Khoury, Nadim's sister and the organiser of the Oktoberfest. "We want to protect ourselves and stay here in case there are any harsh rules ruling alcohol out," she says.

Ms Michael said that some residents are worried they could feel the pinch if Hamas gains control in the West Bank as it did in Gaza in June 2007. "People are saying that they would force us to wear scarves and that maybe we won't be able to ring the church bells. But maybe they will do nothing."

At the festival, a Bavarian music group dressed in traditional shorts and hats alternated with young Palestinians performing folk dances.

Many in the crowd were clerics from other parts of the Holy Land. Father Jones Iragesen, a German Benedictine monk from Dormition Abbey in Jerusalem was accompanied by four other monks. "This is my first and last beer because I am the driver," he said.