Financing Palestinian Refugee Compensation
Source: Worshop Papers
by Rex Brynen, McGill University
A just and lasting resolution of
the refugee issue is likely to require
some material redress for those Palestinians
displaced and dispossessed in 1948
and 1967. To date, examination of
this has largely focused on United
Nations General Assembly Resolution
194, on the legal case for refugee
compensation, or on the scale of
Palestinian property losses in 1948,
and hence the magnitude of any compensation
or restitution scheme. Much less
attention has been devoted to how
any future compensation system for
Palestinian refugees might be financed.
This reticence is understandable
on both sides: efforts to examine
resource availability may appear
premature, and could even be seen
as an attempt to limit future Palestinian
claims or establish a prior expectation
of Israeli commitments.
This paper, although exploring the
financing of refugee compensation,
has neither of these negative intentions.
Rather, it is written in the view
that preliminary reflection on resource
generation may facilitate future
fund-raising, and anticipate otherwise
unpleasant surprises. To the extent
that resource constraints exist,
the purpose here is not to accept
them as etched in stone, but rather
to encourage innovative thinking
about how greater resources might
be mobilized. Resource scarcity,
or the adoption of certain mechanisms
of resource mobilization, might also
have implication for the modalities
of, and time frame for, refugee compensation
payments.
Specifically, three areas of resources
are identified and discussed herein:
Israel, whether in the form of the
restitution of refugee properties,
cash payments, or capital resources
in the West Bank and Gaza; contributions
from Arab donors; and contributions
from international donors. It is
argued that, on one hand, that the
ability and willingness of Arab and
international donors to finance a
compensation scheme has often been
overestimated. On the other hand,
the restitution of former refugee
property, however morally appealing,
is politically and practically unfeasible.
As a result, the major portion of
any compensation scheme will necessarily
take the form of financial and capital
resources contributed by Israel.
Israel Property Restitution
In many ways, the most
obvious response to Palestinian dispossession
is the return of properties seized
by the Israeli Custodian of Absentee
Properties after 1948, as well as
other Palestinian-owned lands and
buildings for which prior Palestinian
title can be shown. This is the process
assumed by United Nations General
Assembly Resolution 194 (III), which
calls for the right of Palestinians "to
return to their homes," and which
extends compensation only to those
unwilling to do so. More recently,
BADIL and other Palestinian activists
and NGOs have launched a campaign to advance the cause of restitution, both
through analysis of the Palestinian and comparative cases, and by drawing greater
public attention to this issue:
We, the undersigned, believe that
Palestinians, of whom two-thirds
are refugees, also have the right
of restitution, including the return
of the rightful owners to their property
as well as restitution for other
material and non-material losses.
Resolution 194, which recognizes
the right of refugees to restitution,
has been reaffirmed one hundred and
ten times by the United Nations.
Further, as recently as November
1998, the UN General Assembly reaffirmed
in Resolution 52/644 the principle,
based on the Universal Declaration
of Human Rights and international
law, that Palestinian refugees are
entitled to all revenues from their
property.
We appeal to all fair-minded people, governments, parliamentarians, human rights
groups and particularly Jewish organizations, to recognize, support and call
for restitution of Palestinians through the restoration of homes and properties
to their rightful owners as well as restitution for other material and non-material
losses. While restitution can never fully make amends for all losses, suffering,
and crimes against humanity, restitution establishes a precedent which should
prevent the repetition of such catastrophes in the future. 1
From a Palestinian perspective,
restitution would not only address
the property rights/claims of refugees,
but also represent a form of moral
acknowledgement by Israel of responsibility
for the original dispossession of
the refugees. The case for restitution
is further buttressed by a growing
number of examples of populations
regaining lost or stolen property
after its seizure in political or
military conflicts. Holocaust property
claims, the return of expropriated
properties in former communist regimes,
and aboriginal land claims settlements
are among the most prominent examples.
Property restitution is also the
model adopted by the international
community in the case of refugees
from the conflict in Bosnia. Specifically,
Annex 7 of the Dayton Accords calls
for property to be returned to the
original owners, or compensation
paid where this is not possible.
This process occurs under the auspices
of the Commission for Real Property
Claims (CRPC) of Displaced Persons
and Refugees, which extends to claimants
a series of possible options: 2
- Retaining their rights and reoccupying
their property as soon as possible.
- Retaining their rights without
reoccupying their property or
tenancy but instead seeking a rental
income therefrom.
- Exchanging their
rights on a voluntary basis and
under terms to be decided between
the parties to the exchange.
(The exchange could be permanent
or temporary and could apply to
either property or tenancy rights.)
- Turning
over their property to the Commission
and seeking compensation in a
form to be determined at a later
date by the Commission.
The Dayton Accord also called for
the establishment "Refugees and Displaced
Persons Property Fund," to be financed
through the purchase, sale, lease
and mortgage of property which is
the subject of claims before the
CRPC. The agreement also held out
the possibility that the Fund could
be replenished by "contributions
by states or international or nongovernmental
organizations"-although, to date,
donors have been unwilling to directly
finance compensation in this way.
The Bosnian case also shows the
enormous difficulties of mass restitution
of refugee property. As of December
1997, the CRPC had received 70,000
claims, but-due to the complex and
labor-intensive nature of the task-had
processed only 6,000. International
funding for the CRPC has thus far
been inadequate. Most important of
all, despite desires to return to
their homes, most refugees have been
reluctant to return to properties
located in areas now controlled by
a rival ethnic group. Indeed, only
6% or so of all refugee returns have
been across the inter-entity boundaries
in Bosnia.
