Resolution to the Palestinian Refugees within a Two State Agreement

AA — Based on Aix Group’s papers (2007, 2010)

Abstract

There will be no permanent peace agreement between Israel and a future Palestine without an agreement on a resolution for the Palestinian refugees that will start the process of becoming citizens. Today, the 1948 Palestinian refugees and their descendants are estimated to number more than five million, depending on the definition used, and they constitute the world’s oldest and largest refugee population. It is clear that any agreement concerning the refugees will have many dimensions, including legal status, place of residence and financial compensation, all of which have significant economic dimensions.

The Aix Group analyzed an agreement that will be based on two foundations:

(1) Choices made by the individual refugees themselves and (2) An agreement between the representatives of the two peoples. The Aix Group suggested a mechanism that makes the outcome of the two foundations compatible; i.e. the implementation of the principles described below concerning the two foundations — the individuals’ choices and the political agreements signed by the representatives of the two sides — will be consistent.

The overall process will be implemented and supervised by the International Agency for the Palestinian Refugees (IAPR), an international administration discussed in detail below. The IAPR will prepare a comprehensive list of all refugees and collect written statements from refugees regarding their claims and preferences. The Aix Group estimated in 2007 that the magnitude of the various financial costs of an agreed-upon resolution for the refugees lies between US$55 billion and US$85 billion over the period of implementation.

A Preliminary Note

Over the course of several years, from 2005 to 2010, the Aix Refugees Working Team exchanged ideas on various aspects of a possible permanent resolution for the Palestinian refugees, within an overall Two State solution. As in the other parts of the Aix Group’s work, we had to imagine a political solution which seemed to some observers, and sometimes also to some in the Group, as a very remote possibility. Still, despite all the reservations that we have, we assume throughout the work that an agreement acceptable to the two peoples will be reached. Only in that context do our detailed discussions make sense. Thus, we would like the readers of the paper to assess the arguments below while imagining that an agreement on all issues except for that of the refugees has been reached.

This summary presents the major points in our discussions. However, not every sentence necessarily reflects the views of all the participants. As much as possible, the emphasis in the summary is on a professional, forward-looking economic perspective, and less on the legal, historical and philosophical dimensions that are so important to our subject.

Introduction

The Israeli – Palestinian conflict is about two contradictory sets of claims that refer to both geographic territory and human rights: On the one hand, many Israelis claim that they have exclusive rights for sovereignty over the land between the Jordan River and the Mediterranean Sea, and they deny that Israel has deprived the Palestinians, in particular the refugees, of their rights; on the other hand, many Palestinians claim that they have exclusive rights to that same land and that Israel has denied the Palestinians, and in particular the refugees, their basic rights since 1948. These contradictory claims, though they do not cover all the differences between the two sides, are at the core of the Palestinian-Israeli conflict and are defining the two sides’ narratives. The strength and impact of these narratives are changing in direct proportion to the distance from meaningful negotiations that may lead to the resolution of the above claims and to a peace agreement. In many ways, the above narratives’ strengths today are a clear sign of the difficulties we face and indicate how far away we are at present from a political compromise.

Over the last ten years, the Aix Group outlined what its members believe to be a reasonable and practical compromise that is forward looking. The compromise avoids the two conflicting narratives and attempts to present a political alternative to the continued confrontation that even those who argue in the name of “their” narrative can live with. The compromise is defined through two dimensions: one dimension is the territory – known as Palestine to the Palestinians and Eretz-Israel to the Israelis – and the second, concerns the Palestinian refugees’ rights. On both dimensions the compromise that we (and many others) have discussed in detail answers the legitimate claims and minimum necessary core demands of the two peoples with regards to both territory and the rights of the refugees.

The territorial compromise assumes two sovereigns with symmetrical features (control over their borders, having a capital in Jerusalem, equal authority over internal and external policy, etc.); i.e. “[real and full] Two States”. The territory between the Jordan River and the Mediterranean Sea will be divided on the basis of the 1967 borders with agreed and minimal “swaps”. Jerusalem will be the capital of the two states. If there are asymmetries, on military arrangements for example, these should be balanced and agreed upon.

