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Preliminary Thoughts on US Financing of a Compensation Regime for Palestinian Refugees

Source: FOFOGNET Digest 197 (17 July 2000)

by Maren Zerriffi

During the current Camp David talks, one of the issues under discussion is the issue of Palestinian Refugees, including a compensation regime. Although little is known about the potential features of this regime, one particularly noteworthy aspect is the fact that it is reported that the US would fund between $15 and $25 billion of an approximately $100 billion regime which would go towards Palestinian compensation and refugee "rehabilitation." 1 Although it has been noted that the US would seek additional financial support for this regime from Japan, the EU and other donors, I have yet to see a report where Israel's contribution to this regime is detailed.

I am therefore concerned that negotiations appear to be moving in a dangerous direction: minimal Israeli contribution to Palestinian refugee compensation and maximal financing by the international community, especially the US. This apparent potential outcome has been the Israeli position for some time; Israel has consistently refused to finance refugee compensation arguing that it cannot accept responsibility for the Palestinian refugee problem. On the other hand, Israel has been supportive of an internationally financed compensation mechanism (to which its contribution would be minor) presumably because of the benefits such a regime would offer in terms of security stability and economic development for the region.

While the Israeli domestic political reluctance to finance Palestinian refugee compensation has received considerable attention (in fact far more attention than the similarly problematic domestic political responses of Palestinian refugees to the proposed regime), potential domestic response in the US has received little attention despite the fact that the US will likely be a large (and perhaps the largest) contributor to this regime. 2 However, there are several reasons to wonder if such an amount of assistance ultimately could be provided and, furthermore, should be provided.

My doubts stem in part from the fact that, although I am deeply committed to high levels of Palestinian compensation and restitution (involving return), I am unsure if I myself would be willing to foot part of this bill--which I would be required to do as an American citizen. While my per capita portion of a $25 billion bill will equal a paltry $91.70 total and $4.58 per year, 3 I can't help but feeling...Why me and not an Israeli? Why this and not long term social security solvency? Or why not UN back dues or funds to fight global AIDS? Finally, I wonder if implementation could even be assured? It is not that I do not support Palestinian compensation (even an internationally funded mechanism) and I am not a stereotypical American isolationist by any stretch of the imagination, but I am nevertheless hesitant. My hesitation stems from several considerations.

First, why the US and not Israel? It has been argued both that Israel should not pay and cannot pay. The argument that Israel should not pay is founded on two aspects: the issue of responsibility and Jewish claims. It is argued that Israel is not responsible for generating the refugee problem and furthermore that such responsibility would be difficult to causally evidence. However, with the opening of archives there is increasing evidence of Israeli responsibility in generating the refugee problem and, furthermore, mechanisms for resolving the issue of responsibility abound. This includes the attribution of "objective responsibility" 4 as well as a possible ICJ fact finding mission similar to that in the case of the Western Sahara. 5 Irrespective of the "responsibility" issue, it has also been noted, even by those advocating a minimalist Israeli contribution, that Israel has benefited considerably from expropriated Palestinian properties. 6 Therefore, not only is the "responsibility" issue surmountable, the argument can quite easily be made that Israel should pay at the very least because, regardless of the responsibility issue, Israel now possesses the property and unless they are willing to give it back, they (and not the US) should pay for it.

It is also often argued that Israel should not be required to pay compensation, by pointing to the fact that a "de-facto" population transfer has occurred and that Palestinian claims are cancelled out by Jewish claims against Arab states. However, while the pressing of Jewish claims against the Arab states is completely legitimate, the notion of linking Palestinian and Jewish claims is not. Not only has it been pointed out that this could hold the peace process hostage to the veto-power of a few states, 7 but it is also unclear why Palestinian people should be held accountable for the expropriations of the Iraqi government of the 1950's. Furthermore, the historical accuracy of many of the Israeli government's assertions has been called into question recently. 8 I therefore find the arguments that Israel should not pay most of the costs entirely unconvincing.

