In a small, brightly decorated classroom at the Escuela Trilingue San Juan Bautista in San Pedro Sula, Honduras, 18 little boys and girls gaze intently at the blackboard as their teacher, Bethlehem-born Buthaina de Bandy, writes out the morning's Arabic lesson.

School rector George Faraj,

"This is the only trilingual school of its kind in Central America," Faraj says proudly. "We have 155 students from kindergarten through ninth grade, and all of them learn English, Spanish and Arabic. We also emphasise religion, but of course it's not the main purpose of the school."

Down the street, at the Iglesia Ortodoxa de Antioqula San Juan Bautista, religion is the main purpose. Father Boulos E Moussa, known by his parishoners as "Padre Pablo," says 220 families belong to the church, which was consecrated in 1963.

"Most of the Arabs in Honduras are Christians who were escaping injustice," says the 47-year-old Moussa, who was born in Tartus, Syria, and arrived in Honduras in 1995 after ministering to Christian Arabs in Venezuela for 12 years. "Here they live in a free environment. We can never forget this. As long as we respect the laws of Honduras, nobody tells us what to do."

Over the years, Arabs have quietly become a potent force in this small, impoverished Central American country, with an influence in its business and political life unparalleled anywhere else in the western Hemisphere.

Statistics are difficult to come by, though it is generally agreed that between 150,000 and 200,000 of the six million inhabitants of Honduras are of Palestinian descent -- the highest proportion of any Latin American nation; only Chile has more Palestinians.

While three per cent of the population may not sound like much -- and it isn't -- the fact is that most of the country's leading businessmen are Arabs. Among them free-zone and textile entrepreneur Juan Canahuati; mattress maker George Elias Mitri and shoe manufacturer Roberto Handal. Palestinian Arabs also occupy many important positions within the Honduran government, including President Carlos Flores Facusse, whose mother -- like many of the early settlers -- hailed from Bethlehem.

Another influential Honduran of Palestinian descent is coffee exporter Oscar Kafati, the country's minister of industry and commerce.

"My grandfather was one of the first Arabs in Honduras," Kafati said. "He came at the end of the 19th century, from Beit Jala." Kafati's family has been in the coffee business since 1933. Today, Gabriel Kafati is the principal coffee roaster of Honduras, and the company owns 1,200 hectares of coffee plantations in El Paraiso, near the Nicaraguan border.

"I was born in 1930, and I grew up in the business," Kafati said. However, the 72-year-old businessmen says he never expected to end up in government -- especially considering the country's past attitudes towards newcomers.

"Twenty or 30 years ago, there was a lot of discrimination," he recalled. "They didn't accept immigrants of Arab origin as elected officials."

These days, of course, things are different, several important Honduran government officials are of Palestinian origin and at least half a dozen of the 120 deputies in the Honduran parliament.

How Arabs came to be so successful -- and influential -- in Honduras is a fascinating yet little-known story that is a microcosm of the Arab immigrant experience in the Americas as a whole.

Old-timer Antonio Jacobo Saybe says Honduras received its first Arab immigrant in 1893: Constantino Nini, a Palestinian merchant who peddled dry goods door-to-door in the little towns along the northern Honduran coast. Later on, Nini established a factory in La Ceiba that produced mops and brooms.

Another early settler was Rosa Handal, who arrived in December 1898, from Bethlehem. But what really set things off was the outset of World War I.

"Many of our fathers and grandfathers in Palestine were saving their money to go to America," explained Saybe. "They bought third-class tickets, the most they could afford. But they weren't too smart geographically. The first stop was either the Caribbean or Central America. They didn't speak English, and they didn't speak Spanish. They came without any papers, and without a penny in their pockets."

Adds hardware-store owner Elias Larach, whose family came to Honduras in 1900: "Our fathers and grandfathers were very innocent, simple people. They worked hard and eventually became successful."

Between 1920 and 1945, few Palestinians settled in Honduras because Palestine was by then under British control, and the region enjoyed relative prosperity. As did those immigrants already living in Honduras. By 1918, Arabs owned 41.5 per cent of the businesses in San Pedro Sula, according to a local survey.

In 1928, the British-American Tobacco Co. (known today as Tabacalera Hondurena S.A.) bought a small Arab-owned Abud y Blanco cigarette factory. Three years later, the Canahuati family founded the Elias Canahuati y Hermanos tobacco company in San Pedro Sula. And on 27 June 1936 -- exactly 400 years after the death of Honduran warrior Lempira -- San Pedro Sula's flourishing Palestinian community unveiled a statue marking the occasion, as an expression of gratitude to their newly adopted city.