The refugee question will be solved in a way that will address both sides’ legitimate claims and concerns and will provide an acceptable and desired common ground. The refugee issue did not receive proper attention in many public discussions, and will be the focus of our discussion here. We believe that there will be no “end of conflict” unless both the sovereignty and refugee questions are answered satisfactorily and since the failure of gradualism is beyond doubt after all these years, it is time to fully respond to both issues.

The Principles for a Resolution

The Aix Group outlined in 2007 and 2010 (and has since continued to work on it) a possible compromise on the refugee issue along the following lines:

The refugees will make “choices” concerning their preferred future residential location; they will choose between the five possibilities mentioned in Clinton’s December 2000 parameters (see below). We propose that during the process of “choice” the refugees will rank-order their preferences.
The representatives of the two sides will negotiate a comprehensive framework “agreement” addressing all the aspects related to the refugee question (as well as the other permanent status issues). This will include a matrix scheme for relocation where the agreed maximum and\or minimum numbers of people at each location after completing the implementation process will be specified.
The IAPR will be responsible for implementing the comprehensive plan and will also address any possible inconsistencies between the outcome of the above “choices” and the framework “agreement”, thus ensuring that the agreed matrix scheme numbers and the refugees’ stated preferences will be consistent.
In addition, the IAPR – working with the authorities of the two sides, the regional countries involved in the refugee issue, other regional countries and the international community – will be responsible for implementing all the aspects involved in resolving the refugee issue. The following four aspects will be under its authority:
- Relocation, including absorption, employment opportunities, housing, legal aspects, etc.
- Rehabilitation, including infrastructure renewal, employment, legal aspects etc.
- Resolving 1948 Lost Properties
- Addressing Refugehood
The IAPR efforts will be coordinated with the relevant regional countries that are linked to any solution for the 1948 refugees. In particular, the outcomes of implementing the above dual process (“choices” and bi-lateral “agreement”) in Jordan, Syria, Lebanon and other Arab states will address those aspects of the 1948 Palestinian refugees that were not addressed by the dual, bi-lateral process. These will include both backward-looking and forward-looking elements concerning past costs and claims and possible negative impacts of the implemented solution on labor, housing and infrastructure in the various guest-countries as a result of the implementation.

The role of the IAPR is of the upmost importance since it will be responsible for implementing an agreed-upon mechanism to ensure that the final decisions satisfy the wishes of the refugees as much as possible. It is also their responsibility to ensure that the final decisions are in line with the overall agreements to be signed between the representatives of the two sides and with the relevant host countries and other relevant countries. The IAPR will also supervise the various arrangements, mechanisms and programs that will address the following four critical topics:

Resettlement/Repatriation, or what we sometimes describe as relocation programs
Rehabilitation programs
Claims concerning properties
Compensation for Refugehood

In its 2007 paper, the Aix Refugees Working Team estimated the costs of relocation and the costs of rehabilitation (i.e. expenses covering those programs intended for refugees who choose not to change residency). The paper suggested the following:

In order to implement comprehensive resettlement programs, the IAPR will need funds in the order of US$8 to US$19 billion over a period of ten years, depending on the number of refugees who choose to relocate.
In order to implement rehabilitation programs, the IAPR will need funds in the order of US$10 to US$14 billion, depending on the number of refugees who decide not to relocate and on whether they currently reside in or outside camps.

The question of settling claims concerning lost properties, and the financial dimensions of such a question, are very complicated. Under international law, and similar to other reparation programs created to respond to other situations, reparations can take many forms. The Aix Group has explored the options of restitution and compensation. These, among others, are appropriate forms of reparations for Palestinian refugees. The Group introduced a concept of “full and fair compensation” to be determined objectively by a board of experts associated with the IAPR that will administer the lost properties claims process. Restitution will be considered only in those cases where “full and fair compensation” has not been offered and where the properties exist in a form that can make restitution practical and equitable.

The funds needed for “full and fair” compensation for the expected property claims are not clear; in the studies we roughly estimated them to be between US$15 and US$30 billion. The wide range reflects conceptual as well as data gaps.

We recommend the establishment of a fund that will finance compensation for refugehood not related to property claims or to the above programs.

