The prospect that a framework agreement may be concluded between Israel and the Palestinian Authority during the course of the next year has led to more focussed attention upon the future of UNRWA. This paper examines the capacity of UNRWA, the major donors to the Agency, and the Palestinian Authority (PA) to change the approach which UNRWA has traditionally taken to its role, in the event that a framework agreement of a comprehensive peace settlement is successfully negotiated.

Assumptions and Judgements
This paper is based on certain assumptions and forecasts concerning the direction of the negotiations between Israel and the PA towards a framework agreement, or a final status agreement that provides for further negotiations on some issues. It assumes that :

• the compromises which will be made in the wider framework of the peace process under way between Israel and the PA will make changes in the present situation of the vast majority of the Palestinian refugees unlikely;
• that situation will be largely accepted, in practice, by Jordan, Syria and Lebanon whose respective political attitudes and policy approaches towards their refugee populations will remain largely unchanged;
• the refugee community will demand the continuation of UNRWA as a symbol of international responsibility for their situation, and as a concrete acknowledgment of their aspirations for redress - even though the international community has long recognised privately that such aspirations cannot be fulfilled in practice. They will be supported in that demand by their host governments; and
• the PA will probably seek to accommodate those demands in some form, rather than to agree formally that the right of return to Israel had been abandoned - or to signal the PA’s acceptance of that reality by supporting the winding up of UNRWA.

If those assumptions are valid, it can be expected that UNRWA, as a UN agency whose operational effectiveness is linked to its careful management of relations with the PA and host governments, as well as the refugee community of which it is in some ways a part, would be unlikely to take the lead in proposing steps towards changing its functions, let alone proposing its own demise.

The mandate of UNRWA is sufficiently flexible for the Commissioner-General to respond to changing circumstances on the ground by adjusting Agency programs without prior reference to the General Assembly. He did so, for example, in January 1988 in response to a request from the UN Secretary-General to improve the assistance provided to the refugee population following the outbreak of the intifada and the subsequent adoption by the Security Council of Resolution 605 (1987) which strongly deplored Israeli violations of the human rights of the Palestinians. UNRWA also willingly engaged in the delivery of development assistance to the Palestinians through the Peace Implementation Program which was launched in 1993 following the signing of the Declaration of Principles.

In both cases, UNRWA provided, at the time, the most effective option available to the international community to give concrete expression to its concerns - to ensure the safety and protection of Palestinians under occupation on one hand, and to make the results of the peace process felt by the Palestinian refugee community on the other.

In both the examples mentioned above, however, UNRWA acted in ways which were broadly in line with its basic orientation. Its measures were certain to enjoy not only broad international support but also, and perhaps more importantly, the support of the refugee community in general. The moves were also certain to have the endorsement of the host countries. Such support would probably not be forthcoming, as noted earlier, for measures by the Agency which were seen to be at odds with refugee political aspirations and host government interests.

Where measures might be envisaged which would depart significantly from its established role, UNRWA would certainly, and reasonably, expect there first to be a clear international consensus calling upon it to change its approach. That consensus would seem unlikely to eventuate in view of the positions of the host countries and the PA described above.

UNRWA would also expect that such a consensus would be embodied in an appropriate UN General Assembly resolution which took account of the widely-perceived linkage between the right of Palestinian refugees to return, as popularly believed to be established in UNGA Resolution 194, and UNRWA’s own continuing role.

Such a resolution would seem unlikely to secure passage through the UN General Assembly if the PA and host governments were to be embarrassed politically by it, or if they, or the refugee populations they currently host, were likely to be financially disadvantaged by changes to UNRWA’s functions.

Key judgements, some of which are elaborated below, are that

• UNRWA should continue to receive donor support because of its operational efficiencies, and its unique place in the political mythology of the Palestinian people;
• Maintaining UNRWA in some form, despite reservations in some quarters, would be more likely to serve the wider interests of key countries among the major donor group (securing a stable outcome to the peace process as a whole and supporting the development of the public services of the emerging Palestinian state) than seeking formally to wind up the Agency. It would also be a more politically feasible approach;
• At the same time, conclusion of an agreement, or of a further significant step in that direction between Israel and the PA would mark an appropriate moment for the role of UNRWA to change to reflect the contemporary political realities of the region, and to address more effectively the financial pressures that have plagued the Agency;
• Instead of delivering its own programmes, UNRWA should become, over time, a service manager and center of excellence, that maintains, for both humanitarian and political reasons, an effective and ongoing commitment to supporting those refugees who are genuinely vulnerable;
• Donors, the PA and UNRWA should seek, accordingly, to develop a joint strategy that strengthens Palestinian national capacities and puts UNRWA on a more financially sustainable basis, by allowing the PA, host governments and NGOs to play a growing part in the services currently provided by the Agency.

