The Palestinian Refugee Issue: Rhetoric vs. Reality Part I.

By Sidney Zabludoff

1^st part of 3

The sixty-year-old Palestinian refugee issue has little connection with reality. It has become solely a bargaining chip used by Arabs and Palestinians in peace talks with Israel and, as such, is a distraction from the real issues of terrorism and boundaries. Indeed, continuing to call Palestinians refugees is a misnomer. They no longer live in tents or temporary quarters. In addition, the Palestinian refugee issue is unique. Since 1920 all other major refugee crises involving the exchange of religious or ethnic populations, while creating hardships, were dealt with in a single generation. Meanwhile, issues such as the "right of return" and compensation never were adequately resolved and were largely forgotten. The same pattern evolved for Jews who fled Middle Eastern and North African countries, even though their number was some 50 percent larger than Palestinian refugees and the difference in individual assets lost was even greater.

The Palestinian refugee issue has festered for sixty years and remains a major stumbling block in reaching an Israeli-Palestinian accord. At the same time, there has been little discussion of the larger number of Jews who were forced out of Middle Eastern and North African countries where they had lived for thousand of years. The reality of the issue has given way to cloudy political motivations, and the facts about the numbers of refugees and assets lost in both cases are little known.[1]

The Facts

Number of Refugees

The exact number of Palestinians who fled Israel from November 1947 to December 1948 will never be known. The estimates range from about 400,000 to one million. The most plausible is some 550,000. Based on census figures and demographic trends, in 1947 there were most likely about 740,000 Palestinians living in the area that became Israel.[2] About 140,000 remained and roughly 50,000 soon returned after 1948 (estimates range from 30,000 to 90,000).[3] About two-thirds of those who left Israel went to the West Bank and Gaza with the remainder mainly going to Jordan, Lebanon, and Syria.[4]

The number of additional Palestinian refugees resulting from the 1967 war is also based on rough approximations. Most observers use some 300,000, of whom nearly 100,000 returned in the months following the war.[5] In addition, about half of those fleeing were already refugees from the 1948 war. The result is that new refugees probably amounted to about 100,000. Thus, the net total of refugees created by both wars was some 650,000.

Within Israel, there were also internally displaced persons (IDP). These were Palestinians who fled their homes but did not regain them upon returning. Estimates of IDPs vary widely. Various Israeli scholars indicate 10,000 to 23,000; international organizations (International Red Cross and UN Relief and Works Agency-UNRWA), 25,000 to 46,000; and Palestinians, 150,000 to 300,000. Using the international organizations' estimate, the IDPs would roughly equate to the 40,000 Jews forced out of the West Bank and Gaza during the 1948 war.

Before 1948, there were slightly more than one million Jews in the Middle East and North Africa outside the area that became Israel, including the 40,000 in the West Bank and Gaza.[6] The total number fell by half in the years following the 1948 war and then declined to some 100,000 following the 1967 conflict. The Jewish population fell further in the ensuing years and by 2007 amounted to just 15,000 to 35,000. The bulk of those remaining reside in Iran. Thus roughly one million Jews became refugees because of actions of Middle Eastern and North African countries.

When the two refugee exoduses are compared, it can be concluded with a high degree of likelihood that the number of Jewish refugees was some 50 percent greater than that of Palestinian refugees.

Value of Assets Lost by Refugees

A considerable number of estimates exist as to the value of the assets lost by the Jewish and Palestinian refugees. This includes numbers published by both groups that are well above any realistic amount and as such are likely politically motivated. Determining the value of property, businesses, financial holdings, and movable assets such as automobiles and furniture will under any circumstance be susceptible to a wide range of estimates. The best estimates are usually bank accounts if the data are available.

The most solid estimate for assets given up by Palestinians fleeing the 1948 war was by John Measham Berncastle, who undertook the task in the early 1950s under the aegis of the newly formed United Nations Conciliation Commission for Palestine (UNCCP). He was a British land value estimator who had worked in Palestine since 1935. His estimate was 120 million Palestinian pounds of which about 100 million was for land and buildings and 20 million for movable property.[7] Other estimates would add some 4-5 million Palestinian pounds for Arab bank accounts blocked by the Israeli government.[8]

The total of 125 million Palestinian pounds amounts to $350 million in 1948. This is equal to some $650 per 1948-1949 refugee. This number seems reasonable when compared to similar data. For example, per capita assets for Poland, the Baltic states, and southeast European countries during the late 1930s ranged from $550 to $700,[9] these being the most equivalent asset statistics available.

