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The Land of Bethlehem is the place where the Zohar landed on the new planet. On the map, it is located in the top left of the planet in a snowy area.
Near the end of the game, when Fei Fong Wong is taken over by Id, he goes to the cave to make contact with the Zohar. His contact transforms Weltall, his Gear, into Xenogears. Fei's friends come to stop Id, and succeed.
Taking advantage of the situation, Fei's father, Khan Wong, appears and is able to help Fei merge his consciousnesses back together. Then, Grahf takes control of Khan's body, but after a conversation with Fei, Grahf decides to help.
Since Deus is becoming active, the Zohar starts trying to absorb the current Contact, Fei. Grahf stops this by letting himself be absorbed. As an imperfect-contact, he is able to postpone Fei's absorption, giving him enough time to stop Deus. Afterwards, Fei and his friends leave the cave to finish the battle.