The issues to be considered further in this paper are first, whether extending ongoing support to UNRWA along such lines is likely to run counter to wider political objectives; and second, the approaches that could be taken to securing outcomes of that nature.

UNRWA and the Outcomes of the Peace Process
Since it started operations in 1950, UNRWA has been a key element in the sustenance of Palestinian refugee identity against external alternatives, both Israeli and Arab. In addition to its outstanding humanitarian role, UNRWA’s existence has kept alive among refugees the hope, if not the belief, that the international community has not abandoned its perceived responsibilities for securing a just settlement of their demands for redress.

In addition, UNRWA facilities have provided the institutional means, including pockets of civil society, through which refugee aspirations have been preserved. Those aspirations, and the Palestinian refugee political culture of which they are part, have emphasised the distinctiveness - or at least the particularity of interests and concerns - of refugees from other Palestinians. There have been other factors at work in that process, of course, but the central place of UNRWA in the Palestinian refugee experience is undeniable.

Despite periodic concerns about the outlook for the peace process, and even with occasional reversion to conditions of bilateral and regional tension, instability or emergency, however the Palestinian-Israeli conflict is drawing to an end. No matter how inconclusive and unsatisfactory that end may be to some of the protagonists, priority needs to be given to strengthening Palestinian national institutions generally, rather than sustaining refugees as a distinct body whose aims and aspirations are fundamentally incompatible with the basis - flawed or otherwise - on which peace is being achieved.

If a peace agreement is concluded, therefore, Israel and many non-Arab donors are likely to question the appropriateness of continuing formal support for the right of Palestinian refugees to return to what is now Israel; and to UNRWA as a symbol, among Palestinian refugees, of the unresolved nature of the refugee issue.

While understandable at first glance, such concern exaggerates the consequences of the fact that the refugee issue has proven to be insoluble on the terms demanded by the Palestinian side.

Leaving the issue unresolved would not make any significant difference to the situation on the ground for either Israel or the Palestinians. But pressing for the acknowledgment of the realities facing the Palestinians on this issue runs a strong risk of creating the reverse effect of what those calling for such measures presumably intend.

The memories and mythologies that are part of the Palestinian identity will not be altered or obliterated through unambiguous statements that the right of return has been abandoned. Such statements are unlikely to be made. If they were to be made, they would seem certain to be disavowed in many quarters. The ensuing debate would satisfy no-one.

At the same time, those realities should not be ignored or discounted. It is highly unlikely that a right of Palestinian refugees to return to Israel proper will be acknowledged by Israel. It is inconceivable in the foreseeable future that a right of return to Israel would be acted upon. But with Lebanon an important possible exception, no regional government faces instability because of the fact that the refugee problem remains unresolved, nor are they likely to give disproportionate weight to that fact in determining the nature of their approaches to dealing with Israel.

The political case for winding up UNRWA as a means of reinforcing the peace between Israel and the Palestinians is therefore weak. Continuation of the Agency in some appropriate form is a preferable approach.

Sustainability
If a settlement is reached between Israel and the PA on the issues of primary concern to them, the international community is capable of accepting de facto an outcome on the refugee question that leaves the refugees largely where they are now located. The fate of the refugees under those circumstances would fall to the host countries and the PA to determine.

Even if there was agreement on the movement of large numbers of refugees to a Palestinian state, there would be lengthy lead times involved in planning for and providing viable infrastructure to accommodate such refugees in new surroundings. Much work has yet to be done before associated but vexed issues including compensation, citizenship and residency rights might be resolved.

With or without a settlement, most donors would continue to consider the services currently provided by UNRWA to be important, for humanitarian reasons. Most would also see those services as contributing to the interests of the international community, and the PA leadership, in avoiding civil strife and confrontation between Palestinians and Israelis.

In the absence of UNRWA, or some successor body, it would be up to the host countries and the PA to cater for the needs of the refugee population by allocating resources for that purpose among their other domestic priorities. Most of the services provided by UNRWA would need to continue.