In the Palestinian case the practical
challenges of restitution would be
even greater. In contrast to the
few years that have elapsed in Bosnia,
Palestinian property claims are a
half century old. Land title records
are sometimes imperfect, particularly
for rural properties, and this is
further aggravated by the difficulty
of determining past usufructory rights
in cases of former musha' (collective)
agricultural land holdings. The amount
of land involved is enormous, potentially
encompassing (if former state lands
under the Mandate are included) the
overwhelming bulk of the current
state of Israel.
However, even if these practical
challenges could be overcome, the
political barriers to a restitution-based
approach to Palestinian refugee claims
are clearly insurmountable. This
is not to say that claims for restitution
have no foundation: given the inherent
rights of refugees, the confiscatory
nature of Israeli land and property
legislation after 1948, and increasingly
successful efforts of other populations
elsewhere around the world to reclaim
dispossessed properties, the moral
basis for Palestinian claims is a
powerful one. However, there is absolutely
no constituency within Israel (or,
more accurately, within Israel's
Jewish community) for such an approach,
and it is impossible to imagine any
present or future Israeli government
entertaining Palestinian efforts
to reclaim specific properties on
the basis of original ownership.
Indeed, the overwhelming majority
of Israelis would probably favor
favor stalemate in the peace process
than allowing the large-scale restitution
of specific property, especially
if this were combined with the right
of return of Palestinian refugees
and other property-owners.
A more politically feasible alternative-partly inspired by the Bosnian case-would
be to utilize some or all of the rental income from former Palestinian properties
(especially those presently leased to individuals by the state or Jewish National
Fund) as a source for general monetary compensation for the refugees. This
would not involve the return of actual property title to the original owners.
It would, however, have some symbolic and moral value, linking general refugee
compensation to at least some of the properties seized from refugees. This
symbolic value would be heightened if the current legal and customary practices
which prevent non-Jews from renting such lands were to be lifted or alleviated.
Compensation/Reparations
If the return of specific refugee
properties is not feasible, and if
Israel is to assume some or all of
the costs of compensating refugees,
then the obvious alternative is cash
payments. The Harvard-based Joint
Working Group on Israeli-Palestinian
Relations, in a paper written by
Joseph Alpher and Khalil Shikaki,
suggested that individual compensation
to Palestinians, largely financed
by Israel, might total $15-20 billion. 3 Rashid
Khalidi suggests that reparations
might total some $40 billion (if
based on per capita payments of around
$20,000), or several times this amount
is based on the current value of
both material and non-material losses. 4 Shlomo
Gazit has suggested that Israel might
assume a substantial portion of a
refugee compensation scheme totaling
$7-10 billion, on condition that: 5
- The compensation was part of
a bilateral political agreement,
stating clearly that Israel's decision
was ex gratis.
- Israel's share in compensation
was clearly limited in scope, and
was made conditional upon the wealthy
industrial countries and the rich
Arab oil-producing countries participating
in financing a "package" for refugee
rehabilitation.
How much resources might Israel
be expected to contribute, under
optimal circumstances? This is an
enormously difficult figure to calculate.
It can be assumed, however, that
any such contributions would be spread
over several years, in order to make
them more politically and financially
manageable. Table 1 examines various
levels of Israeli compensation commitments
relative to the size (1999) of the
Israeli population, economy, and
government expenditure, on the assumption
that these amounts are raised over
ten years. 6 It
also examines the magnitude of these
compensation levels relative to the
original 1948 refugee population
(here taken to be 750,000), as well
as the current UNRWA-registered refugee
population (3.6 million).
Looked at purely from an economic perspective, a figure of $5 billion does
seem plausible as a lower margin: as a proportion of GNP, it is below the current
level of official development assistance (ODA) mobilization in most of the
Scandinavian countries. It also represents the equivalent of less than two
years of current annual US assistance to Israel. In the draft 1999 Israeli
budget, the Israel Land Authority was to contribute some $291 million to state
coffers, or almost $3 billion over ten years. 7 The
value of settler houses (excluding land) and infrastructure in the West Bank
and Gaza might also comprise part of the Israeli contribution. Arzt suggests
some 100,000 settlers could leave the territories, making some 20,000 housing
units available. 8 These
might have an approximate value of $1 billion, depending on market values and
what was included in the calculation. 9 On
the other hand, some proposals call for Israel to annex those areas of the
West Bank containing 70% or more of the settler population-thus leaving only
5-10,000 housing units in Palestinian areas, worth perhaps $250-500 million.
Table 1: Relative Burden of Israeli
Contributions to Palestian Refugee
Compensation (spread over a ten-year
period)
total amount |
$1 billion |
$5 billion |
$10
billion |
$25
billion |
$50
billion |
$100
billion |
annual amount |
$100 million |
$200 million |
$ 1 billion |
$2.5 billion |
$5 billion |
$10 billion |
per Israeli
(annual) |
$16.67 |
$83.33 |
$166.67 |
$416.67 |
$833.33 |
$1,666.67 |
% GNP |
0.12% |
0.59% |
1.18% |
2.95% |
5.91% |
11.81% |
% government
expenditure |
0.19% |
0.95% |
1.91% |
4.77% |
9.54% |
19.08% |
% defense expenditure |
1.19% |
5.95% |
11.90% |
29.76% |
59.52% |
119.05% |
per UNRWA-
registered refugee |
$277.78 |
$1,388.89 |
$2,777.78 |
$6,944.44 |
$13,888.89 |
$27,777.78 |
per original
1948 refugee |
$1,333.33 |
$6,666.67 |
$13,333.33 |
$33,333.33 |
$66,666.67 |
$133,333.33 |
A total of $10 billion represents,
relative to GNP, about the same level
of generosity evident in the current
Saudi and Kuwaiti foreign aid programs,
and only slightly more than Denmark's
ratio of ODA/GNP, and might also
be considered economically feasible.