The influx of Palestinians picked up after World War II, with increasing hostilities between Arabs and Jews, and the establishment of Israel in 1948.

Selim B Canahuati, who was born in Bethlehem in 1949 and arrived in Honduras two years later, points out: "This was still an undeveloped country, and there were lots of opportunities to make money. They called us turcos, because we had Turkish passports. This was around the time US companies began developing the banana industry."

Jose Segebre, arrived in Honduras with little but the clothes he stood up in.

"A friend gave me yarn and clothes, and I opened a tienda in downtown San Pedro Sula, though I had no experience." Segebre prospered and his parents followed him to Honduras shortly after.

Canahuati, 53, still runs his family's hardware store in Puerto Cortes, along with a San Pedro Sula garment factory that employs 150 workers and assembles men's shirts on contract for Macy's, Burdine's and other large US department-store chains. One of his many cousins, Nawal Canahuati de Burbara, is the owner of Comisariato Los Andes, one of the largest supermarkets in Honduras.

"The Arabs were fundamental to the development of Honduras," says Canahuati, who doesn't pull any punches when talking about his country's recent history. "The Honduran people were here for hundreds of years, doing nothing, until the Americans came. Then the Jews and Arabs came. Both were a fundamental part of the development of Honduras. That's the reality of this country."

Indeed, in the midst of thousands of Arabs also live a handful of Jewish families. Like the Arabs, they are also generally wealthy, and the two groups -- who both got their start as small merchants and pushcart peddlers -- get along quite well despite the ongoing Arab-Israeli conflict.

In fact, at least a dozen Jews are full-fledged members of the Centro Social Hondureno Arabe -- an elegant country club located in the suburbs above San Pedro Sula.

Here, on a 25,000-square-metre plot of land, eight Honduran Arabs got together in 1968 and built a little swimming pool. That eventually grew into the current complex of buildings, which represents an investment of around $15 million.

About 1,600 families are members, says local free-zone industrialist Juan M Canahuati, who has been president of the club since its inception. Each must pay 60,000 lempiras ($4,000) to join, and 1,000 lempiras ($65) in monthly subscriptions. The club's ballrooms, the Palestina, Jerusalem and Belen -- can accommodate up to 1,400 people. It also boasts tennis courts, a gymnasium, an Olympic-sized swimming pool, a jacuzzi, a juice bar and three restaurants, serving typical Arab and Honduran dishes. A recent New Year's Eve party attracted over 1,000 people.

That's a long way from the 1930s and 1940s, when Arabs, Chinese, Jews and other immigrants were denied entrance to the country's poshest casinos and nightclubs.

"There wasn't hate against the Palestinians, but there was jealousy, because we worked hard and made money. This was the only way," says Tewfik Canahuati, 71. "Today we have no more social problems in Honduras ... we are integrated in all aspects of life here."

Walking around downtown San Pedro Sula, it's virtually impossible to tell who's Palestinian and who isn't. Although many shops display names that might be Middle Eastern in origin, there are few actual signs in Arabic, and only one Arabic restaurant: Almanarah.

Nevertheless, up to 25 per cent of the city's 800,000 inhabitants have some connection to Palestine, says Nancie Gonzalez, author of the 1992 study Dollar, Dove and Eagle: One Hundred Years of Palestinian Migration to Honduras. Palestinians can also be found in Tegucigalpa, and in smaller cities like San Lorenzo, Comayagua, Puerto Cortes and El Progreso.

"Once pariah entrepreneurs, they are now among the most wealthy and powerful industrialists in the country," writes Gonzalez, noting that 75 per cent of the stores in a six-square-block area of downtown San Pedro Sula are Palestinian-owned. But because the Arabs are neither residentially segregated nor physically distinguishable from other Hondurans, "they tend to fade into the general fabric of Honduran life when viewed casually by outsiders."

In order to deflect occasional criticism from non-Arab Hondurans, the Palestinian community has attempted to channel some of its wealth into helping less fortunate Hondurans. After the devastation wrought by Hurricane Mitch in late 1998, two women's organisations -- the Association of Arab Orthodox Women and the Honduran-Arab Ladies' Association -- worked hard to help hurricane victims.

In addition, the local chamber of commerce -- dominated by Palestinian-owned businesses -- has established Fundacion Mhotivo, a modern school on the outskirts of San Pedro Sula where 320 children from the poorest sectors of Honduran society receive a first-rate entirely free education in both English and Spanish.

"We are conscious that only through education can we provide the tools people need to search for new opportunities," said Canahuati.