The questions to decide would be the mechanisms through which, in future, those services would be provided; and who would provide the resources required.

With a peace framework in place, the focus among Western donors, at least, is likely to concentrate increasingly upon strengthening the sustainability of the emerging Palestinian state.

Under the changed political circumstances of the region, and questioning the appropriateness of maintaining the distinctiveness of the refugee population, at least in areas under Palestinian control, some Western donors may encourage UNRWA to transfer its responsibilities to that state.

Pressure may mount in particular for the PA to take over UNRWA’s responsibilities in regard to education, health and social welfare. Donors may further decide that the strengthening of civil society and Palestinian NGOs warrants higher priority for funding than UNRWA programs - unless UNRWA decides to strengthen its own (highly successful) efforts in some of those areas.

Some donors may also insist on UNRWA bringing its criteria for eligibility for services into line with the new political situation, arguing that the Palestinian state should have the capacity to provide for the refugees within its territory, and that the Agency for its part should henceforth accord higher priority to protecting the well-being of Palestinian refugees on the basis of need, rather than their refugee status.

Donors could seek to apply the same approach to UNRWA’s role in Syria and Jordan, where specific local arrangements surrounding the presence of the refugee population have allowed refugees varying degrees of access to national social infrastructure.

At the same time, the particular vulnerability of Palestinians in Lebanon may also lead some donors to press for those refugees to secure a larger proportion of UNRWA funding than under existing, political status-based Agency criteria for refugee registration and participation in UNRWA programs.

Fresh Approaches
It would be a major challenge to bring such changes about, even if they were supported by key donors as part of a wider approach to the refugee issue which addressed other issues such as citizenship, rehabilitation, resettlement and compensation.

A first step would need to be the reaching of agreement among key donor countries (unanimity among all donors on the issue is unlikely) that the time had arrived for UNRWA and the PA, and where possible, UNRWA and the host governments, to enter into firm arrangements for the transfer, over a specified period, of UNRWA’s functions to the PA and to those regional governments.

Key donors are generally averse to covering recurrent costs, rather than development programs. They would have to be persuaded that their interests - including both their humanitarian relief objectives and their development policy objectives - would be served by supporting, probably for a specific period, a transitional financing arrangement for UNRWA, the PA and host governments, akin to their support for the PA post-Oslo, to underpin the transfer of responsibility for UNRWA programs.

Donors would need to agree in principle to commit substantial resources, either individually or perhaps through a World Bank mechanism, to assist each of the parties involved jointly to identify the steps which would need to be taken to make that transfer technically possible. That would include, in particular, the planning and upgrading of skills and institutional capacities that would be required.

A second step would be to persuade the PA and the host governments to accept, in principle, establishing a transitional program and financing package with the donor countries, despite the awkward political questions it would raise about allocating priorities between refugees and non-refugees, and the sharing of responsibilities with UNRWA in the transition period.

Political resistance at the highest level of the PA to such a change would be likely. Given the challenges to achieving concrete outcomes from negotiations with Israel on key refugee concerns, the PA would not wish to add to the problems it would face in managing its relations with the refugee community. It would be likely to claim to be tightly constrained, politically and financially, from assuming UNRWA’s responsibilities. It would probably assert, with considerable vigour and passion, and some justice, that those responsibilities remain the obligation of the international community to uphold.

Although there have been important exceptions, previous attempts by UNRWA to explore with the PA the ways in which the PA’s institutions might undertake, on a mutually beneficial basis, a larger share of the functions currently provided by the Agency have been rebuffed for political reasons.

The obvious, but by no means conclusive argument which could be put to the PA and the host countries to seek their agreement, would be that to reject such an approach would be to risk a breakdown or effective cessation of existing UNRWA services for financial reasons. Unless donors reverse their aversion to funding recurrent costs, which seems unlikely in view of the political and developmental arguments in favour of according priority instead to state-building, UNRWA can expect to be at least 50 per cent worse off in resource terms in ten years time.

The PA and host governments might not be readily persuaded to come that view, however, especially in the light of the success that UNRWA has enjoyed over recent years in galvanising additional donor support when necessary, including through astute management of the politics of its financial crises.

