3rd part of 3
The Economic Ingredient
Soon after Israel occupied the West Bank and Gaza following the 1967 war, the plight of the Palestinian refugees improved. Overall, the area's economy grew significantly. Israeli government economic assistance helped, but an even more important factor was the natural heavy dependence of the Palestinian economy on the Israeli market for its labor and goods. In addition, Palestinian wages were high compared to those of nearby Arab countries making Palestinian goods less competitive in these countries. Indeed, as Hebrew University economics professor Nadav Halevi stated at a UN conference in Cairo: "The Palestinian economy needs the Israeli one more than the Israeli economy needs the Palestinian one."
As a result of the improved post-1967 economic situation, by 1974 90 percent of Palestinian refugees owned their own homes and their spending was close to that of nonrefugee families. Refugees made up nearly half of the Palestinian population of the administered territories.
The favorable economic trend lasted until the First Intifada in the 1980s, when terrorist activity led to a downturn until the mid-1990s. Then, as a result of the Oslo accords, a more peaceful period emerged leading to resurgent economic activity and a 6-7 percent annual rise in GNP per capita. During both growth periods, the economy benefited significantly from the enhanced integration of the Israeli and Palestinian economies.
The favorable Oslo period ended with the Second Intifada in 2000. There was some recovery from 2003 to 2005 but this soon diminished when Hamas came to power and then took over Gaza. From September 2000 to mid-2007, the Palestinian GNP per capita declined about 30 percent. Clearly, terrorism has been a main factor undercutting economic opportunities for refugees as well as the entire Palestinian economy. Israeli antiterror measures hamper the movement of goods and labor between Israel and the territories.
Compensation for Refugee Losses
All refugee crises since World War I have involved considerable discussions of how to compensate for the property and other asset losses of individuals. International agreements on the subject have increased dramatically, especially since World War II and the founding of the United Nations. During World War II, a number of Allied agreements called for the return of property stolen by the Nazis and their collaborators. The United Nations and its agencies have passed several resolutions on returning property and the right of return of refugees.
In all these cases the agreements have had little effect, becoming no more than idealistic pronouncements. Moreover, all parties to the issue have different interpretations of the language used. This is true of the 1948 UN resolution 194, which refers to the right of return of Palestinian refugees. Finally, there is no balance since the United Nations has passed numerous such resolutions relating to the Palestinians but not one referring to the dispossessed Jews of the Middle East and North Africa.
The examples of compensation falling short are numerous. Less than 20 percent of asset losses by Jews in Nazi-occupied Europe have been returned despite the fact that the Holocaust was an event unequaled in modern history-the extermination of more than two-thirds of continental European Jewry. The nine hundred thousand French pied-noirs who fled Algeria in 1962 lost property valued at $20 billion. Only about 10 percent of that was reimbursed by the French government in the form of assimilation assistance over the next fifteen years.
More akin to the Arab-Israeli situation was the division of the British-ruled Indian subcontinent in 1947 into two states, India and Pakistan. Killings, riots, and property destruction led to the flight of Muslims in India to Pakistan and of Hindus and Sikhs from Pakistan to India. Among the more than fourteen million refugees, less than 2 percent returned and/or recovered their land or business. Although there was considerable discussion of individual compensation, it never worked out. Again in the Greek-Turkish population exchange of 1923, individual compensation was suggested but dropped because of its complexities in favor of a global settlement between the parties. In both cases, the land and shops abandoned by those fleeing were turned over to the incoming refugees.
Such an exchange of property also took place between Jewish and Palestinian refugees. Israel used previously owned Palestinian land to absorb Jewish refugees. The Syrian government seized Jewish property and turned it over to Palestinian refugees. But more commonly in other Middle Eastern and North African countries, seized Jewish property was not used to resettle Palestinians. Governments and local individuals simply took over the Jewish property and profited by not paying compensation.
A fairer resolution of the compensation issue involved the Israeli government's settlement with the Palestinian IDPs. In 1953, it reached an agreement with UNRWA to take over responsibility for resettling these Palestinians. As a result they were no longer considered refugees but rather citizens of Israel. During the next ten years the Israeli government provided the IDPs either their original property and/or compensation for the losses. Although some Palestinians felt the offers were too small and have raised the issue in recent years, the group as a whole has become an integral part of Israeli society.
For most refugee crises of the post-World War II era, compensation came mainly in the form of temporary assistance. Such rehabilitation efforts usually lasted for several years while the refugee groups were becoming assimilated into their new surroundings. It is only the Palestinian one in which such support continued for a prolonged period. In 2007 prices, UNRWA has spent $13.7 billion since its inception in 1950. Its 2007 budget exceeds $500 million. The result is that UNRWA, over the past fifty-seven years, has spent 3.5 times more than the Palestinian refugees lost in assets, and this excludes assistance they received through other aid programs provided to the Palestinians mainly by Western countries.
