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In 1187 the Ayyubid Sultan Saladin (of Egypt, Syria and more in the Levant) reconquered Bethlehem and the Catholic clergy was forced to let the Greek Orthodox clergy return. Saladin himself in 1192 allowed two Catholic priests and two deacons to return to the diocese, though Bethlehem's economy still suffered from the drastic reduction in pilgrims from Europe.
In 1250, with the Mamluks' risen to power, tolerance for Christians in Palestine declined -- the Catholic clergy left Bethlehem, whose walls were demolished in 1263. The Catholics then returned to Bethlehem only in the 14th century and settled in the monastery adjacent to the Church of the Nativity. The Greek Orthodox in the meantime took over control of the Church of the Nativity and shared control of the Milk Grotto with the Catholics and the Armenians.
The crusading William IV, Count of Nevers, dying in the Holy Land in 1168, had left the building known as the Hospital of Panthenor or Pantenor in the town of Clamecy in Burgundy, together with some land, to the Bishops of Bethlehem, in case Bethlehem should fall under Muslim control. In 1223, the then Bishop of Bethlehem took up residence in his Burgundian property, which remained the seat of residential (nearly titular) Bishops of Bethlehem for almost 600 years, until the French Revolution of 1789.
From 1223, therefore, the 'exiled' Bishops of Bethlehem exercised jurisdiction over the hospital and the faubourg that was their property. Their successors were chosen by the Counts, later the dukes of Nevers, with the approval of the Pope and the King, although (neighbouring) French bishoprics contested their diocesan legitimity. In 1413, Charles VI tried to obtain for them the privileges enjoyed by the diocesan bishops of the realm, but because of the opposition of the French clergy they continued to be considered bishops in partibus infidelium. In 1635, the assembly of the French clergy granted them an annual pension. Christopher d'Authier of Sisgau, founder of the Missionary Priests of the Congregation of the Blessed Sacrament and celebrated for his sermons to the galley-slaves of Marseilles, was Bishop of Bethlehem 1651-63.
The immediate aftermath of the French Revolution extinguished the title to property that was once attached to the titular bishopric of Bethlehem, making it like any other of the titular sees listed by the Catholic Church in the Annuario Pontificio.
Circa 1462 the crusader diocese was nominally restored by Rome, alongside Clamecy (which was in obedience to the Antipopes of Avignon), but now as a regular Latin Titular bishopric of Bethlehem (English) / Bethléem (français) / Betlemme (Italiano) / Bethleem (latine) / Bethleemitan(us) (Latin). It had the following incumbents, all of the fitting Episcopal (lowest) rank :
(in French) Honoré Fisquet, La France pontificale, histoire chronologique et biographique des archevêques et évêques de tous les diocèses de France. Métropole de Sens. Nevers - Bethléem, Paris, pp. 143-172
(in French) Charles D. Du Cange; Nicolas Rodolphe Taranne; Emmanuel Guillaume Rey, Les familles d'outre-mer, Paris, Imprimerie Impériale , pp. 784-93