Coordination among key donors on their approach to the issue would be essential, and protracted negotiation would be very likely. The price of agreement would be high, including potentially in terms of the influence to be accorded to the PA and host governments over resource allocation decisions by the Agency in the interim period. That is something which the Agency, mindful of its responsibilities as a UN body, its operational needs, and the wider political aspects of the question has been careful not to compromise in the past.

If the first two steps were completed successfully, a third step would be for UNRWA, the donors, the PA and host governments to establish the details of sectoral packages for the harmonisation and eventual handover of services. Those would need to cover the identification of needs, the priority areas to receive support, the duration of that support, and the nature of the respective inputs of resources that UNRWA, the donors and host governments and the PA would make.

The aim would be to achieve a sufficiently high degree of convergence and complementarity between PA/host government activities and those of the Agency that the services currently received from UNRWA could be sourced increasingly by refugees themselves from host government agencies and NGOs. The stabilisation of enrolment rates in the UNRWA education program in Jordan in recent years illustrates the potential for refugees voluntarily to seek greater use of host government facilities provided they are of comparable quality.

A Refocussed UNRWA?
While the political case for continuation of UNRWA in an appropriate form is strong, the time is long overdue for UNRWA to reconsider its traditional concern to deliver its programs itself, and to shift to a situation where it delivers some of those services itself, and manages and supervises the delivery of some others.

The main reasons it has largely failed to do so to date, despite the vastly different political circumstances that now apply in the region, and the greater capacity of governments to provide for the refugee population compared to the early 1950s, are essentially political. They also relate to the Agency’s operational ethos.

If changes are to be introduced, they will need to be dealt with at a political level as well as through addressing the technical challenges they would entail.

The present approach of the Agency, which is derived from assumptions that all registered refugees are entitled to assistance by virtue of their political status, and that the Agency should deliver services itself, is unsustainable financially because of demographic factors. It is out of step with the direction of government philosophy and practice in many donor countries. It does not take adequate account of the capabilities of government and Palestinian community-based bodies to undertake a larger share of those functions, and the longer-term need for those functions to be managed on a sustainable basis.

Where a role for the PA and host governments is not a serious possibility at this stage, outsourcing to Palestinian and host country NGOs, or partnerships between national NGOs and international NGOs, might still provide significant strengthening of Palestinian and national institutions. It may also allow additional access to resources from some donor countries by tapping development as well as the relief budgets of certain aid agencies.

Among possible fresh approaches that could be considered, in the UNRWA/PA context at least, are the following:

• establishment of a cooperation agreement between UNRWA and the PA encompassing secondment of staff from the PA to UNRWA schools and clinics, with the PA to be given additional financial assistance from the donors for that purpose (to cover salary and allowance differentials), and with UNRWA to be actively engaged in a cooperative effort with the PA for the upgrading of PA teaching qualifications and performance to meet UNESCO standards. UNRWA-employed staff (as distinct from contracted teachers) would eventually be used mainly for senior level management and training;
• increased outsourcing to the PA of refugee education and health services. Refugee children should be able to go to school wherever there is capacity in PA schools to absorb them - as currently happens to some extent in the West Bank.
• concluding an agreement with the PA whereby, in lieu of the VAT currently owed by the PA to UNRWA (amounting to some $20 million) eligible refugees would be covered by PA health insurance, enabling them to attend PA clinics - as many already do - rather than UNRWA having to open and to staff additional health facilities.
• subject to it being economically viable (which, on careful examination it may not be) outsourcing to the private sector and NGOs of UNRWA medical services including cardiology, gynaecology, diabetes, dentistry and pathology services; and paying NGOs and the PA to run non-camp clinics on behalf of the Agency;
• and possibly introducing partnership arrangements for the construction of additional schools for UNRWA and the PA (and for refurbishment of Agency schools) on a leaseback basis, perhaps in association with the World Bank.

Implementation
As noted above, political resistance to change would be inevitable. Affected parties would ensure an active, vocal resistance in some quarters. But carefully managed, those sensitivities should not prevent a well-considered series of reforms from going forward.

It would be critically important to arrive at a package supported by donors from which the PA and host governments would derive advantages overall, provided they were prepared to work positively and constructively with the Agency. Selling the package would require serious engagement on the substantive issues at the most senior political level of the PA in a way that combined firmness about the need for change in approach on one hand, with, on the other hand, an emphasis on the shared benefits of cooperation.