In addition, there is the long-standing argument that Israel cannot afford to single-handedly pay compensation. However, the Israeli economy has changed considerably since the early years. According to one estimate, the value of total agricultural property is only 4% of current GDP, in contrast to the 150% of GDP of the early Israeli state. 9 In addition, another author has suggested that $25 billion over ten years represents the "extreme upper boundary of what is economically possible," which is only a mere 2.95% of Israel's GNP. 10 Presumably, with the time frame now doubled, the total figure could be adjusted upwards and perhaps even doubled. Surely this indicates a far different ability to pay than in the early years of negotiations. Therefore, the economic inability to pay position has become a far less convincing argument than it once was.

So it seems that it is not that Israel can't pay or shouldn't pay, but won't pay. Israeli preference for an internationally financed scheme in which Israel is not a major contributor stems from an intransigence to address the issue of responsibility. True, this is a contentious issue domestically. But, it is also important to note that part of the Palestinian compensation demand has included acknowledgment of Israel's role in creating the Palestinian refugee problem, sometimes called "moral compensation." It is often argued that this is an important component of the reconciliation process for the Palestinians. 11 However, while proponents of a minimal role for Israel in financing compensation note the reconciliation benefits of compensation, they often reject a role of an examination of even partial responsibility for the creation of the refugee problem. Thus, the preference is for reconciliation without truth--or even the search for it. Therefore, Israel seeks the benefits of reconciliation and peace (as well as the economic benefits of having expropriated Palestinian movable and immovable property) while externalizing the costs (to the US). And it is entirely unclear to me why American citizens should finance the luxury of peace without self-examination.

In addition, in my research on past cases of compensation in population transfer, war and mass expulsion, 12 I have not encountered a single case where the international community has financed compensation on this level. There are two cases where the international community has provided a degree of financing for a compensation commission, but it is not clear that these funds have gone to compensation rather than the initial running of the commissions. These two cases are the United Nations Compensation Commission (UNCC) which handles compensation claims from the Second Gulf War and the Commission for Real Property Claims (CRPC) which handles compensation and restitution under the Dayton Accord. It appears that in both of these cases, international funds were used mostly for start-up and administrative costs. In fact, in the case of the CRPC, there have been considerable problems in obtaining the pledged international funds. Therefore, not only is international (especially US) funding of compensation unjustified, it is also unprecedented. Furthermore, the case of the CRPC illustrates that such a scheme may also ultimately be unlikely.

Therefore, there are plenty of questions regarding whether the US (rather than Israel), should foot a whopping $25 billion. But even if these are answered in the affirmative, there remains questions as to whether the US COULD fund compensation. For starters, social spending concerns such as long term social security solvency and the crumbling public educational system are figuring quite prominently in this election year and will additionally serve as strong competitors (rightly or wrongly) to international aid over the course of the next 20 years. On top of these looming social spending needs, there are potential indigenous compensation demands on US funds. In developing a bibliography of materials concerning other compensation cases which could yield valuable lessons for the Palestinian case, 13 I came across a vast literature concerning past and pending Native American claims against the US government which America will likely have to deal with in the coming 20 years. In fact, Native American self-rule and land claims are already becoming election year issues in some states. Furthermore, Americans have benefited from the use of lands and resources which were originally those of Native Americans. We have not benefited at all from Palestinian refugee property and it is entirely unclear to me why we (instead of Israelis) should pay for Palestinian compensation, especially when we have our own outstanding debts. Even cynical US officials should realize that providing funding to a Palestinian compensation scheme on this large a scale is a potential public relations problem. This is also in addition to the increasing demands among African-Americans and the descendents of slaves for compensation. Therefore, American's have plenty of expenses and debts (not to mention the deficit!) without assuming Israeli ones!