All registered refugees will receive uniform sums. Each refugee will receive a sum when he\she registers with the IAPR at the start of the process and an additional sum when the decisions concerning the individuals are completed. This fund will require approximately US$22 billion.
The main responsibility for compensation of refugee property taken over in 1948 and 1967 will lie with the State of Israel. If the State of Israel fails to come up with adequate compensation then the rule restitution will prevail. Similarly the future state of Palestine will be responsible for compensation/restitution of Jews who lost their property in the West Bank.

A long term resolution of the Palestinian refugee issue should be based on all relevant UN resolutions, including GA Res. 194, while recognizing that a literal application of this Resolution is no longer possible given the substantial changes on the ground. As in the Clinton parameters, the parties would agree that the measures recommended in the paper implement Res. 194. The Aix Group considers that the refugees’ right of return to their homeland, even in a modified and limited sense, together with the other measures discussed in this paper, should be an essential component of closure to this issue.

The magnitude of the financial dimensions of an agreed-upon resolution for the refugees is quite significant; we estimated it in 2007 as between US$55 billion and US$85 billion over the period of implementation. The financial estimates are explained in the 2007 paper; one has to remember that resettling/relocating/rehabilitating around 4.5 million people and settling 60 year-old claims on many lost properties is an enormous task.

The Essential Facts

During the war immediately following the UN’s partition decision in 1947-1949, around 750,000 Palestinians fled or were forcibly expelled from their homes, in addition to 240,000 more Palestinian refugees who fled their homes during the Six Day War of June, 1967. In the papers we analyzed only the 1948 refugees.

In 2006, nearly one third of the registered refugees – about 1.3 million people – lived in 59 recognized UNRWA refugee camps in Jordan, Lebanon, Syria, the West Bank and Gaza; a significant number also lived in informal settlements near camps. Additional numbers of refugees live in non-UNRWA territories, mainly in Egypt and Iraq. Table 1 presents figures of the locations of the Palestinian refugees as of 2006, published by UNRWA, which were used in our estimates. We quote UNRWA’s figures, which are the most updated available, although they are considered by some to underestimate the real numbers and by others to exaggerate the number of refugees in certain locations. The main reasons for the various estimates are the lack of coverage of unregistered refugees, missing data on refugees outside the camps and outside UNRWA’s coverage and missing information about people who have moved. However, for our purposes the data presented in Table 1 is a good approximation of the demographic scope of the refugee situation.

Table 1: Palestinian Refugees^{^[1]} – Figures as of September 2006^{^[2]}

UNRWA Fields of Operations	Registered Refugees	By Location %	Official Camps	Registered Refugees in Camps
				Families	Individuals	Percent In Country
Jordan	1,835,704	42%	10	61,063	316,549	17%
Lebanon	405,425	9%	12	49,836	214,093	53%
Syria	434,896	10%	10	25,740	116,253	27%
West Bank	705,207	16%	19	38,954	185,121	26%
Gaza Strip	993,818	23%	8	92,322	474,130	48%
Total	4,375,050	100%	59	267,915	1,306,191	30%

One should recall the fact that refugees constitute about one-half of all Palestinians, as can be seen in Table 2.

Table 2: Palestinian Population 2007/8^{^[3]}

	Total Palestinians	Registered Refugees	No. of Camps	Registered Refugees in Camps
West Bank	2,281,714	754,263	19	191,408
Gaza	1,416,543	1,059,584	8	492,299
Jordan	2,867,000	1,930,703	10 (+3 unofficial)	335,307
Syria, Lebanon and other Arab countries	1,632,000	416,608	12	220,809
Foreign Countries	580,000	456,983	—	123,646
Israel	1,200,000^{^[4]}	—	10 (+ 3 unofficial)	—
Total	9,977,257	4,618,141	59 (+ 6 unofficial)	1,363,469
Total in Diaspora*	5,079,000	2,804,294	32 (+ 6)	679,762

* Outside of historic Palestine, i.e. the total number excluding those living in the West Bank, Gaza and Israel.

Individual choices, the agreements and some possible relocation matrixes

The Aix Group has examined the economic dimensions of possible solutions for the refugees. The economic components generally stem from two different processes that will follow any agreement on them:

1) Resettlement/repatriation (sometimes referred to below as relocation) and rehabilitation;

2) Financial arrangements concerning reparations for losses and suffering and for covering the costs of relocation.

