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The Harvard Project on Palestinian Refugees

Source: A Paper Presented To The United Nations Department of Political Affairs
International NGO Meeting
European NGO Symposium on the Question of Palestine
Palais des Nations
Geneva, Switzerland

by George Borjas, Leonard Hausman, and Dani Rodrik
Institute for Social and Economic Policy in the Middle East
John F. Kennedy School of Government
Harvard University

September 2, 1996

I. Introduction
Peace in the Middle East will not endure without resolving the Palestinian refugee question. The absence of such an agreement will leave a large number of people feeling ignored and aggrieved by the peace process. Although formal talks have been held on the matter intermittently for over three years, no progress has been made on formulating a consensus plan for the resolution of the question.

In this context, a “Track II” effort has proceeded at Harvard University with two goals. The first is to have a group of Palestinian, Israeli, and Jordanian social scientists contribute to the formal talks by reaching a consensus on the essential facts of the problem, as well as on the nature and strength of the economic and social forces that will have an impact on the resolution of the problem. The second is to have this group analyze alternative options for resolving this refugee question; reach agreement on the outlines of a particular plan; and then recommend this particular plan to the Track I negotiators. Professors George Borjas and Dani Rodrik of Harvard’s Kennedy School co-chair this project, and work with a team of roughly fifteen professionals, principally Israelis, Jordanians, and Palestinians who reside in the their home countries. The “gavel holders” for the multi-lateral talks on refugees, first Mr. Marc Perron and then Mr. Andrew Robinson, of Canada’s Ministry of Foreign, have encouraged the work of this project since its initiation on February 15-16, 1994.

The Harvard Project on the Palestinian Refugee Question has produced to date a consensus among its members on a research plan, and on the broad outlines of a set of solutions to the essential economic and social aspects of the problem. In this brief paper, we discuss the key concerns which the research plan will address. Then we offer comments on a feasible set of plans. The latter comments reflect our view of understandings reached by the group; they have not been reviewed or approved by the group. Until the research is concluded, the group cannot agree on the details of feasible consensus plans. The expertise, including political awareness that stems from important relationships in the Middle East, and neutrality of this Harvard group, should commend its ultimate product to those seeking a compromise agreement. The work of the Harvard Refugee Project is greatly enhanced by the data collection efforts of Norway’s FAFO, and the discussions held thus far in the multi-laterals.

II. The Research Questions
In 1995, the United Nations Relief and Works Agency for Palestinian Refugees (UNRWA) enumerated 3.2 million registered Palestinian refugees, with about 38 percent of them living in the Palestinian National Authority (PNA), another 41 percent living in Jordan, and the remaining split evenly between Syria and Lebanon. So, roughly, four-fifths of the refugees resided in the PNA and Jordan. Others have produced different estimates of the size of the Palestinian refugee population, some as low as 1.2 million. At this lower estimate, the distribution of refugees by country, however, is the same as when the estimate is 3.2 million. The United Nations has affirmed the “right of return” for these refugees, as well as the right to financial reparations.

Beginning with the Camp David agreements, a series of historic events in the past fifteen years have opened a window of opportunity for the permanent resolution of the Palestinian refugee problem. The shape of the proposed agreement will obviously depend on a host of economic, social, and political issues. Remarkably, despite the substantive importance of the refugee problem, little is known about many of the economic and social issues which are likely to be a crucial component of these negotiations. For example, what is the absorptive capacity of the economy of the PNA? What policies should the various parties put into effect now to ensure that the emerging Palestinian state has a vibrant economy? How many Palestinian refugees will “return” to the PNA? What are the costs of converting the refugee camps in the PNA into permanent and vibrant communities?

A parallel set of questions also exists for Jordan which currently, as noted, hosts a large number of Palestinian refugees. The Jordanian economy faces the dual challenge of a potentially large out-migration along with the integration of camp populations into the regular economy. How large are these outflows likely to be and how can the adjustment costs be minimized? What are feasible strategies for transforming refugee camps in Jordan? Our view is that these questions have to be answered no matter what form the eventual settlement takes with Israel on the reparations issue, and therefore should not await this more comprehensive settlement.

The main objective of the Harvard Refugee Project is to provide much-needed empirical evidence, in an objective and reliable manner, on the economic and social underpinnings of the Palestinian refugee problem. Secondly, by measuring the various costs and benefits of particular solutions to the problem, we believe that our research findings can facilitate the formal negotiations by pointing to possible solutions to this extremely difficult problem.

