Foreign Relations of the United States, 1955–1957, Arab-Israeli Dispute, 1957, Volume XVII

349. Memorandum From the Assistant Secretary of State for International Organization Affairs (Wilcox) and the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree) to the Secretary of State and the Under Secretary of State (Herter)¹

Washington, July 2, 1957.

SUBJECT

• Detailed Review of the Palestine Refugee Problem

Pursuant to the Under Secretary’s request of May 13 [14],² IO and NEA, in concert with other interested elements of the Department, have undertaken a detailed review of future United States policy regarding the Palestine refugee problem. The following memorandum contains (I) a brief background statement of the problem; (II) an analysis of the political, economic and social factors in the situation; and (III) recommendations. Attached are a series of detailed papers on which the recommendations are based.³

The study was made on two basic assumptions: that it is an overriding political necessity not to permit UNRWA’s operations to lapse and that conditions in the area are somewhat more favorable today for an initiative by the United States on the refugee problem.

I. Background (Tab A):⁴

During the nine years of the existence of the Palestine refugee problem, thinking as to the best means of solving it has followed a cyclic pattern between two positions: (a) the problem should be isolated from the main body of unresolved Palestine issues and attacked as a thing in itself (e.g. Clapp Mission report,⁵ UNRWA activities, Johnston Plan, etc.); (b) the problem can best be solved in the context of a general Arab-Israel settlement (e.g. your speech of August 26, 1955, and its aftermath).

At present we seem to be on the crest of a wave of opinion favoring a return to the first position. There is widespread feeling among the public and in Congress that something must be done about the Palestine refugees. There have been similar intimations from area leaders. Specific suggestions have been made to the Department, principal among them being:

Mr. Eric Johnston’s Memorandum of June 10 [7], 1957.⁶ Mr. Johnston proposes: (a) that the United States approach Iraq with an offer to underwrite the cost of resettling Arab refugees in Iraq and of developing other projects to benefit Iraq’s indigenous population; and (2) that the United States approach Jordan with a proposal to underwrite the cost of developing the Jordan River in Jordan.

The UN Secretary General’s Memorandum of June 17, 1957.⁷ Mr. Hammarskjold proposes that a quiet diplomatic effort be made to enlist Iraqi, Jordanian, Saudi and perhaps Egyptian support in a program aimed at resettling refugees from Jordan and Gaza in Iraq. The Secretary General feels that the first moves should be made about August 15 and suggests designation of an individual to carry on the negotiations.

Views of UNRWA Director. Mr. Harry Labouisse believes⁸ it essential that there be some element of choice as between repatriation and resettlement offered to the refugees. He also feels that territorial concessions by Israel may be necessary in order to win Arab acquiescence to a solution of the problem.

Israel Trial Balloon. In the course of the past few weeks, Israeli representatives have approached us with the “purely tentative” suggestion that advantage should be taken of the recent improvement of U.S. relations with Jordan. They suggest an approach to Hussein and the Iraqis to persuade them to facilitate the movement of refugees from Jordan to Iraq and mention the possibility of Israel’s willingness to pay compensation to refugees agreeing to make such a move.

Palestine Conciliation Commission. Another new element is about to enter into the situation. The work of the Palestine Conciliation Commission in identifying refugee property taken over by Israel will be completed and reported to the UNGA sometime during the autumn of this year. The completion of the evaluation phase of the project will follow.⁹ PCC now indicates that the total figure for the values of the property will be about $460 million.

II. Factors in the Situation (Tab A):

1. Political:

A. The refugee problem remains the primary cause of tension between Israel and the Arab states, and the primary threat to internal stability in Jordan. It vastly complicates the territorial problem of the Gaza Strip but does not play a role in Egyptian domestic politics, in view of the geographical isolation of the refugees.

B. There is general agreement that conditions in the area are somewhat more favorable than they have been in the past to make a constructive move on the refugee problem. The public position of the Arab leaders (including those friendly to the U.S. such as Hussein and Nuri) still militates against a solution of the refugee problem in any context other than a general political settlement which would severely truncate and greatly weaken Israel. Moreover, recent propaganda statements by the Egyptians alleging that unusual secret efforts are being made to solve the refugee problem introduce an additional complicating element. This means that only quiet efforts with minimal publicity have any chance of success.

C. Recent developments in the area have tended to involve the United States more deeply than hitherto. This may have resulted in a decrease in U.S. area of maneuver in the problem. For example, a year ago we could have supported a policy of uniform pressure on the Arab host Governments. Today, two of those Governments are close friends Jordan and Lebanon), two are unfriendly (Syria and Egypt).