Most important, the refugee issue is not only bogus but a major distraction from the real issues: establishing a Palestinian state and eliminating terrorism. Only these steps would provide Israel security and allow the Palestinian economy to flourish as it did following the 1967 war and the signing of the Oslo accords.
Restoring such a reality would mean:
Shelving the right-of-return issue and accepting the outcome of similar religious or ethnic disputes that created a significant number of refugees. Each side would continue to live in their new domains, and property and other asset claims would be dropped. At the same time, Arab countries-mainly Syria and Lebanon-would accept the Palestinians as citizens and help integrate them into the local society and economy. Or if they so chose, these Palestinians could be resettled in a new Palestinian state.
Eliminating the refugee status of Palestinians. Instead of providing support to so-called refugees, economic assistance would be given to a new Palestinian state. Similar aid could be provided to other nearby countries to facilitate their absorption of Palestinians.
Obviously, however, negotiations to reach an Israeli-Palestinian settlement will have to deal with the refugee issue and its subparts such as the right of return and/or compensation. Put into perspective, it remains as a bargaining chip for Arab and Palestinian negotiators who continue to emphasize the issue via their political drumbeat. The only way to move toward the reality of how such events have been handled in the past is to stress the clear fact that there were more Jews who fled Middle Eastern and North African countries than Palestinians who left Israel.
If it is decided to establish a fund to reimburse the original Jewish and Palestinian refugee families or their heirs for the asset losses, there are two options. The most just method would be to pay each family/heir what it lost. Such a procedure, however, would be extremely complicated and take many years to determine each person's losses. The second alternative is to establish a global fund in which each family/heir receives an equivalent amount. This would be unfair to the few Jews and Palestinians who in each society held the bulk of the wealth. This is a common situation in all countries. For example, in Iraq in the late 1940s, 2 percent of the Jewish population held 44 percent of the group's assets. To overcome this problem, a higher award could be paid to those who could prove they possessed assets worth more than a stipulated amount.
Under either option an estimated $10 billion would be needed to support an asset restitution fund. Realistically, only a small portion could be expected to come from the countries from which the refugees fled. Most funds would have to be provided by developed or oil-rich Arab countries. During the peace negotiations in 2000, the Clinton administration suggested such a fund should be financed by developed countries. The Arab countries, Israel, and the Palestinians all quickly approved that idea since they would not have to contribute. This is reality!
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 The amount of material produced, especially on the Palestinian refugees, is huge, and much of it highly slanted to support political views. These books and articles provided the most useful research and analysis for this article: Avi Beker, UNRWA, Terror and the Refugee Conundrum: Perpetuating the Misery (Jerusalem: WJC Institute, 2003); Avi Beker, "The Forgotten Narrative: Jewish Refugees from Arab Countries," Jewish Political Studies Review, Vol. 17, Nos. 3-4 (Fall 2005); Randy Belinfante, "Resources for Research on Jews in Arab Countries," Proceedings of the Annual Convention of the Association of Jewish Libraries, Toronto, 2003; Eyal Benvenisti, "Principles and Procedures for Compensating Refugees," PRRN/DRC Workshop on Compensation as a Part of the Comprehensive Palestinian Refugee Problem, Ottawa, July 1999; Rex Brynen, "The Funding of Palestinian Refugee Compensation," FOFOGNET Digest, March 1996; Michael Comay, Zionism, Israel and the Palestinian Arabs: Questions and Answers (Jerusalem: Keter Books, 1983); Elizabeth Ferris, ed., Refugees and World Politics (New York: Praeger, 1985); Michael Fischbach, Records of Dispossession: Palestine Refugee Property and the Arab-Israeli Conflict (New York: Columbia University Press, 2003); Moshe Gat, The Jewish Exodus from Iraq, 1948-1951 (London: Frank Cass, 1997); Sami Hadwi, Palestinian Rights and Losses in 1948: A Comprehensive Study (London: Saqi Books, 1988); Nadav Halevi, "Prospects for Palestinian Economic Development and Middle East Peace Process," paper presented at a United Nations conference in