There is also international competition for US funds. International assistance as a percentage of the US budget is an embarrassingly low 1.2%. 14 In fact, even if Americans became more forthcoming with international assistance, there are many other competing claims to international aid. The fact that the UNAIDS conference and the Middle East Summit were held near simultaneously should not be overlooked. The levels of international assistance to combat this serious global threat should not be forgotten. One estimate notes that in Africa alone, $3 billion will be required per year for "basic measures" on top of "tens of billions of dollars more each year to provide in Africa the standard drugs used in developed countries." 15 In discussing the competing claims to international aid and expressing his pessimism concerning the overall availability of international funds for Palestinian refugee compensation, one scholar has relayed the words of an aid official writing: "the cost of increasing support for Palestinian refugees is more dead children in the Congo." 16 With the focus on the increasing threat of AIDS especially in sub-Saharan Africa, the cost of US (rather than Israeli) financing of Palestinian refugee compensation could be quite high for sub-Saharan Africa. In fact, the potential competition between aid to the Middle East and funds to combat AIDS has already been noted. 17

In addition to these general demands on US funds, there are a number of questions about the long term ability (and willingness) of the Congress to appropriate these funds. Although the annual amount over the course of years is still less than annual US aid to Israel, it is still unclear if this amount could be raised. For starters, it as yet undetermined if this would be taken from or in addition to current foreign aid to Israel. One scholar has noted that he seriously questions "Congressional support for shifting former aid to Israel to the Palestinians." 18 Indeed, since there are already discussions of a tighter US-Israeli security agreement following a framework agreement, it appears that the agreement would be accompanied by increased US (military) assistance to Israel. It appears that Palestinian compensation would be additional to this assistance. One wonders if such a large amount would be consistently appropriated by Congress.

While some would be tempted to point to the fact that aid under the first Camp David Accord has proven resilient, there is reason to be cautious. First, that agreement was during the Cold War which had an overall impact on American's willingness to provide aid (especially when it ensured stability). Second, is the fact that AIPAC has proven central in the continuation of Camp David aid. It is not entirely improbable that a long term winding down of the conflict would lead to changes in AIPAC as well. Also, the problem in deriving generalizations from the past 20 years of Camp David aid is brought home when one imagines what would have happened had a leader supportive of the Muslim Brotherhood come to power in Egypt? Even if Egypt had maintained the peace agreement, it is unlikely that US aid levels would have been maintained. Now imagine a Hamas leader becomes the president of Palestine. Would the US Congress continue to support compensation at committed levels (especially forms of collective compensation which would go to Palestinian institutions)? Under a more likely scenario, it is possible the Congress could make appropriating compensation funds extremely (and perhaps unacceptably) conditional. In short, there are a number of ways in which compensation to Palestinian refugees could be held hostage to politics. Even the most committed believer in the US ability to fulfill its international financial obligations would be sobered by an examination of the US Congress' reluctance to appropriate funds for the UN. Despite the recent overdue payment of $93 million, the US is still $1.65 billion in arrears due to the unilateral modification of the percentage of US contribution to peacekeeping operations from 31% to 25%. 19 And this is US dues (not assistance!) to a peacekeeping body whose contribution to global stability Americans enjoy--not payment for expropriated property paid to Palestinians or a Palestinian entity!

Also, in considering the domestic reaction, the nature of the assistance warrants considerable consideration. It has been pointed out that: "compensation" falls outside of the mandate of most development agencies; cash schemes will likely be viewed askance by legislative bodies; and that rehabilitation and development projects are preferable as the primary form of aid. 20 However, these observations do not seem to be accounted for in the current package (as far as one can currently tell). In addition, the American public's reaction to compensating Palestinian refugees for their property that Israelis are using should be considered. Compensation is quite different from other forms of foreign aid. Americans are (sometimes justifiably but sometimes not justifiably) not exactly known for their global generosity. While Americans have provided support (although sometimes limited) for foreign humanitarian aid or military assistance, I am not sure that foreign aid in order to pay for the expropriation of someone else's property (combined with the absolute refusal of Israel to return it) will be warmly received by the American people. This problem is further compounded by the fact that this compensation regime in, which a right of return will likely be denied, runs directly counter to refugee preference for return. In addition, according to one account, return is also the cheaper alternative. 21 Thus, the average American may start to wonder why they are paying for movable and immovable Palestinian property so that Israel can deny their internationally recognized right to return, especially since there will likely be a well publicized international outcry if return is forsaken. Even if due to semantic spin or other slights of public relations hands, this were to be "sold" to the American public as rehabilitation aid, rather than compensation, it is still unclear that Americans would ultimately support this.