2. United Nations:

A. UNRWA. In the seven years of its existence, UNRWA has proved its worth as an efficient relief agency. Its programs of education and medical care have been equally successful. It has been useful in that it has to a large extent insulated the United States from the difficult consequences which would ensue if we were directly involved in a relief program.

On the debit side, UNRWA has been unable to carry out any major economic development project aimed at refugee resettlement. It is supported by voluntary contributions by United Nations members and the willingness of other countries to contribute is getting increasingly limited. Against this decline, UNRWA faces a constantly increasing relief and education budget as a result of the natural increase of the refugee population and UNRWA’s inability to prune existing ration rolls. The Agency now has reasonable assurance of funds to enable it to conduct a reduced level of operations only through January or February 1958 (Tab B).¹⁰ This situation will make it increasingly difficult to hold the United States contribution at 70 percent. The effective UNRWA relief program has also tended to insulate Arab politicians from awareness of the very real need for a permanent as opposed to a temporary solution to the refugee problem.

B. PCC. The only activity of the Palestine Conciliation Commission, which was created as a mechanism for reaching a general settlement, for the past few years has been in the field of compensation as described above. There is serious doubt that the PCC could ever successfully be reactivated to resume its entire original task.

3. Economic and Social:

A. The aftermath of the Palestine hostilities has not brought stagnation to the area. On the contrary the Arab States and Israel have passed through a period of unprecedented economic development. This rapid development has several implications: (1) it has demonstrated the area’s ability to absorb this population; (2) it has resulted in widespread “automatic resettlement” of skilled and semi-skilled refugees especially in Lebanon and Syria—a process which has largely been hidden in view of refugee refusal to turn in their UNRWA ration cards; (3) this “cream-skimming” process has meant that the bulk of refugees remaining to be resettled are unskilled peasants most of whom left little by way of property behind in Palestine.

B. The resettlement of Arab refugees in Jordan poses the minimum problem of social adjustment (they are already Jordan citizens). By cruel circumstance, however, Jordan has the least economic capacity. Refugee “automatic reintegration” in Syria has proceeded to the point where international relief could be withdrawn from that country without undue personal hardship. Lebanon protests against settlement of Arab refugees in its territory on the grounds that it would upset the delicate Christian-Moslem balance. “Automatic reintegration” has gone forward, however, to a considerable degree. There is no point in considering the settlement of refugees in the already crowded Nile Valley, and there are no grounds for hope at this time that Egypt would make Nile water available to permit refugee settlement in Sinai Peninsula.

C. Iraq presents the most tempting prospect for major resettlement. In addition to the political obstacles, other problems arise. Iraq will wish to adjust any influx of refugees to its ability to respond to the needs of the depressed classes in its own population. There are significant cultural and climatic differences between Iraq and the area where the refugees presently abide and a resulting problem of adjustment. Kuwait is worthy of mention as a remotely possible source of funds for refugee settlement.

D. While a relationship can sometimes be drawn between rehabilitation projects and a specific number of refugees resettled, it is difficult, if at all possible, to predict the full extent or rate of resettlement that could be expected to result from a complex program such as the one envisaged in the present study. For the sake of planning, however, the following estimates might be of use:

If the entire Jordan Valley Plan were eventually to be carried out, Jordan could be expected to absorb up to 175,000 of its 513,000 refugees. It must be conservatively estimated that Mr. Johnston’s revised Plan could resettle something over half of the 175,000. The 90,000 refugees in Syria are virtually absorbed into the nation’s economy and do not enter into the program. The Gaza Strip is economically incapable of absorbing any of its 217,000 refugees. A large share of the 102,000 refugees in Lebanon could economically be absorbed there, and the remainder should not be considered for resettlement elsewhere until excess refugees in Jordan and Gaza are taken care of. Of the remaining refugees, it is probable that not over 100,000 would be repatriated to Israel and the balance of approximately 455,000 would be resettled elsewhere in the Middle East, predominately in Iraq.

III. Recommendations:

1. UNRWA (Tab C):¹¹

A. The United States should be prepared to maintain at least its present level (70 percent) of support to UNRWA’s relief and rehabilitation programs for the remainder of the Agency’s mandate, until June 30, 1960. Anticipated appropriations for our fiscal year 1958 will permit contributions of up to $17,800,000 toward the Agency’s relief budget, and up to $7,628,000 toward its rehabilitation budget. While such contributions would not exceed 70 percent of the Agency’s budget, they would exceed 70 percent of total anticipated contributions to the Agency.