To this must be added the asset losses for those additional 100,000 who fled in the aftermath of the 1967 war and the 40,000 IDPs. The latter are included even though they often were given new property and/or compensation.[10] At a realistic $700 per capita that would amount to another $100 million in lost Palestinian assets. Thus the total of assets lost by Palestinians is some $450 million. In 2007 prices this would amount to $3.9 billion. In per capita terms for 2007, this would be $4,740 or for a family of seven more than $33,000. The 2007 values used in this article are calculated by using the U.S. Consumer Price Index.[11]

There also are no precise global figures of the assets lost by the Jewish refugees from the Middle East and North Africa. Using a similar methodology, the minimal amount would be $700 million at period prices and $6 billion at 2007 prices. For the Jews of the above East European countries the per capita range is $700-$900. Jews had higher per capita assets than for the country as a whole because most lived in urban areas and held a large share of the professional jobs. The same demographic structure existed in most countries of the Middle East and North Africa. For example, while Jews made up 3 percent of the Iraqi population in 1948, they accounted for 20 percent of the population of Baghdad.

There are two key reasons for the higher value of assets for Jewish refugees. Most important, the number of Jewish refugees from Middle Eastern and North African countries is some 50 percent higher than that of Palestinian refugees. Second, the demographic nature of the two groups varied, as explained. A higher percentage of the Jewish population was urban, mainly traders and professionals, which would tend to accumulate more assets than the Palestine population that was more rural.

For both Jews and Palestinians, there are also two factors that somewhat reduced the amounts that needed to be repatriated. Assets, especially financial ones, were sometimes saved by moving or smuggling them out of the country. Both sides did so. Many wealthy Arab families from Jerusalem, Haifa, and Jaffa left Palestine soon after the November 1947 UN partition resolution, taking with them their financial and other movable assets. Those fleeing after the fighting began obviously took whatever financial assets and other movable assets they could carry. There were no limits on the amount of money and goods. As a result, by the end of September 1950, $26.7 million ($229 million in 2007 prices) in Palestinian pounds was converted in Jordan to Jordanian currency.[12]

In the early days many Jews fleeing Middle Eastern and North African countries, mainly the wealthy ones, were able to smuggle money out of the countries in which they lived. For example, a number of Iraqi Jews moved money into Iran. But when it came to the mass exodus, each Middle Eastern or North African country had stringent regulations on the value of currency and high-valued goods, such as jewelry, that the refugees could take with them. In some countries Jews had a longer time to sell their property than did the Palestinians. But most often the transactions were at substantially reduced prices-less than 10 percent of their market value-and thus the losses were still substantial.

The second factor concerns assets repatriated. Israel returned more than 90 percent of Palestinian blocked bank accounts. The process started in 1953 under the UNCCP and was mainly completed by 1959, with the small remainder being paid out during the early 1960s. Similarly, for the most part contents of safe deposit boxes and items held in custody by the banks also were returned. The amounts returned exceeded $10 million ($86 million in 2007 prices).[13] There also were a few cases where Jewish property was restored. Egypt did pay some claims for compensation for nationalized Jewish property, mainly to Jews who had English or French citizenship, normally at prices at the time of confiscation. For example, an undisclosed sum was paid in 2007 to a French-Egyptian-Jewish family for a hotel in Alexandria that the Nasser regime seized in 1952.[14] In the case of Algeria, refugees who fled to France, including Jews, after independence in 1962 received resettlement support.

A major unknown is community property such as hospitals, mosques, synagogues, and religious schools. One estimate put the value of such Jewish-owned property in Egypt at $550 million in 2007 dollars.[15] It can be assumed, however, that the Jewish amounts are larger than those of Palestinians because of the higher number of refugees and a larger number of locations.

Other financial demands were made by both sides, none of which were seriously considered. The Israelis wanted compensation for direct damage caused by the Arab attack on Israel ($463 million in 2007 prices), of which 65 percent involved the heavily damaged Jewish Quarter of Jerusalem and the economic damage caused by the closure of the Suez Canal to Israel ($5.3-$5.9 billion in 2007 prices).[16] Other claims that had no determined value included direct expenditures incurred in repulsing the Arab invasion, indirect war damages on individuals, companies, and government due to the invasion, and losses caused by Arab boycott of firms doing business with Israel.

The Palestinians have mentioned psychological damage to individuals as well as the lost income. When these are added to property losses, the total according to one Arab estimate runs from $181-$290 billion in 2007 prices.[17] Some estimates by Jewish groups also seem to be high. For example, the World Organization of Jews from Arab Countries indicates that the value of the properties they lost was some $100 billion (2006 values)[18] and another estimate is $300 billion in 2007 values.[19]

It should be noted that it is impossible to determine an exact value for asset losses and an argument can be made for higher asset values. The roughly $10 billion in current value losses by both sides described above is determined by bringing the 1949 value up to 2007 value by adjusting for inflation. Often, however, prices of property increase faster than inflation and interest on financial assets is greater than the price increases. One method of determining current value is to use government long-term bond yields instead of inflation rates. This would increase the combined Jewish and Palestinian losses to some $36 billion in 2007 prices. The bottom line, however, is that no matter what methodology is used the losses of Jewish refugees from Middle Eastern and North African countries are almost certainly at least 50 percent higher than those of Palestinian refugees.

Sidney Zabludoff

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