JERUSALEM (AP) � The Greek Orthodox Church in the Holy Land is trying to recover from a moral and financial crisis, its top clergyman, Patriarch Theofilos III, told The Associated Press in a rare interview.

In recent years, the church has been shaken by secretive real estate deals with Israelis, by Palestinian laymen angry about domination by Greek priests, and by a vicious power struggle that resulted in the rare removal of an incumbent patriarch, Theofilos’ predecessor.

Installed in 2005, Theofilos faces multiple challenges.

His congregation is shrinking. He is struggling to maintain a delicate balance between the church, its Arab congregants and the Israeli government. And he says he is trying to bring fiscal transparency to an institution that is the second largest landowner in the Holy Land, yet chronically in debt.

“I say that our position is the position of an acrobat,” he said of his church.

It took the patriarch until December to win the required recognition from the three governments in the Holy Land � Israel, Jordan and the Palestinian Authority. For the first time in three years, he is leading Easter Week rites unchallenged.

Still, this year’s Holy Week � the Eastern rite churches are marking it now � was overshadowed again by squabbling. Several days ago, on Palm Sunday, Armenian and Greek Orthodox worshippers exchanged blows during a dispute over rights of worship at Jerusalem’s Church of the Holy Sepulcher, built over the site where tradition says Jesus was buried and resurrected.

Renewed tensions were expected during Saturday’s holy fire ceremony at the Holy Sepulcher.

Speaking in his office in Jerusalem’s walled Old City this week, Theofilos said the Palm Sunday dispute was the result of a misunderstanding and that he hoped it could be resolved through dialogue.

“We don’t want to have more problems like this because they damage and destroy the image and the spirit of such events that are really very unique,” said the 56-year-old patriarch.

Before the interview, the black-robed slight patriarch greeted Greek pilgrims and handed out pictures of Jesus, while leaning on his sculpted staff.

Still, Theofilos insisted that his church has a special role as one of the oldest denominations in the Holy Land � an argument that has riled other Christian groups competing for a share of the holy sites.

“The patriarchate considers itself the host, and not the guest” in the Holy Land, said the Greek-born clergyman who grew up in Jerusalem.

Theofilos acknowledged that recent years have been difficult for his church.

“The crisis that the patriarchate passed through, it was both moral, which was the most important, and of course financial,” he said. “There is no doubt about it. Now we are gradually recovering because order has been restored.”

The patriarch’s predecessor, Irineos I, was ousted in May 2005 amid allegations that he leased two church-owned hotels in traditionally Arab east Jerusalem to groups trying to expand a Jewish presence there.

Irineos has denied the allegations, but the leases enraged the church’s predominantly Palestinian flock. Palestinians claim east Jerusalem as the capital of a future state.

Theofilos has said he considers the leases invalid because they were never presented to the church’s leadership group, or synod, for approval. The dispute has since moved to an Israeli court.

The patriarch said he would honor legitimate transactions with the state of Israel, such as the long-term lease of land on which Israel’s parliament was later built.

However, all future transactions would be closely studied by the church leadership, he said. “We are not going to accept anymore the patriarchate to be treated as a real estate agency,” he said.

Theofilos said the synod is now reviewing all business transactions.

Acknowledging that the church was plagued in the past by corruption and mismanagement, he said that now “there is transparency concerning the administration and finances.”

Israel only recognized Theofilos in December, more than two years after he was installed by his flock. During the period of limbo, Irineos refused to step down or leave his official residence. He has since been demoted to monk.

Israel’s long delay in ratifying his appointment was a “grave mistake,” Theofilos said.

Yet Theofilos is not a rebel � his church depends on a delicate balancing act in dealing with the three governments in the Holy Land. “The patriarchate … emerges as a state within a state, as an entity, a very powerful entity, spiritual entity but it is an entity which lives on the ground and not in the clouds,” he said.

He has also addressed complaints by Palestinian Christians that they are being kept out of positions of authority in the church. He has appointed an Arab clergyman as his spokesman, promoted another to archbishop, and appointed a third to the 18-member synod.

Palestinian Christians say Theofilos has helped restore the church’s tainted image.

“People (once) were embarrassed to say they were Orthodox,” said Dimitri Diliani, who had been among those pushing to remove the previous patriarch. “He (Theofilos) managed to go through a thorny road with nobody mad at him by adhering to being a head of a church.”