A total ten year contribution of
$25 billion, on the other hand, is
equivalent to more than one-quarter
of the entire Israeli defense budget,
and can only be considered the extreme
upper boundary of what is economically
possible.
That these levels of resources are economically feasible,
however, does not mean that they
are politically feasible.
While the conclusion of a permanent
Palestinian-Israeli peace might be
thought to produce a peace dividend
by reducing military expenditures
and freeing up new resources for
economic support of the peace process,
the loss of Israel's territorial
buffer in the West Bank (and perhaps
on the Golan) will create new short-term
pressures for increased military
expenditures. Israel would also face
other costs in withdrawing from the
territories, including possible hundreds
of millions of dollars in compensation
payments to former settlers. Thus,
financing for refugee compensation
would likely have to compete with
a number of other (and politically
more popular) peace-related claims
on the Israeli treasury.
Much may depend on the way that
a compensation regime is "packaged" and
sold to the Israeli public. In their
paper on the refugee issue, Alpher
and Shikaki revealed a major difference
between the Palestinian preference
for significant individual (and perhaps
claims-based) compensation, and an
Israeli preference for collective
compensation to the Palestinian state
and possibly host countries. 10 The
language and approach utilized by
Khalidi and Gazit illustrates another,
related, tension. For Khalidi, payments
are "reparations," intended to acknowledge
moral responsibility as well as to
compensate refugees for specific
losses. Gazit, on the other hand,
underscores a widespread Israeli
view that Israeli should not, through
a compensation scheme, admit to any
moral responsibility or financial
liability for the refugee problem.
On the Palestinian side, linking
compensation and admission of moral
guilt serves to enhance the political
efficacy of compensation, especially
in a context where the full right
of return to 1948 areas is unlikely
to be realized. Conversely, the mobilization
of Israeli resources is inversely linked
to the moral dimension of compensation:
the more that compensation looks
like reparations, the less likely
it becomes that Israel (and the Israeli
public) will provide the required
resources. As Gazit also notes, the
failure to address the issue of Jewish
refugee claims may further aggravate
the domestic political difficulties
of mobilizing Israeli financial resources
for Palestinian refugee compensation.
International Assistance
A number of authors have argued
that, given that Israel alone cannot
be expected to assume the cost of
refugee compensation. According to
Donna Arzt:
Because the estimated value of total compensation
might be in the range of tens of
billions of 1990 US dollars, it
is much beyond the capability of
any one country such as Israel
to pay.... Realistically, given
the minimal likelihood of ever
resolving the causation question,
compensation must be paid out of
a combined pool created as part
of the final peace settlement and
contributed to on an international
basis by Arab states, western industrialized
governments, international institutions,
private benefactors, and Israel. 11
Similarly, Peretz argues
that "these [compensation] amounts
are far larger than any single country
can provide. Therefore an international
compensation pool will have to be
established to raise the necessary
funds" 12 Benchmark figures for the potential
availability of aid from Arab and
international donors might be estimated
by reference to funding for UNRWA,
the post-1993 aid effort in the West
Bank and Gaza, and the most recent
Palestinian Development Plan (PDP).
UNRWA has, of course, faced a growing
squeeze between static resources
and a growing refugee population.
In 1997, it received a total of $297
million in donor contributions. In
the case of international aid to
the West Bank and Gaza, donor pledged
some $4.2 billion for the period
1994-98, and actually disbursed some
$2.6 billion of this. A further $3
billion or so has been pledged for
the next five years of development
efforts. Finally, the most recent
Palestinian Development Plan (1999-2003)
list some $247.5 million in refugee
camp projects for which the PA hopes
to secure donor funding in the next
four years. 13
Arab Donors
Arab donors have been identified by a number of authors as a possible source
for Palestinian refugee compensation on two major grounds: first, because of
a linkage between Palestinian and Jewish refugee compensation; and second,
because Israel cannot shoulder the burden for refugee claims, while oil-rich
Arab states ought to do so as part of their broader contribution to the peace
process.
Linking Palestinian and Jewish Claims
With regard to the first of these
ground, Don Peretz has suggested
that a linkage between Palestinian
and Jewish refugee claims ought to
be made on practical grounds: 14
When compensation does become an
agenda item in the negotiations dealing
with refugees, it seems that the
most feasible solution will be a
trade-off based on the current de
facto situation. For example, former
Jewish property now in Arab areas
such as Iraq, Egypt, and the future
Palestine entity will become the
property of each Arab party to the
conflict, and former Arab property
in Israel will retain the status
it has acquired since 1948. Thus
compensation is unlikely to consist
of large amounts of cash or promissory
obligations that can be used for
development. Rather, it will be in
the form of property that has already
been absorbed into the economy of
the host countries, such as Jewish
housing in Damascus that has been
taken over by Palestinians, property
in Baghdad that is now owned by the
government or Iraqi citizens, and
property left behind by Jewish settlers
in the West Bank and Gaza that will
become part of the infrastructure
and housing stock of the Palestine
entity.
Such a proposal, however, essentially
requires that those Arab states that
seized Jewish property after 1948
be full partners in the resolution
of the refugee issue, by compensating
Palestinians out of those property
seizures. Yet to ask this is to make
the peace process dependent on the
goodwill of, for example, Iraq or
Libya-an unlikely and undesirable
prospect .