The central research questions being currently analyzed by the members of the Harvard Refugee Project include:

  1. A determined effort will be made to reach a consensus, using old and new data sources, on the characteristics of the population of Palestinian refugees.

  2. How many Palestinian refugees can be expected to “return” to the areas that will be ruled by the PNA? Even though there are as many as 2 million Palestinian refugees living outside the West Bank and Gaza, many of these refugees, particularly those living in Jordan, have become established members of their adopted communities, have relatively high incomes, have extensive if not full political rights, and have by now grown roots in their new environment. The empirical evidence obtained from the study of migration flows in many other countries around the world suggests that not all of the Palestinian refugees will exercise their “right to return”. Obviously, the social and economic consequences of any permanent solution to the refugee problem will depend crucially on the fraction of refugees which chooses to return. The Harvard Refugee Project can make a very useful contribution by providing systematic empirical evidence on the projected size of the return flow to the PNA, and on likely outflows from specific countries (such as Jordan).

  3. What types of immigration policies should the PNA pursue so as to ensure that the return migration flow can be absorbed easily by the emerging economy and social structure of the Palestinian state? Even if only a small fraction of the Palestinian refugees residing in other countries choose to return, their absolute number might be sufficiently high to raise concerns about the economic and social capacity of the Palestinian Authority to absorb all of them in a short period of time. There seems to be some consensus that a permanent solution to the Palestinian refugee problem could be achieved in a time frame of several years. If the time frame were part of the negotiated settlement, we can then “amortize” the return migration over that period, giving time for the various types of social and economic adjustments to occur in an orderly fashion in the affected areas. The Harvard Refugee Project will consider alternative scenarios of how the refugee flow can be handled and quantify the social and economic adjustments that will take place as the flow continues. This phase of the research project will provide a careful analysis of the experience that Israel encountered in the late 1980s, when a large flow of Soviet émigrés entered the country. The lessons learned from that experience--in particular, the social and economic adjustments experienced by Israel, as well as the types of policies that were developed to “smooth out” these adjustments--could play an influential role in the negotiated settlement.

  4. The economic consequences of any agreement will depend crucially not only on how many refugees exercise their right to return, but also on which Palestinian refugees choose to return. It is important to realize that the sample of refugees who return to Palestine is a self-selected group. Obviously, different types of economic adjustments will occur depending on the types of refugees who exercise their right to return. As a result, the economic policies that will be developed to smooth out the adjustment period will be quite different if the refugees bring with them substantial human and physical capital, or if the refugees need substantial financial assistance and retooling of their skills. The Harvard Refugee Project will attempt to describe the nature of the flow that will likely occur, and will help formulate policies that will be most successful in ensuring that the refugee flow can make an important (and rapid) contribution to social and economic life in the emerging Palestinian state.

  5. What types of economic and social resources are required to turn the refugee camps in the West Bank - Gaza and Jordan into vibrant economic communities? What types of improvements in the infrastructure are needed? As noted earlier, two-fifths of the registered refugees now live in the West Bank and Gaza; and many of these persons live in refugee camps. Another two-fifths lives in Jordan, and of them many also reside in camps. The Harvard Refugee Project will provide a systematic analysis of the conditions in the camps, of the improvements required to upgrade their social and economic infrastructure, and of the costs that will have to be incurred. The refugees already residing in the PNA along with non-refugees living there, are, in effect, the “founding members” of the emerging state. The speedy transformation of the refugee camps into successful economic communities could provide the much-needed spark that will be required for the development of the surrounding regions.

  6. What is the value of the economic benefits that accrued to Israel and to the PNA through employment in Israel of Palestinian “commuters”? Throughout much of the 1980s, Israel depended heavily on labor imported from the then Occupied Territories. Recent studies show that upwards of 100 thousand Palestinians were employed in Israel, and these “commuters” made up perhaps as much as 40 percent of the working-age Palestinian male population in the West Bank and Gaza. The employment flow from the then Occupied Territories to Israel probably generated sizable economic benefits both for Israel and for the West Bank and Gaza. The Israeli economy got an infusion of various types of much-needed labor, while the Palestinians had access to a wider array of job opportunities. What types of labor market adjustments will occur if the flow is discontinued by “closures” of the West Bank and Gaza? What types of employment arrangements will persist after the refugee problem is settled?