Cairo, June 2000; Andre Jabes, Jews in Arab Countries: A Survey of Events since August 1967 (London: Institute of Jewish Affairs, 1971); Arie Kacowicz and Pawel Lutomski, eds., Population Resettlement in International Conflicts: A Comparative Study (Lanham, MD: Lexington Books, 2007); Arlene Kushner, UNRWA: A Report (Wellesley, MA: Center for Near East Policy Research, 2003); Ruth Lapidoth, "Legal Aspects of the Palestinian Refugee Question," Jerusalem Letter/Viewpoints, 485, 1 September 2002; Luke Lee, "The Issue of Compensation for Palestinian Refugees," PRRN/DRC Workshop on Compensation as a Part of the Comprehensive Palestinian Refugee Problem, Ottawa, July 1999; Itamar Levin, Confiscated Wealth: The Fate of Jewish Property in Arab Lands (Jerusalem: WJC Institute, 2000); Itamar Levin, Locked Doors: The Seizure of Jewish Property in Arab Countries (London: Praeger, 2001); Emanuel Marx and Nachmias Nitza, "Dilemmas of Prolonged Humanitarian Aid Operations: The Case of UNWRA," Journal of Humanitarian Assistance, 22 June 2004; Ya'akov Meron, "Why Jews Fled the Arab Countries," Middle East Quarterly, September 1995; Benny Morris, The Birth of the Palestinian Refugee Problem Revisited (Cambridge: Cambridge University Press, 2003); Ori Nir, "What Is a Refugee? What Is a Displaced Person?" Haaretz, 7 March 1995; Walter Pinner, How Many Refugees? (London: McGibbon & Kee, 1959); Walter Pinner, The Legend of the Arab Refugees (Tel Aviv: Economic and Social Research Institute, 1967); Terence Prittie and Bernard Dineen, Double Exodus: A Study of Arab and Jewish Refugees in the Middle East (London: Goodhart Press, 1974); Maurice Roumani, The Case of the Jews from Arab Countries: A Neglected Issue (New York: WOJAC, 1977); Joseph Schechtman, Arab Refugee Problem (New York: Philosophical Library, 1952); Joseph Schechtman, On Wings of Eagles: The Plight, Exodus and Homecoming of Oriental Jews (New York: Yoseloff, 1961); Joseph Schechtman, The Refugee in the World: Displacement and Integration (New York: A. S. Barnes, 1963); Malka Hillel Shulewitz, ed., The Forgotten Millions: The Modern Jewish Exodus from Arab Lands (London: Cassel, 1999); Norman Stillman, The Jews in Arab Lands in Modern Times (Philadelphia: Jewish Publication Society, 1991); Milton Viorst, Reaching for the Olive Branch: UNRWA and Peace in the Middle East (Washington: Middle East Institute, 1989); www.Wikipedia.org/wiki/Palestinian_refugees.
 See Prittie and Dineen, Double Exodus, 8-9; Schechtman, Arab Refugee Problem; Schechtman, Refugee in the World, 199.
 See Morris, Birth.
 See Shulewitz, Forgotten Millions, 140.
 See Nir, "What Is a Refugee?"
 The total for 1948 is 1,036,000. This includes 856,000 from Arab countries (see Roumani, Case of the Jews from Arab Countries, 2), 140,000 from Iran, and 40,000 from the West Bank and Gaza. For other years, see the American Jewish Year Book.
 See Fischbach, Records, 128.
 See ibid., 98.
 Sidney Zabludoff, And It All But Disappeared: The Nazi Seizure of Jewish Assets (Jerusalem: WJC Institute, 1998).
 See Kacowicz and Lutomski, Population Resettlement, 136-50.
 US Bureau of Labor Statistics, Consumer Price Index, 1982-1984=100.
 See Schechtman, Arab Refugee Problem, 95.
 See Fischbach, Records, 198-209.
 World Jewry Dateline, WJC Foundation, September 2007, 2.
 See Levin, Locked Doors, 137.
 See Fischbach, Records, 193.
 See Hadwi, Palestinian Rights.
 Jerusalem Post, 23 October 2006.
 Jerusalem Post, 16 November 2007.
 UNRWA as of 31 March 2006.
 See Roumani, Case of the Jews from Arab Countries, 50.
 See Schechtman, Arab Refugee Problem, 111-12.
 See Shulewitz, Forgotten Millions, 96; Meron, "Why Jews Fled."
 See Halevi, "Prospects," para. 40.
 See Marx and Nachmias, "Dilemmas."
 World Bank, Two Years after London: Restoring Palestinian Economic Recovery (Washington, DC: World Bank, 2007).
 Sidney Zabludoff, "Restitution of Holocaust-Era Assets: Promises and Reality," Jewish Political Studies Review, Vol. 19, Nos. 1-2 (Spring 2007).
 See Kacowicz and Lutomski, Population Resettlement, 50.
 See Levin, Locked Doors, 182-84.
 Individual years from UNRWA reports with each year increased to 2007 prices using the US Consumer Price Index; see n. 11.
 See Gat, Jewish Exodus, 74.
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SIDNEY ZABLUDOFF is an international economist who specializes in financial matters. Over the past twelve years he concentrated on issues related to returning assets stolen by the Nazis and their collaborators to Holocaust survivors and their heirs. Previously he worked on numerous economic issues at the CIA, White House, and Treasury including the movement of illicitly earned funds.
Copyright - Original materials copyright (c) by the authors.