In addition to the argument of practicality
advanced by Peretz, others have linked
Palestinian and Jewish refugee compensation
on moral grounds. Typically, this
sort of position argues that since
Israel provided for the care and
development of Jews fleeing Arab
lands, and since Arab states bear
responsibility for war with Israel
and the flight of Palestinians from
their homes, it is the Arab states
which ought to assume financial responsibility
for Palestinian refugees. As former
Prime Minister Benjamin Netanyahu's
office noted in a background paper
on the subject: 15
When discussing these questions,
the rights of Jewish refugees from
Arab countries must also be given
their due consideration. In the years
immediately following Israel's independence,
nearly 600,000 Jews from North Africa
and the Middle East (approximately
as many as the number of Palestinian
refugees who left Israel in 1948)
arrived in the new state, as a direct
result of official and popular anti-Semitic
actions against them. Israel received
them as returning countrymen, granted
them citizenship and helped them
begin new and productive lives. There
is currently no visible sign of their
being "refugees," since they have
long since been absorbed into Israeli
society. Nevertheless, they still
have substantial claims against those
countries which forced them to flee,
often penniless, and these must be
addressed in any comprehensive resolution
of the refugee problem....
...between 1948 and 1986, $10.88
billion (in 1986 dollars) were spent
on transport and primary absorption,
housing, the creation of employment
opportunities, rural settlement,
and educational expenses involved
in absorbing the over 580,000 immigrants
who have come to Israel from Arab
countries (health and welfare expenses
are not included as it was not possible
to calculate these). This is in sharp
contrast to the amounts that the
Islamic countries have contributed
in aid for the Palestinian Arab refugees
over the years.
Once again, it is difficult to see
how previous actions or inaction
by Iraq, Libya, Egypt, Yemen or other
Arab countries toward their former
Jewish citizenry can in any way be
seen as a Palestinian responsibility,
nor why resolution of the refugee
issue between Israel and the Palestinians
ought to be made contingent on the
goodwill of other regional states.
Moreover-while the potential domestic
political weight of Sephardic lobby
groups on Israel's future refugee
position should not be underestimated-there
is good reason to believe that this
particular political obstacle is
sometimes deliberately cultivated
to hamper progress on the refugee
issue. As one Jerusalem Post article-approvingly
redistributed by the Prime Minister's
Office in May 1999-noted:
A campaign has been launched to identify and quantify lost Jewish property
in Arab countries, both as a means to close the historic chapter on Sephardi
life in those countries and to counter Arab claims for restitution for
property in pre-state Palestine .... [italics added]
If claims to Arab property
are raised, then obviously Israel
will have to counter them with
claims to property that is immeasurably
greater," said David Bar-Illan,
director of policy planning and
head of communications for Prime
Minister Binyamin Netanyahu, adding
that it is impossible to calculate
the value of the property abandoned
in the Arab countries.
Amram Attias,
chairman of the Sephardi Federation's
committee of Jews from Arab lands,
said his organization "would like
to demand from the government of
Israel and negotiators that they
put our demands against their demands:
If they are asking for a mosque,
we are asking for a synagogue; if
they are asking for a school, we
are asking also for a school. "It's
not to try to get any money, we
have no hope, no expectation that
we are going to get any money.
The question is a moral issue,
and that moral issue has not been
recognized." 16
Tellingly, while the issue is often
raised to counter impending Palestinian
claims, Israel has yet to vigorously
pursue Jewish refugee claims against
the government of Egypt during the
past two decades of peace between
the countries.
It remains to be seen, of course,
whether this linkage will also be
raised by the new government of Prime
Minister Ehud Barak. Certainly, as
final status negotiations begin,
there are likely to be mounting domestic
pressures to do so. Yet, if the refugee
issue is to be resolved, it is desirable
that he issues of compensation to
Jewish refugees from Arab countries
and Palestinian refugees should not be
linked in any final status agreement.
One possible response to this dilemma
might be for the parties might well
pledge to work together to secure
appropriate compensation for all
those displaced by the Arab-Israeli
conflict (that is to say, including
Jews from Arab lands)-thus transforming
this potential obstacle into a grounds
for positive agreement. This might
be coupled to a broader joint declarative
statement in which the parties recognize,
and profoundly regret, that forced
displacement of civilian populations
occurred during the conflict; and
agree that forced displacement of
civilian populations in times of
conflict constitutes an unacceptable
practice, in violation of both human
rights and international law.
Arab Resources and Burden-Sharing
The second argument for an Arab
role in a refugee compensation scheme
is, as noted earlier, one of burden-sharing.
In this view, the Arabs states have
failed to do their fair share in
providing for the refugees or supporting
the peace process, and the Gulf States
in particular have substantial resources
that could be allocated in this regard.
Another variation of this view is
advanced by Arzt, who suggests that
this might be used as an incentive
to secure Arab participation in refugee
resettlement: "Contributions by Arab
states could be inversely linked
to their willingness to absorb refugees..." 17 She
also suggests that post-peace reductions
in Arab defense expenditure might
free up additional resources for
refugee compensation.
In response, the primary refugee-receiving
states-Jordan, Syria and Lebanon-can
argue that they have have made major contributions to the support of refugees.
This is especially true of Jordan and Syria, which for more than fifty years
have extended public services to their large refugee populations. Both Lebanon
and Jordan can also point to the domestic and regional political (and military)
challenges that they have faced as a direct or indirect consequence of hosting
large refugee populations.
The Gulf states have also made major
contributions to Palestinians. This
included aid host governments; to
the PLO, and hence the broad range
of pre-1982 services it maintained
for refugees in Lebanon; to the Palestinian-Jordanian
Joint Committee in the 1970s and
1980s; and to various Palestinian
charitable organizations. The Gulf
states have not, until recently,
been major contributors to UNRWA.