  7. What types of social services can UNRWA provide today that would be most effective in hastening the rehabilitation of the region under the control of the Palestinian Authority, and in the relevant parts of Jordan, as well as the long-run prospects of the refugees themselves? Should all of the programs now sponsored by UNRWA be “rolled over” to the Palestinian Authority and the government of Jordan? (It should be noted that such a rollover does not mean that refugees would forego their claims to reparations in the process. It also does not mean that the Palestinian employees of UNRWA would lose their jobs). How much will this roll-over cost, and what will be the fiscal basis for the funding of these programs? What is the size of additional resources required, and what are the likely levels of funding available? What is the best use of these funds, and in what form are they best dispensed (loans or grants? transfers to the Palestinian Authority or the households directly?). For the past five decades, UNRWA has provided an array of social services to the Palestinian refugee population, such as education, medical services, and food rations. UNRWA now spends about $300 million annually to provide social and economic resources to this population--or about $100 per registered refugee. A comprehensive solution to the refugee problem will require additional resources from abroad. It seems prudent that before the above questions are answered, we should engage in some program evaluations. Not all social programs provide equal value for a given expenditure. The Harvard Refugee Project, therefore, will evaluate the impact of the existing social programs on Palestinian social and economic well-being. This evaluation would be extremely helpful in the construction of a post-settlement social “safety net” offered by the PNA.

The Harvard Refugee Project either has or is commissioning research studies to be done in all of these substantive areas by a large number of researchers, principally from Palestine, Israel, and Jordan. The permanent solution to the Palestinian refugee problem must, of course, be a political solution--after all, it will have to deal with the political realities of the area. Nevertheless, the questions that the Harvard Refugee Project will explore--and the answers that the systematic research will provide--can help towards attaining this political goal. By providing a clear, objective picture of the economic and social adjustments that will occur as the refugee problem is solved, the research supported by the Project will make it easier for the various parties in the dispute to find a common ground on which to settle what is surely a central political problem of our time.

III. An Approach to a Plan
As the Harvard team proceeds with its research on the above questions, it has discussed the elements of a plan for the resolution of the Palestinian refugee question. Below are initial thoughts on key components of a plan.

  1. Professor Rashid Khalidi has said that “it is inconceivable that most refugees will be allowed to exercise their right of return to their original homes in what is now Israel for the foreseeable future, or perhaps ever.”[1] When the PLO signed the Oslo I and II accords with Israel, and then in altering its charter, it traded its people’s claims to residing in the State of Israel for the opportunity to create the State of Palestine. Under the rubric of family re-unification, there may be token return to Israel; perhaps 5,000 persons per year would return to Israel for each of ten years.

  2. It follows that the Palestinian refugee problem -- as a social and economic problem -- will have to be solved largely within the PNA, and Jordan as well. Regarding refugees, the main challenge that will face the Palestinian government will be that of turning refugees into citizens and absorbing refugees into the Palestinian economy at low adjustment costs. Refugee camps must be converted into normal towns, the inhabitants of which will be transformed from refugees into citizens in their own country.

  3. Return to the emerging Palestine will depend in good part upon the differences in economic opportunities for Palestinian households in Lebanon, Jordan, and Syria as compared to the new state. Since conditions are worst in Lebanon (as compared to Jordan and Syria), “return” would be greatest from there. Many, perhaps most refugees, living in Jordan are likely to continue to work and reside there. Hence there will have to be a program of camp conversion and refugee transformation in Jordan as well as in the PNA.

  4. The process of return will likely be gradual, perhaps distributed over a period of ten years. The key matter here is the capacity of the PNA to generate jobs which are economic. Creating such jobs through economic growth takes time.

  5. A plan for the return of refugees may make the issue of reparations more susceptible to solution. This matter will be difficult for anyone to address because the data that could support claims is unavailable or of poor quality. Our project views “return” and reparations as separable matters. It should be clear that “return” should not result in any diminution in claims to reparations. We will study the former and not the latter. We would do so were the data that are available very good and the matter of reparations not highly controversial. It is on the matter of return that we can make a contribution to the solution of the problem. If the question of return is satisfactorily addressed, the parties may more easily reach agreement on reparations.

  6. The resources that will be available from international donors to make reparations are likely to be more limited than people imagined.

  7. The Harvard Refugee Project expects to complete its work and submit its plan to the negotiators and to the public in 1997.

[1] Khalidi, “The Palestinian Refugee Problem: A Possible Solution,” Palestine-Israel Journal of Politics, Economics And Culture, vol. II, no., Autumn 1995, p. 74

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