B. We should offer bilateral assistance to Jordan so that Jordan can assume responsibility for some of the Agency’s rehabilitation programs which have direct bearing on reducing relief rolls and in which Jordan has expressed an interest, such as the program of individual loans or grants to refugees, projects for the construction of permanent homes for refugees in areas where greater self-support is possible, the continued operation of the vocational training center and instructors’ training unit at Kalandia and the construction of two other badly needed similar centers. This assistance would amount to approximately $5.6 million during fiscal year 1958. To the extent that Jordan was prepared to accept bilateral assistance in any or all of the rehabilitation programs mentioned above, part or all of the $5.6 million would be expected to come out of the $7,628,000 which it is anticipated will be available for contribution toward UNRWA’s rehabilitation budget.

C. If UNRWA’s finances preclude its undertaking the construction and equipment of two vocational training centers and an agricultural training center in Lebanon projected for 1958 at a cost of $790,500, we might wish to make these projects feasible through bilateral assistance to Lebanon.

D. While no further legislation is required to implement the above three recommendations, we should consult with the appropriate Congressional committees on our plans in this regard.

E. Between now and the terminal date of UNRWA in 1960, we should reaffirm, as appropriate, our strong desire for the earliest feasible transfer of administrative responsibility for the refugees to the Arab host governments, and should be prepared to assist any host government expressing a willingness to do this (See 6(C) below).

F. Our plan should be based on the assumption of primary emphasis being given to permanent solution of the refugee problem so that it may be possible to achieve our objective of liquidating UNRWA when its mandate ends in 1960.

2. Repatriation (Tab D):¹²

A. We should approach Israel quietly at an early date to secure its agreement to a feasible and equitable program for repatriation of refugees in the spirit of the recommendations of the General Assembly resolution of 1948¹³ establishing a refugee’s right of a choice between repatriation or compensation. This would be clearly understood as a “pilot project” designed to demonstrate the good faith of Israel, the Arab states and the Arab refugees, and the feasibility of a repatriation program to other members of the United Nations.

B. The elements of a repatriation program which appear feasible and equitable include:

(1) Israel would agree as the first step in orderly repatriation to admit on an annual quota basis a given number of Arab refugees. Repatriation would be subject to equitable arrangements being made for the care and shelter of refugees who were repatriated with due regard for internal security of Israel. Israel would, insofar as possible, work out arrangements for the restoration of former Arab holdings to repatriated owners and would assure full safety and protection of the refugees under Israeli law.

(2) The Arab refugees would be made aware of the fact that they would be required to live under the laws of Israel, which probably would entail the acceptance of the obligations of citizenship. They would sign agreements indicating their acceptance of the conditions under which they were being repatriated.

(3) A United Nations Agency would be established to ensure that the implementation of a repatriation program was equitable to Israel and the Arab refugees.

(4) The repatriation program would be phased to ensure a satisfactory indoctrination for the refugee as to his rights under either repatriation or compensation, and to permit its being halted at any such time as Israel or the United Nations Agency was of the opinion that the repatriation program was not being carried out justly or peacefully.

C. Israel would be expected to accept in principle the right of all refugees to repatriation subject to equitable arrangements which the Israeli Government could develop as qualifications for repatriation. The object of the equitable arrangements should be to discourage too wide option for repatriation by the refugees. It would be necessary to phase actual repatriation should it occur. Moreover, we would seek to make the alternative to repatriation, i.e. compensation, as attractive as possible.

D. We should link favorable Israeli action on repatriation with the question of additional aid which Israel is seeking from the United States in its current foreign exchange difficulties.

3. Compensation (Tab E):¹⁴

A. Concurrent with a proposal for repatriation and following Israeli announcement that it had accepted repatriation, the United States should announce its willingness to contribute initially as much as $100 million to an internationally financed fund, from which Israel could provide compensation to those refugees who decide not to return to Israel.

B. We should seek to make compensation as attractive as possible to the individual refugee while at the same time minimizing possible economic dislocations which would occur from too sudden an influx of funds into the host governments. A fixed sum of money should be established as available to every refugee opting to accept compensation instead of repatriation. The compensation proposal should be used as inducement to Israel to accept repatriation in principle.

C. A Compensation Board should be set up as a United Nations Agency to process all claims for compensations.

4. Unified Development of the Jordan Valley (Tab F):¹⁵

The United States should approach Jordan with a proposal to underwrite the cost of developing the Jordan River in Jordan along lines described by Mr. Johnston in his memorandum. Israeli acquiescence in this would be necessary since it would involve a greater storage use of Lake Tiberias than previously discussed with the Israelis. Full cooperation from the Jordanian Government in substantial refugee resettlement on the developed land should remain part of any agreement on Jordan Valley development.