Traditionally, this arose from the
position that the refugee crisis
had been caused by Israeli action,
and that resolution of the refugee
issue was an international responsibility.
Since the onset of the current peace
process, and in the context of UNRWA's
growing financial crisis, somewhat
greater Arab funding for the organization
has been forthcoming. While total
Gulf contributions totaled only $8.5
million of the $297 million received
by the Agency from donors in 1997,
this must be seen in light of the
relatively small size of Arab economies.
Measured as a proportion of donor
GNP, the contributions of Kuwait,
Saudi Arabia and the UAE were between
two and ten times more generous than
those of the United States, and Kuwait
was-in relative terms-by far the
most generous UNRWA donor in 1997. 18 By
contrast, Israel provided only $28,000
to the Agency in that same year.
A similar picture emerges from an
analysis of Arab support for the
Palestinian-Israeli peace process.
Again, far from shirking their burden,
Arab states have, in view of their
relatively small economies, ranked
among the most generous donors to
the West Bank and Gaza, disbursing
some $219 million between 1994 and
1998. During the same period, Israel
disbursed some $17.6 million, and
other (predominately Western) donors
the remaining $2.3 billion. 19 Relative
to GNP, Arab countries have proven
between three and fifty times more
generous than the US. 20
Moreover, in contemplating all of
these figures, the current poor economic
state of almost all of the Arab states
must be kept in mind. Economic performance
in the region as a whole is weak.
With oil prices at a historic low,
the petroleum-exporting states face
growing budget deficits, and little
prospect of short-term growth. True,
a post-peace agreement regional reduction
in military spending might free up
additional resources in support of
the refugees. However, with continuing
tensions in the Gulf, civil conflict
in Algeria, Sudan and elsewhere,
and a current war on the African
side of the Red Sea, it is unlikely
that Palestinian-Israeli peace would
result in a major short-term reduction
in military expenditures. The image
of an oil-rich Gulf with abundant
financial resources is a dated one,
with little grounding in contemporary
economic realities.
At best, therefore, the wealthier
Arab states might be minority contributors
to a much larger compensation fund,
and in approximate proprtion to their
current support for the Palestinian
Authority and UNRWA. The generation
of Arab contributions towards any
refugee compensation scheme also
faces a formidable political obstacle:
the certain reluctance of Arab states
to finance anything that resembles
compensation to Palestinians for Israeli actions
in 1948. This might be assuaged,
of course, by calling compensation
something other than compensation-say
support for refugee repatriation
and reintegration, or perhaps contributions
to a larger regional economic development
fund. Arab donors would likely be
especially willing to provide support
for the repatriation of refugees
to Palestine from their present host
countries, as well as contribute
to easing their transition to non-refugee
status. It might also be possible
for Gulf donors to assume a leading
role in assisting Lebanon, Syria
and Jordan in maintaining services-formerly
provided by UNRWA-to any refugees
who elect to remain in these host
countries.
Western Donors The international community might
also be expected to make a financial
contribution towards an agreed resolution
of the refugee issue, including compensation.
Western countries currently provide
most of the $297 million (1997) contributed
to UNRWA, and since 1994 have disbursed
an average of $461 million per year
in aid to the West Bank and Gaza.
In 1997, Lebanon and Jordan together
received some $900 million per year
in aid from Western and Arab donors.
Do current levels of Western assistance
to the region-mobilized to support
the current fragile peace peace process-represent
an approximate upper limit on the
resources that might be available
to support final status arrangements?
Or might additional resources be
found?
In 1998 Western development assistance increased in real terms for the first
time in many years. As Western governments bring debts and deficits under control,
the retrenchment of aid budgets may now gradually be reversed. And the US has
certainly shown its willingness to provide substantial (if now declining) assistance
to Israel, while pledges of American aid to the Palestinians increased significantly
from $100 million per year in 1994-98 to around $180 million per year in the
wake of the 1998 Wye Memorandum. Indeed, participants at the 1998 Warwick conference
on refugees suggested that reductions in US aid to Israel might be redirected
towards financing a resolution of the refugee issue.
In broader terms, however, Western
aid budgets remain very overstretched. >From
1992 to 1997, total Western development
assistance aid fell by 21 per cent
in real terms. 21 Palestinians
already receive more assistance per
capita than any developing country
in the world: around $225 per person
per year, compared to an average
of $12.72 for the South as a whole.
In many western aid agencies, and
especially within humanitarian assistance
divisions, the claims of relatively
well-off Palestinian refugees may
be looked about with a rather jaundiced
eye given the needs of far more desperate
populations around the world: despite
its obvious budget pressures, UNRWA
receives around $78 per registered
refugee, compared to only $55 per
UNHCR "person of concern." 22 In
the blunt words of one aid official,
the cost of increasing support for
Palestinian refugees is more dead
children in the Congo. 23 With
the recent the war in Kosovo, the
West also faces massive new humanitarian
relief and reconstruction costs in
the Balkans. These may well equal
or exceed any increases in the total
availability of Western aid. Finally,
with regard to the reallocation of
US aid in particular, it is difficult
to imagine strong congressional support
for shifting former aid to Israel
to the Palestinians. Indeed, while
Israel has accepted in theory a gradual
reduction in US aid, in practice
it requested a major short-term increases in
assistance to finance the redeployments
called for in the Wye Memorandum).
In short, there are likely to be
serious constraints on the availability
of donor resources.