Central to achieving a satisfactory outcome would be the protection of the vast majority of refugees from additional financial or other burdens. It would be difficult to justify advocacy of a resolution to the refugee issue that left the most vulnerable of the refugees worse off than before. That would, in turn, make securing political support for needed changes even more problematic than at present.

With political considerations in mind, the approaches proposed should not encompass movement towards cost recovery. The value in pursuing such an approach may be limited, even under ideal conditions, in regard to public health and primary education. To raise the cost recovery issue under the political conditions of the next few years would be to eliminate any real prospect of gathering the political momentum for other changes in approach that are, ultimately, more important to the donors’ long-term interests.

Key to the successful introduction of such a change in approach would be to ensure that the PA and UNRWA were fully consulted and had time and, where necessary, additional technical support to consider what supplementary assistance may be required as bridging arrangements were made.

Though it should be planning for change, UNRWA, for its part, could not expect to be invited by host countries or the PA to be relieved of its present responsibilities, or to be asked to deliver its programmes differently. Donors would have to initiate any moves in that direction. They would need to insist upon the impossibility of sustaining UNRWA’s present approach any longer in the changed political circumstances of the region, and to draw attention to the absence of any alternatives in a realistic time frame for the Agency.

If Consensus Was Not Possible
If a consensus approach could not be developed, an alternative (and less attractive) approach would be for the key donor countries still to maintain UNRWA as an institution, but to cap financial support for the Agency at present levels, thereby effectively bringing about an increasing requirement for the PA to absorb its functions in the West Bank and Gaza.

Under such an approach, demographic realities and sensible management would require the Agency to reassess its priorities in the allocation of the resources available to it, and to concentrate its resources upon maintaining programs primarily for the benefit of the elements of the refugee population at greatest risk in each field.

Though the situation might be resisted initially in some parts of the PA and UNRWA, provided they were aware that a firm decision had been taken on the part of key donors to proceed in that direction; provided the Agency made necessary adjustments in a timely fashion, and set its initial level of eligibility to receive benefits at a level that accommodated the bulk of the refugee population; and provided particular attention was paid by UNRWA to protecting the interests of the Palestinian refugees in Lebanon, the political repercussions of such a move would be manageable.

The Agency might survive within a fixed budget through measures to restrain the growth of demand - moving towards cost recovery; and lowering the quality of services through delays; further crowding; and generally lowering the attractiveness of Agency services compared to host country provided services where available. Doing so would be no more than a reinforcement of actual practice among the refugee population in some places. In the West Bank and Lebanon, for example, there is evidence that some refugees are willing to use non-Agency services where those are available, even at a higher cost.

The overall effect, however of curtailing the performance of the Agency by default, rather than adjusting its role by design, would go beyond running down the performance of UNRWA to unacceptable levels. It would further lower its morale, and ultimately erode the likelihood of sustaining donor financing for those functions which it would need to continue to provide to those refugees in greatest need.

It would be more appropriate to rebase UNRWA’s approach, to attune it to changing circumstances, and to move as quickly as possible to more cost-effective and sustainable methods of delivery of Agency services where research indicated that would be feasible, and where agreement could be reached with the PA and host governments on the approach to be taken.

Conclusion
Over time, whether the memories and mythologies which drive Palestinian refugee aspirations fade as a political force will depend on the evolving nature of the relationship between the refugees and the host countries where they will ultimately reside. Though unlikely to be abandoned, those mythologies may gradually become less dominant when confronted by new experiences of constructive dealing with Israel and with the Palestinian Authority at individual and governmental levels. The challenges associated with such processes will of course remain formidable.

It is clear that there would be few interests served on the Palestinian side, and considerable capacity for political turmoil, especially in the Lebanese context, if premature and probably fruitless efforts were made to bring the refugee issue to formal closure on a basis which ruled out the principle of the right to return.

The approach suggested in this paper - and the fall-back approach also outlined - would not prevent a reorientation of UNRWA’s present functions in directions that lent support to those Palestinian refugees, particularly in Lebanon, who would appear likely to gain least from the outcomes of the peace process. The approach would also contribute in areas of UNRWA’s special competence to development goals for a Palestinian state from which refugees in that state would also benefit.

The challenge for the donor community, and for the Agency’s leadership, is twofold. The first task is to define a strategic vision characterised by responsiveness to change, but with predictability and the capacity to preserve core functions where they are needed most. The second task is to communicate that vision to key audiences in order to secure a more predictable footing for the Agency.