Two Jewish groups have bought up a block in an Arab-populated section of the Old City of Jerusalem, Maariv reports.  The properties were purchased from the cash-strapped Greek Orthodox Church.

The area in question, known as Omar Ibn al-Hitab Square, is located at and near the Jaffa Gate entrance to the Old City. The late Jerusalem Arab leader Feisal Husseini used to hold diplomatic meetings in the area, Israeli left-wing former Minister Yossi Beilin met there with the PA's Seri Nuseibeh, and similar meetings continue to take place at the site. But unbeknownst to the participants, the ground has shifted underneath their feet - and now belongs to Jews.

The Greek Orthodox Church has been facing legal, financial and political difficulties of late, and now, with the publication of the sales of their property to Jewish groups, faces the prospect of strained relations with the Palestinian Authority as well.

The Jerusalem District Court ruled earlier this month that the Church elections for Patriarch, in which Yasser Arafat's crony Irineos was chosen, were illegal and must be held again. The court accepted an appeal by a Church member who brought evidence that the pre-election process was illegal.

The Church's shaky relations with the former Soviet Union republic of Georgia suffered a recent blow when Georgians accused Greek Orthodox priests of removing the corpse of the idolized 12th-century Georgian national poet Shota Rustaveli from his grave in the Church of the Cross in western Jerusalem. A Church official said, on condition of anonymity, that persons close to a direct appointee of Patriarch Irineos did this in order to destroy, even if only "spiritually," historic Georgian claims to the building and area.

Yet another scandal, this one financial, recently rocked the Church when Church treasurer Nicholas Papedemes was accused of having run off with millions of dollars of Church funds. Supporters of the latter say that the accusations are groundless, and are designed merely to push Papedemes out and his opponent Claudius – another Irineos confidante - in.

Papedemes is said to be behind the sales, acting on behalf of Irineos. The two major properties that were bought in the recent purchases are the Petra Hotel and the Imperial Hotel, both very close to the Jaffa Gate.

Though the wealthy Church owns many valuable properties in Jerusalem, its financial state has deteriorated over the past year. Among its holdings are the land on which the Knesset was built, the Prime Minister's and the President's official residences, and locations in the Old City, Har Homa and prominent western Jerusalem neighborhoods. However, a court ruled that it must pay 30 million shekels (close to $7 million) because of a failed plan to build a hotel in the Abu Tor neighborhood of Jerusalem. In lieu of this debt, properties were confiscated, as well as the last payment for the Jaffa Gate real estate of 1.46 million shekels ($340,000).