The Arab souk (market) that sprawls across the Christian and Moslem Quarters in Jerusalem's Old City is a cluttered warren of bizarre juxtapositions, stalls hawking shoddy Middle Eastern tourist chintz next to venerable shops selling the necessities of life to Old City residents, "I Got Stoned in Jerusalem" T-shirts beside traditional kaffiyehs and jalabiyehs, Orientalism rubbing uncomfortably against authenticity.
Don't let that stop you from visiting, though; the souk is a genuine Jerusalem landmark, the mercantile heart of Jerusalem from at least Ottoman times and up to the present. The high arches and ceilings of the souk are a result of the same Ottoman largesse that gave the Old City its current walls, and no matter how many European tourists are being led to the Church of the Holy Sepulchre by way of the chintzy gift stalls at any given time, one gets the impression that the rhythms of the souk have remained the same for hundreds of years.
The souk is usually the cheapest place in the city for common gift items, ranging from massive hookahs and Arabic lutes to enormous glow-in-the-dark crucifixes and Judaica, but it is also home to some of the city's enduring culinary landmarks (Abu-Shukri, Lina, Jaffar's Sweets), a large portion of the Via Dolorosa and a full food market. Haggling is the norm, and don't allow yourself to be bullied by pushy merchants. If a merchant is too forward, walk away. Chances are you'll find exactly the same products next door.
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