It is assumed that these two processes will be pursued parallel to one another through a comprehensive mechanism designed especially for implementing a permanent status agreement on refugees. The process will be supervised and managed, as we proposed above, by the IAPR.

Relocation and Rehabilitation

There are over 4.5 million Palestinian refugees,^{^[5]} the majority of whom reside outside of historic Palestine. To both ensure that the relocation decision is made voluntarily and to meet political and practical exigencies, the Palestinian refugees should be presented with options for electing a place of permanent domicile through which they can normalize their status, gain citizenship and begin the process of rebuilding stable, prosperous lives. It is worth noting that this study does not relate to displaced persons after the 1967 war; it is assumed that those displaced in 1967 who were not refugees of 1948 will have the right to return to their homes following the establishment of a Palestinian state.

These options include:

The Palestinian state (borders on the basis of pre-1967 borders);
An agreed-upon and limited land swap, added to the territory of the Palestinian state;
Israel;
The present host countries;
Other countries.

The IAPR will prepare a comprehensive list of all refugees. It will collect written statements from each refugee concerning his or her past and present conditions and preference regarding future residency. The process of implementing the agreements and achieving a practical solution will be based on choices made by the refugees, who will assess their own best interests and choose between alternative locations for residency, as outlined in the Clinton parameters. As explained above, this choice will be made individually, in a well-organized process supervised by the IAPR and according to an agreed-upon time frame, and each refugee will choose more than one alternative and rank them according to his or her preferences. The goal of this process is to ensure that the final decisions will satisfy the refugees as much as possible and will be in line with both the agreements to be signed between the representatives of the two sides and with the relevant host countries and other countries.

These decisions will have to take into account not only the final destinations but also the timetable for relocation and rehabilitation. Obviously not all the refugees will be able to be processed at once and priorities will have to be assessed, taking into account each refugee’s wishes, the urgency of his or her situation (based on his or her present conditions), the economic situation at each location and the time needed to prepare the new locations for absorption. The refugees who have claims concerning lost properties will file their preliminary statements at this stage.

The relocation, repatriation, and rehabilitation processes will be a major logistical undertaking, requiring significant institutional resources. For instance, institutional arrangements will need to be set up in order to disseminate information about the options available to the refugees and to register their choices. Responsibility for this process will rest with the IAPR and with domestic ministries and organizations that will have to support and facilitate the movement and/or integration of the refugees.

Targeted Programs

Targeted programs will have to be put in place to help the refugees’ transition to their new lives. These programs, in the West Bank, Gaza, Swap WB, Swap Gaza etc. (see Tables 3 & 4), should include housing, employment and infrastructure programs as well as educational and health services. Regional administrations will be created by the IAPR to deal with the various aspects of implementation of resettlement/relocation/rehabilitation:

Housing and infrastructure: Improved and/or new housing will have to be provided to refugees to replace their temporary, inadequate shelters and/or to house relocating refugees.
Education and health services: Creating or improving education and health services for the new as well as the existing population will be an important part of the project.
Direct rehabilitation assistance: In addition to the generalized measures listed above, directed assistance may be provided through stipends to refugee families for the early period of resettlement, until they adjust to their new lives (a practice that Israel uses with new Jewish immigrants). Other forms of direct rehabilitation assistance may be identified depending on particular return/resettlement needs.

These components carry costs that should be factored into an assessment of the economic dimension of a solution. While it is obvious that the components might vary from one state to another according to need, this difference would mainly be in the cost of a certain component and to what degree it is needed.

In addition, the provision of services and rehabilitation assistance should be integrated with the overall macro-economy and management policies of the receiving state. The integration and rehabilitation of refugees should be part of the overall development goals, particularly in the case of the future Palestinian state. The economic component of refugee resettlement should be integrated with national Palestinian development goals. Third countries will share responsibility for these costs by either absorbing refugees directly or providing financial assistance to receiving states, including the Arab host states. The financial aspects will be managed by the IAPR.

Macroeconomic Implications

The macroeconomic implications will heavily depend on the nature of the agreements, as well as on the reaction of the population that is affected by them. Thus, the socio-economic characteristics of the refugees, their current places of residency, their level of integration in the various countries, and of course the size of the populations, should be discussed. The number of persons who would become eligible for IAPR assistance under the various scenarios was disputed for many years, but it seems that we are now approaching a consensus on the figures.