As an internationalist American who supports Palestinian rights, it is unclear to me why, given all the other completely justified demands on my income, I should be asked to pay for Israeli expropriation of Palestinian refugee property. My reluctance to do so is determined not only by the fact that this runs directly counter to the preferences of the refugees themselves but also by the fact that the reasoning for me to do so is based almost entirely on concerns for Israeli public opinion and reluctance to admit (or even examine) culpability. I understand that it is considered unrealistic to hold the view that Israel would be the sole or primary financier of compensation, but it is equally naive to not anticipate problems concerning American public opinion. In many respects, as an internationalist committed to justice for the Palestinians, I may be the "best case" scenario for Joe (Joan?) Q. American. But I am also hesitant to pay for such a compensation package and I may not be unique in that respect.

Although many would balk at such an assertion, the idealist in me still believes in the resilience of Wilsonian ideals among the American people which would make them unwilling to support the denial of self-determination. (Although this idealism is certainly tempered by a quick review of the American foreign policy record, I nevertheless hold this view). More to the point, the cynic in me notes American unreliability (particularly of the US Congress) on matters of aid. The analyst in me brings these two elements together to question altogether whether policymakers can assume that Americans would be willing to underwrite for 20 years an immense compensation regime which goes against the expressed preferences of Palestinian refugees for return. Therefore, given the problems likely to be encountered in mobilizing this aid, I am entirely unsure whether making such a promise to the Palestinian people, which we may not be able to keep, is ultimately a fair and honorable thing to do--especially since it would likely involve the relinquishing of the right of return.


1 While the US portion would possibly pay for resettlement, rehabilitation, and regional development schemes, it is still quite clearly compensation as it is a non-consumptive form of collective compensation and would likely be counted against other forms of collective and individual compensation.

2 There has been some consideration of the issue. In an July 7, 2000 op-ed in the LA Times , entitled "In the Middle East, Money and Bear Hugs Only Go So Far," Robert Satloff argues that the administration should "make Congress a full partner in these negotiations" because "even in this era of surpluses, no Republican-controlled Congress is going to meekly acquiesce to the promise-making of a lame-duck president without a stake in the effort." While valuable in noting the importance of Congress in this effort, it still underestimates the scope of the domestic problem. A commitment spanning 20 years will surely outlast a Republican controlled Congress and the (perhaps overstated) so-called budget surpluses. In addition to the Satloff op-ed, in discussing the financing of Refugee Compensation, Brynen identifies some aspects of donor preferences. Although largely resting on institutional preferences (such as maximizing visibility and political and economic leverage), there is some mention of domestic politics (such as the reluctance to finance "compensation" and cash support) which bear on the design of the compensation regime. Rex Brynen, "Financing Palestinian Refugee Compensation" Paper prepared for International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999 http://prrn.mcgill.ca/prrn/brynen.html .

3 According to my calculations, it would the per capita amount for the same figure for Israeli's would be: $4348.01 total and $217.40 per year.

4 Donna Arzt, "The Right to Compensation: Basic Principles Under International Law" Paper prepared For International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999 http://prrn.mcgill.ca/prrn/arzt.html .

5 John Quigly, Palestine and Israel: A Challenge to Justice (Durham: Duke University Press, 1990): 225. While the current state of the Western Sahara (especially the complete and utter failure of the UN, especially the "neverendum" process run by MINURSO) does not bode well for this option (especially a timely solution), the general proposal is not without merit.

6 Shlomo Gazit, "The Palestinian Refugee Problem" Final Status Issues: Israel-Palestinians Study Number 2 (1995)10. He writes, "no one denies that Israel greatly benefited from the Arab property that came under its control" The author then goes on to argue that Israel's opposition to paying composition was due to the absorption of Jewish refugees from Arab countries and that "it is reasonable to assume that were such a calculation made, the result would demonstrate at least parity between the two groups properties, if not a balance favoring the Israeli claims." This assertion is taken up further below.