The willingness of Western donors
to finance a portion of Palestinian
refugee compensation will depend
not only on budgetary circumstances,
but also on how such assistance is
packaged. In this regard, there are
several important considerations
that ought to be kept in mind in
designing a compensation scheme:
- At present, support for UNRWA
has a well-established budget niche
within most donor agencies. With
the termination of UNRWA, these
funds will become available for
new purposes, including far needier
refugees in other parts of the
world. Consequently, the eventual
termination of UNRWA may lead to
a shifting of donor support to
other areas. This can be minimized
if UNRWA has a role to play in
supporting compensation, repatriation,
and refugee development. It can
also be minimized if the wind-down
arrangements for UNRWA include
a specific, time-limited commitments
by donors to shift former UNRWA-earmarked
funds into other refugee-related
initiatives. In this case, the
donor's eagerness to relieve themselves
of the continuing burden of UNRWA
might be used as an incentive to
attract their transitional financial
support for the refugee component
of final status arrangements.
- At the same time, while former
UNRWA funding represents an important
potential source of the refugee
component of a peace agreement,
it should also be frankly noted
that, in the long term, the termination
of the agency will undoubtedly
involve a long-term net reduction
in the level of external resources
allocated for refugees. The PA
and host governments-which will
bear the continuing cost of extending
public services to former refugees-are
well aware of this, and hence can
be strongly expected to advance
their own collective claims for "compensation." Any
assistance to governments, of course,
will inevitably come out of the
same finite envelope of donor resources.
- Very few donors will explicitly
finance "compensation," an activity
that falls outside the mandate
of most development agencies. Similarly,
cash transfers to a compensation
fund for Palestinian refugees are
unlikely to win legislative support
in most donor countries. On the
other hand, refugee repatriation
and development activities would
have an easier time attracting
donor resources. This is particular
ly true if organized in a way that
provides donors with suitable guarantees
of efficiency, transparency and
accountability. This latter dimension
suggests another reason why UNRWA,
in partnership with the Palestinian
Authority and others, might have
an important role to play in this
regard.
- Donors in general are highly
reluctant to finance multilateral
funds of any sort, preferring instead
to conduct bilateral assistance
programs, which offer greater political
visibility and economic leverage.
Rather than designing a regional
refugee fund, this fact suggests
that effort should be focused on
developing a coordinated array
of individual repatriation and
development initiatives that donors
can finance on a bilateral basis.
However, while such a mechanism
is likely to prove more attractive
to international donors, it would
be less effective as a way of harnessing
Israeli and Arab contributions
for the purposes of refugee compensation.
- It is important to recognize
that post-agreement refugee development
initiatives are unlikely to represent
a major new infusion
of resources, but rather a relabeling
or retargeting of existing programs.
Indeed, since approximately 41%
of the current population of the
West Bank and Gaza are refugees,
and since Gaza has tended to win
a slightly disproportionate share
of aid (on the basis of both poverty
and the presence of the PA), donors
could today announce more than
$2 billion in apparent assistance
to refugees over the past five
years, simply on the implicit basis
that around half of their current West
Bank/Gaza assistance (and all of
their funding for UNRWA) benefits
refugees. In short, the ability
of the donor community to generate
apparently new commitments out
of smoke, mirrors, and existing
aid should not be underestimated.
Calculating External
Support for Compensation
Given the preceding discussion regarding
Arab and western donor support for
a possible compensation scheme, what
overall conclusions can be drawn
about the availability of external
support for the refugee component
of permanent status arrangements?
In Table 2, calculations are presented
for two time-frames (five and ten
years), and under two sets of assumptions
(optimistic and pessimistic). These
can be said to represent the range
of what might be forthcoming from
Arab and international donors.
- For the first five years, the
optimistic scenario assumes that
donors maintain their current approximate
average of $500 million per year
in development assistance is directed
towards the West Bank and Gaza,
and $900 million per year for Jordan,
Syria and Lebanon. Of this amount,
20% of existing assistance is earmarked
for refugee-related programs. This
would generate some $1.4 over five
years. Thereafter, development
assistance to the region is assumed
to fall by 25%. In addition, a
total of $100 million per year
in new funds are generated specifically
for the refugee issue during the
first five years of permanent status
arrangements, generating a total
of $500 million .
- The optimistic scenario also
assumes that UNRWA is wound down
at a constant rate over five years,
from a peak budget of $350 million.
Former UNRWA funding is reallocated
to refugee projects, thus generating
some $875 million over five years.
In practice, the actual savings
may be less than this: not only
will their material costs involved
in any transfer of services to
the Palestinians state and host
governments, but in addition UNRWA
may face significant staff indemnity
payments (arising, under current
contracts, from the termination
of UN employment status). Thereafter,
it is assumed that $175 million
per year from the former UNRWA
budget are earmarked for refugee-specific
purposes for five additional years
thereafter.
These calculations produce a maximum
of $2.8 billion for the refugee dimension
of the peace process in the first
five years after a final status agreement,
and $4.7 billion over ten years (Table
2). However, as noted earlier, host
states will likely want to claim
a proportion of these resources for
themselves, in compensation for assuming
services previously provided by UNRWA.
Table 2 assumes that around half
of all external resources are thus
split between Palestine and host
countries to alleviate the budgetary
burden of assuming service provision
for refugees. There thus remains
a maximum of around $1.4 billion
over five years, and $2.4 billion
over ten years, to be targeted directly
at the refugees.