Thus, the agreement and the refugees’ decisions will result in changes in places of residency. We present below four relocation scenarios, some more acceptable to one side, some more acceptable to the other, and some unacceptable to both. We use these scenarios in order to clarify the challenges that the implementation of a possible agreement presents and to argue that the scenarios are feasible. The results of the four scenarios, presented in terms of the total numbers of refugees in each location, are presented in Table 3.

Table 3: Number of Refugees at Each Location under the Four Scenarios

(in thousands, rounded figures)

	Scenario 1	Scenario 2	Scenario 3	Scenario 4
In:
Jordan	1101	1101	1469	1101
West Bank	1904	1729	1094	1330
Gaza	497	497	596	596
Syria	87	87	174	174
Lebanon	0	0	81	81
Swap WB	325	325	325	325
Swap G	199	199	199	199
Israel	44	219	219	350
R o W	219	219	219	219

The scenarios reflect a summation of the many decisions of the refugees and represent “net” outcomes; thus, for example, in Scenario 1 the refugee population in the West Bank (1,904,000) includes those who decided to stay and rehabilitate and those who opted to come to the West Bank from other locations, minus those who left for other places. Among the options for the refugees, we include what we called “Swap West Bank” and “Swap Gaza”, two areas where new specific development projects are planned. Thus, the number of refugees in the West Bank does not include those who opted to settle in the new construction projects in the “Swap WB” areas.

Refugees’ Lost Properties Claims

The issue of compensation for lost properties is very complex, even if we focus only on the economic aspect and ignore the political, emotional and legal aspects. First, there is a wide range of estimates for the original scope of the properties. Second, there are several methods for calculating the current value of past properties, and each of these methods leads to a different result. Finally, there are questions regarding the micro level, or how the compensation would be distributed to the original owners and their descendants. This section briefly summarizes the research and analysis that has been done so far. It also adds details regarding the estimates of the value of movable properties, and expands the description of the technical part of the estimates.

Estimations of Past Value of Lost Properties

Surveying the results of different studies will help to reach rough estimates of the aggregate financial compensation for lost properties. Since 1948, several studies have attempted to document, evaluate and measure the size and the values of the lost properties. In the brief survey below, we rely on the comprehensive studies of Fischbach (2003, 2006). Fischbach estimates that the potential sum of compensation varies widely among the parties which have estimated the value of the property (the UN estimates, Israeli estimates and Arab estimates). The divergence between the estimates results from: 1) different conceptual definitions of land (should the definition include only privately-owned property which is registered, or also land held collectively without being registered?); and 2) different assigned values (should the value be based on market factors or taxation assessment, and a difference of opinion about when Israel became liable for the compensation – immediately after the refugees left or only after the Israeli authority took control?).

The IAPR and the Implementation of Resolution

The IAPR will be responsible for identifying and compensating each of the refugees’ households, subject to the household’s acceptance of the authority of the IAPR and of its mechanism of relocation. It is important to note that the value of compensation will not be dependent on the location preferences, or final location, of the refugees.

The IAPR will prepare a comprehensive list of all refugees and collect written statements from each refugee concerning his or her past and present conditions and his/her preference regarding future residency. The process of implementing the agreements and achieving a practical solution will be based on choices made by the refugees; their choice will be made individually, in a well-organized process supervised by the IAPR and according to an agreed-upon timeframe. The goal of this process is that the final decisions will satisfy the refugees as much as possible and will be in line with the agreements to be signed between the representatives of the two sides and with the relevant host countries and other countries. These decisions will have to take into account not only the final destinations but also the timetable for relocation and rehabilitation. Obviously not all the refugees will be processed at once and priorities will have to be assessed, taking into account each refugee’s wishes, the urgency of his or her situation (based on his or her present conditions), the economic situation at each location and the time needed to prepare the new locations for absorption.

In addition, the provision of services and rehabilitation assistance should be integrated with the overall macro-economy and the management policies of the receiving state. The integration and rehabilitation of refugees should be part of the overall development goals of the state, particularly in the case of the future Palestinian state. The financial aspects will be managed by the IAPR.