7 Joseph Alpher and Khalil Shikaki, "The Palestinian Refugee Problem and the Right of Return" Paper 98-7 (Cambridge: Weatherhead Center for International Affairs, May 1998):16-17, 25, and 31 and Rex Brynen, "Financing Palestinian Refugee Compensation" Paper prepared For International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999 http://prrn.mcgill.ca/prrn/brynen.html

8 For example, see: Yehuda Shehnav, "The Jews of Iraq, Zionist Ideology, and the Property of the Palestinian Refugees as of 1948: An Anomaly of National Accounting." International Journal of Middle East Studies 31.4 (November 1998): 605-630

9 Frank D.Lewis "Agricultural Property and the 1948 Palestinian Refugees: Assessing the Loss." Explorations in Economic History 33.2 (April 1996): 186. The author also notes that this is roughly equivalent of one year of Israel's defense-related imports.

10 Rex Brynen, "Financing Palestinian Refugee Compensation" Paper prepared for International Development Research Centre's Workshop On Compensation for Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/brynen.html .

11 See for example, Rashid Khalidi, "Attainable Justice: Elements of a Solution to the Palestinian Refugee Problem" International Journal 53.2 (Spring 1998): 233-252. The centrality of moral compensation has also been noted by observers. On this Brynen has written, "On the Palestinian side, linking compensation and admission of moral guilt serves to enhance the political efficacy of compensation, especially where the right of return to 1948 areas is unlikely to be realized." Regarding the Israeli position, Brynen goes on to write, " Conversely, the mobilization of Israeli resources is inversely linked to the moral dimension of compensation; the more it looks like reparations, the less likely it becomes that Israel (and the Israeli public) will provide the required resources." Rex Brynen, "Financing Palestinian Refugee Compensation" Paper prepared for International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/brynen.html . However, it is important to note that it appears that he Israeli's may be having their cake and eating it too (an internationally financed cake!): getting the international community to finance a substantial amount of compensation as well as retaining the "red-line" of non-recognition of responsibility for the Palestinian refugee problem.

12 Maren Zerriffi, "Refugee Compensation: Selected Cases and Source Materials." Paper prepared For International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/biblo.html .

13 Maren Zerriffi, "Refugee Compensation: Selected Cases and Source Materials." Paper prepared For International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/biblo.html .

14 L. Craig Johnstone, "Feature Story: Foreign Policy on the Cheap - You Get What You Pay For" State Magazine August 1996. http://www.state.gov/www/publications/statemag/statemag_nov-dec/statemag_aug/feature1.htm .

15 Comments of Dr. Peter Piot, the head of Unaids, as discussed in Rachel L. Swarns And Lawrence K. Altman, "Amid Controversy, South Africa Opens World AIDS Forum" New York Times July 10 2000

16 Rex Brynen, "Financing Palestinian Refugee Compensation" Paper prepared for International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/brynen.html .

17 John Lancaster and Dan Morgan, "Congress Alerted to High Price of Peace," Washington Post July 15 2000.
www.washingtonpost.com/wp-dyn/articles/A50573-2000Jul15.html .

18 Rex Brynen, "Financing Palestinian Refugee Compensation" Paper prepared for International Development Research Centre's Workshop On Compensation for Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/brynen.html .

19 "World Briefing: U.S. PAYS DUES" New York Times (July 13 2000).

20 Rex Brynen, "Financing Palestinian Refugee Compensation" Paper prepared for International Development Research Centre's Workshop On Compensation for Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/brynen.html .  

21 BADIL "The Impact of Return on Compensation for Palestinian Refugees" Paper prepared for International Development Research Centre's Workshop On Compensation For Palestinian Refugees Ottawa, July 14-15, 1999. http://prrn.mcgill.ca/prrn/badil.html .

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