Table 2: Possible Arab and International
Support for Resolution of the Regugee
Issue ($ millions)
|
5 years (optimistic) |
10 years (optimistic) |
5 years (pessimistic) |
10 years (pessimistic) |
earmarking
of existing aid |
$1,400 |
$2,450 |
$1400 |
$2450 |
UNRWA termination |
$875 |
$1,750 |
$875 |
$875 |
new assistance |
$500 |
$500 |
$0 |
$0 |
total |
$2,775 |
$4,700 |
$2275 |
$3325 |
transitional
support for PA |
$695 |
$1,175 |
$570 |
$835 |
transition
support for other hosts |
$695 |
$1,175 |
$570 |
$835 |
amount
remaining for refugees |
$1,385 |
$2,350 |
$1135 |
$1655 |
These resources would be almost
entirely biased in favor of repatriation
and socioeconomic development programs,
and to a lesser extent budgetary
support for the provision of social
services. One unpublished report
by a multi-year Israeli-Palestinian
study group, organized by the Institute
for Social and Economic Policy in
the Middle East at Harvard University,
suggested that the repatriation and
absorption costs of 500,000 returning
refugees might total $1.6 to $4.8
billion, excluding any
compensation amounts. 24 Even
if these estimates are considered
high, it is clear that little or
no monies would be available for
cash compensation payments to refugees
out of international donor funds,
although repatriation, reintegration
and development programs might all
be politically packaged as part of
a refugee compensation scheme.
It should also be noted that UNRWA
would, in the absence of peace, be
expected to spend approximately $3.5
billion on refugees over ten years.
While Arab and international donors
will undoubtedly provide resources
that could be allocated tosupport
refugee repatriation and development,
they may not provide any long-term net increase
in external support for refugees
in the wake of a peace agreement.
Finally, and most importantly, it
should be emphasized that these are optimistic assumptions.
More pessimistic assumptions might
suggest that no new resources would
be available for the refugee issue
beyond current aid levels, and that
no former-UNRWA monies would be made
available past the first five years
of an agreement. With these conditions,
the amount available for refugees
(rather than host governments) drops
to $1.1 billion in the first five
years, and a total of $1.6 billion
over ten years.
Conclusion
What overall conclusions can be
drawn from this brief-and admittedly
highly speculative- discussion of
the financing of refugee compensation?
First, the amount of funds available
for compensation may heavily depend
on the design of a compensation regime.
Ideally, such a fund should be designed
in such a way that, from a Palestinian
perspective, it appears to constitute
reparations for past Israeli violations,
while from and Israeli, Arab and
international perspective it has
the form of an international refugee
development initiative rather than
a compensation fund. The treatment
of Jewish claims against Arab states,
while not logically linked to Palestinian
property claims, are likely to become
entwined within the Israeli political
debate over the compensation issue,
and may have significant impact on
the willingness and political ability
of and Israeli government to allocate
resources to the refugees.
Second, there appear to be significant
constraints on the total amounts
that might be available. The various
scenarios here suggest a range of
$6.7 billion to $27.3 billion is
economically sustainable given the
size of the Israeli economy and the
availability of official development
assistance from Arab and international
donors. Whether this level of resources
is politically sustainable is, as
suggested earlier, an entirely different
question. Variation in the "plausible" figures
presented above is largely a function
of Israeli willingness to generate
the necessary financial resources.
To the extent that such willingness
exists, the amounts available for
compensation (as well as repatriation
and development) might be significant.
If Israel is unwilling to generate
the needed resources, there will
simply not be adequate funds available
for compensation. The same holds
true if Israel insists, implicitly
or explicitly, on linking its contributions
to the scale of Arab and international
donations. Given current economic
realities and urgent demand for ODA
elsewhere in the world, there is
little scope for substantial expansion
of commitments on the donor side.
* * *
Finally, and also by way of conclusion,
what are the author's own view on
the likelihood of the various scenarios
presented herein? At the moment,
under present economic and political
circumstances, I'm inclined to pessimism:
I suspect that Israeli willingness
to allocated resources to compensation
will fall at the very lowest end
of the range presented here (that
is, between $1 billion and $5 billion),
and that over ten years international
donors are likely to earmark $2 billion
or less for (post-UNRWA) refugee-specific
purposes.
These amounts are clearly inadequate
to meet the needs of refugee repatriation
and compensation, a fact underscored
by the distributional projections
suggested in Appendix 1. The resulting
crisis of expectations could prove
to be a substantial stumbling block
in final status negotiations. All
of this points to an urgent need
for action.
Among international donors, there
needs to be serious discussion now-and
not after a final status agreement
is concluded-on financing a resolution
of the refugee issue, and specifically
on the maintenance of refugee-specific
funding when UNRWA is eventually
terminated. To date, discussion of
these topics has been inhibited by
immediate preoccupation with UNRWA's
serious financial problems, the tendency
of many regional parties to steer
away from official discussion of
sensitive final status topics (in
the context of the Refugee Working
Group and elsewhere), by the reluctance
of international organizations to
face the question of future refugee
absorption in Palestine, and by the
understandable concern of refugees
that the negotiating process will
fail to address their full rights
and aspirations.
Within Israel, the refugee issue
needs to be further aired, in an
effort to build some degree of public
recognition (and acceptance) that
future compensation payments to Palestinian
refugees are both justified and in
the interest of both Israel and the
Palestinians. Greater public understanding
of the origins of the refugee problem
might facilitate this. Similarly,
the political and strategic necessity
of finally resolving the refugee
issue must be underscored. Creative
efforts must also be undertaken to
prevent the question of Jewish refugee
claims against Arab states becoming
a future political obstacle. Direct
discussions between Palestinian and
Sephardic Jewish groups, for example,
might yield agreement on basic principles
and the inherent rights of refugees.
Appendix 1: Distributing
Individual Compensation
The purpose
of this paper was to discuss the
very substantial challenges that face any effort to mobilize
resources for Palestinian refugee
compensation, rather than to discuss
the distributional modalities of
any compensation regime.