The Aix Group proposed the following stages for the creation of the IAPR and the implementation of its program:

Stage I: Drafting of a bilateral agreement on the principles for resolution between Israel and a future Palestine.

Stage II: Establishment of the IAPR in line with the bilateral agreement and under the coordination of the international community.

Stage III: Establishment by the IAPR of its program and structure.

Stage IV: Implementation of the program by the IAPR.

Structure:

The IAPR structure will be created in an international conference on refugees in which the Palestine Liberation Organization/Palestinian Authority (PLO/PA) and Israel will be constituent parties. The structures and functions of IAPR will take international precedents into account (e.g. Kosovo, Bosnia, Namibia, and South Africa). The IAPR will have direct representation among Palestinian refugee communities in the Arab host countries, in PA areas, and in the remaining diaspora countries.

The IAPR will include all the main parties involved in the solution, primarily the refugees themselves and the absorbing countries. The IAPR will be constructed from representatives of the following bodies/countries:

The UN
The G8
The World Bank
The Palestinian representatives from the PLO/PA
The host countries
The absorbing countries, i.e. Palestine (in the West Bank, Swap West Bank, Swap Gaza), Israel, and other countries who will participate in the process; Canada will be the leader of the multilateral refugees’ discussions

Mission:

The mission of the IAPR is to bring an end to the period of Palestinian refugehood by agreeing on a long term solution. The solution will be based on the Clinton parameters and on the scenarios that were presented in the Aix phase III paper.

Role:

The IAPR will be responsible for implementing an agreed-upon mechanism to ensure that the final decisions satisfy the wishes of the refugees as much as possible and are in line with the overall agreements to be signed between the representatives of the two sides, and also with the relevant host countries and other countries. The IAPR will also supervise the various arrangements, mechanisms and programs that will be implemented.

The three main functions of the IAPR are:

Assigning each refugee a permanent “target country”, either his or her current location or another country.
Assigning each refugee an amount of money for his or her individual compensation.
Assigning each “target country” the amount of money that is needed for the relocation and rehabilitation process.

In order to fulfill these functions, the IAPR will have to develop and operate a mechanism that will achieve a solution, considering both the individual will of the refugees and the different interests of the relevant countries, all under a fixed budget.

The huge number of refugees, the complexity of their situation, and the inability of the two direct parties – Israel and the PLO/PA – to solve the problem on their own, requires the involvement of other countries and international organizations in both the practical aspects (e.g. financing and providing permanent places of residence) and the organizational aspects (e.g. the institutions/bodies that will manage the various processes of collecting information, registering claims and requests, checking and assessing them, and deciding on and distributing the different benefits).

[1] We used UNRWA data based on their definitions: “Under UNRWA’s operational definition, Palestine refugees are persons whose normal place of residence was Palestine between June 1946 and May 1948, who lost both their homes and means of livelihood as a result of the 1948 Arab-Israeli conflict. UNRWA’s services are available to all those living in its area of operations who meet this definition, who are registered with the Agency and who need assistance. UNRWA’s definition of a refugee also covers the descendants of persons who became refugees in 1948.”

See http://www.un.org/unrwa/english.html.

[2] http://www.un.org/unrwa/publications/index.html

[3] Refugees’ figures are from UNRWA’s June 2008 records; total Palestinians from PCBS end 2007 http://www.pcbs.gov.ps/Portals/_PCBS/Downloads/book1526.pdf

http://www.pcbs.gov.ps/Portals/_pcbs/PressRelease/gaza_census_e.pdf

http://www.pcbs.gov.ps/Portals/_PCBS/Downloads/book1530.pdf

Palestinians in Israel end 2007

: http://www.cbs.gov.il/reader/

[4] There are no refugees by UNRWA definition in Israel. The issues covered in this paper do not address Palestinians in Israel. The figure is calculated from the ICBS, and includes Arabs in Israel excluding those in Jerusalem.

[5] See discussion in Abu Libdeh (2007). In this study we use UNRWA figures for September, 2006. The figures can be debated, of course, both those concerning specific locations and the totals. They serve us as a point of reference; revision of the figures will change the results.

Resolution to the Palestinian Refugees within a Two State Agreement