Nevertheless, it is interesting to sketch out in a little more detail the distributional
implications of different levels of resource allocation for the level of individual refugee
compensation. The following schema should not be considered as a well thought-through
plan, but rather an illustrative model. It is based on the following assumptions:
- A ten year time frame, and a
total refugee population of 3.6
million persons, of whom 10% are
first-generation refugees.
- The repatriation of 750,000 refugees
over that period, with returning
refugees receiving a $750 repatriation
package, financed by international
donors. This is considered part
of individual compensation package.
Development assistance to refugees
or assistance to host governments,
however, is not considered part
of individual compensation, due
to its much more diffuse and indirect
character.
- Other than the repatriation package,
returnees and non-returnees receive
similar levels of compensation,
largely paid for by Israel. Half
of all compensation resources are
paid to first generation refugees,
distributed evenly on a per capita
basis. All remaining funds are
paid to second and subsequent generation
refugees on an equal per capita
basis.
Table 3 : Distributing Refugee Compensation
|
$1
billion |
$2
billion |
$5
billion |
$10
billion |
$25
billion |
first
generation refugees |
|
returnees |
$1,530.56 |
$2,746.53 |
$6,913.19 |
$13,857.64 |
$34,604.17 |
non-returnees |
$780.56 |
$1,996.53 |
$6,163.19 |
$13,107.64 |
$33,854.17 |
subsequent
generation refugees |
|
returnees |
$875.45 |
$1,070.87 |
$1,740.51 |
$2,856.58 |
$6,190.85 |
non-returnees |
$125.45 |
$320.87 |
$990.51 |
$2,106.58 |
$5,440.85 |
Notes
1 BADIL, Petition
Campaign for the Palestinian Right
to Restitution.
2 Commission
for Real Property Claims of Displaced
Persons and Refugees, Press Communiqué ,
11 June 1996; General
Framework Agreement ("Dayton
Accord"), Annex 7.
3 Joseph
Alpher and Khalil Shikaki, The
Palestinian Refugee Problem and the
Right of Return , Weatherhead
Center for International affairs
Paper 98-7 (Cambridge: Harvard University,
May 1998), p. 14.
4 Rashid
Khalidi, "Toward a Solution," in Palestinian
Refugees: Their Problem and Future (Washington
DC: Center for Policy Analysis on
Palestine, October 1994), p. 24.
5 Shlomo
Gazit, The Palestinian Refugee
Problem (Tel Aviv: Jaffee Center
for Strategic Studies, 1995), p.
21-22.
6 An estimated
GDP of $84.7 billion (1999) and estimated
population of 6.1 million (1999)
have been taken from data provided
by the Israeli Ministry of Finance
at http://www.mof.gov.il/hachnasot/bud99/tables.htm#t7 Estimated
government expenditure of $52.4 billion
and defense expenditure of $8.4 billion
have been taken from the 1999 draft
budget, at http://www.mof.gov.il/budget99_e/part110.htm .
A current exchange rate of NIS1 =
$0.2438 has been used for conversions.
7 1999 draft
state budget, at http://www.mof.gov.il/budget99_e/part110a.htm
8 Donna
Arzt, Refugees Into Citizens:
Palestinians and the End of the Arab-Israeli
Conflict (New York: Council
on Foreign Relations Press, 1997),
p. 98, 170 n38.
9 This rough
calculation is based on 20,000 houses
at $50,000 each.
10 Alpher
and Shikaki, The Palestinian
Refugee Problem and the Right of
Return, p. 31.
11 Arzt, Refugees
Into Citizens , p. 98.
12 Don
Peretz, "The Question of Compensation," in Palestinian
Refugees: Their Problem and Future (Washington
DC: Center for Policy Analysis on
Palestine, October 1994), p20.
13 Palestinian
Authority, Palestinian Development
Plan 1999-2003 (January 1999).
14 Don
Peretz, Palestinians, Refugees,
and the Middle East Peace Process (Washington
DC: United States Institute of Peace,
1993), p. 92.
15 Prime
Minister's Office, Background
Papers: The Refugee Issue (as
of July 1999).
16 Jerusalem
Post , 5 May 1999, reprinted
in The Prime Minister's Report ,
11 May 1999.
17 Arzt, Refugees
into Citizens , p. 98.
18 UNRWA, Contributions
to UNRWA in Cash and in Kind by
Governments and the European Community ,
1 January 1997 - 31 December 1997;
Rex Brynen, "UNRWA Donor Generosity
Index," FOFOGNET Digest ,
31 December 1998.
19 Data
from Palestinian Authority, Ministry
of Planning and International Cooperation.
20 Rex
Brynen, A Verp Political Economy:
Peacebuilding and Foreign Aid in
Palestine (forthcoming), chapter
3.
21 Calculated
from Development Assistance Committee,
Organization for Economic Cooperation
and Development, News Release ,
10 June 1999.
22 UNHCR, "UNHCR
in Numbers (July 1997)" at http://www.unhcr.ch/un&ref/numbers/numbers.htm;
UNRWA, Report of the Commissioner-General
of the United Nations Relief and
Works Agency for Palestine Refugees
in the Near East , 1 July 1996-30
June 1997 (A/52/13), para. 8.
23 Interview
with senior Western aid official,
June 1997.
24 George
Borjas and Dani Rodrik, Project
on Palestinian Refugees: Summary
Report , Institute for Social
and Economic Policy in the Middle
East, Harvard University (unpublished,
May 1998). In Bosnia, the external
financing requirements for refugee
reintegration were estimated at $520
million for 1998 alone. The Bosnian
authorities have suggested that much
larger amounts will eventually be
needed-c $8-10,000 per person, or
some $3-4 billion total. Reconstruction
and Return Task Force, Report ,
March 1998.
To date, international donors have
provided only a fraction of this. |