5. Iraq (Tab F):

The United States should approach Iraq with a proposal to provide funds either through a grant or a loan for an expanded Iraqi development program, as described by Mr. Johnston and the Secretary General, on the understanding that extensive contracting for refugee labor would be involved.

6. Action in the United Nations (Tab G):¹⁶

A. On the assumption that quiet negotiations with friendly Arab governments and Israel will be proceeding along the above lines, we shall want to have UNRWA matters handled in as non-controversial a manner as possible in the XIIth General Assembly, both during the pledging session of the Committee of the Whole and in the Assembly itself. During the Special Political Committee’s consideration on the UNRWA item we should propose a draft resolution which would take note of the Director’s Annual Report, approve the work performed by him and his staff and authorize its continuation, express appreciation of the help of private philanthropic organizations, and urge states to maintain or increase their contributions.

B. Should there be sufficient progress, including the public acceptance by Israel of the principle of repatriation, the United States should take the lead in the General Assembly to set up an appropriate internationally financed fund to be used for payment of compensation by Israel.

C. The United States should indicate that it would be willing to help any host government taking over administrative responsibilities for the refugees prior to June 30, I960. (Funds for this could come from the anticipated MSA appropriation for refugees for 1958.)

7. Financial Implications to the United States (Tab H):¹⁷

In addition to bilateral assistance in undetermined amounts to Iraq (possibly in the form of a loan) and possibly to Israel, the program involved in the above recommendations would cost approximately $265,000,000 during fiscal year 1958. $75,000,000 of this would be in the form of an Export-Import Bank loan to Israel.

8. Tactics and Timing (Tab I):¹⁸

At the end of the study there is a paper on proposed tentative timing of approaches in carrying out the above recommendations.

9. The foregoing recommendations are presented as possible courses of action. Additional inter-agency consultation and coordination, and consultation with appropriate Congressional Committees would be necessary before the United States could embark upon those courses of action regarding expenditure of US funds.

Tab D

THE PALESTINE REFUGEE PROBLEM—FUTURE UNITED STATES POLICY

B. Remedial Steps (continued)¹⁹

3. Proposal for Repatriation

a. Basic Factors Involved

(1) Total repatriation is and will remain completely impractical. Jewish immigration into Israel makes a total repatriation impossible both with regard to the reclamation of Arab properties and capacity of the land to support the population. Moreover, the physical management problem is insuperable with regard to the movement of persons, the amount of time which would be consumed in order to make the necessary transfer of populations and the probable expenditure of UN, US and Israeli funds to accomplish such a movement.

(2) Any substantial repatriation of Arabs to Israel would constitute an overwhelming and continuing security problem to the State of Israel, particularly in the absence of a peace settlement, but probably even if there were a peace settlement.

(3) Based on our available information and estimates arising therefrom the majority of refugees (if properly advised) would not choose to be repatriated if the alternative to repatriation were adequate compensation because few would wish to become Israeli citizens and many, as in Syria and Lebanon, have already in effect become assimilated, into the “host countries”.

(4) Repatriation, while an emotional ideal to the Arab refugees, is of more importance as a political barrier to a peaceful settlement of the Palestine question, including the resettlement of the large majority of Arab refugees in the Arab states. Any proposal for overcoming this barrier, therefore, must be one which is politically defensible with the Arab Governments and will ensure that the political and security interests of the State of Israel are so protected that it may be induced to accept a program of repatriation which is limited in its extent but is fair to the Arabs in its application.

b. Proposal

(1) In the spirit of the recommendations of the General Assembly resolution of 1948, the Government of Israel would accept the principle of repatriation and undertake, in conjunction with a duly designated United Nations body (see 2(c) below) and representatives of the host Arab Governments, to arrange for the repatriation, on a carefully phased basis, of Arab refugees. It would be clearly understood that this proposal was in effect a “pilot project” designed to demonstrate the good faith of Israel, the Arab states, and the Arab refugees, and the feasibility of a repatriation program to the other Members of the United Nations.

(2) The basic requirements for the repatriation program would be as follows:

(a) Israel would agree as the first step in orderly repatriation to admit on an annual quota basis a given number of Arabs. Israel would, in conjunction with the UN authorities, arrange for adequate shelter and farm land for the refugees and, insofar as possible, would work out arrangements for the restoration of former Arab holdings to their repatriated owners. Israel would assure individual Arabs returning to Israel full safety and equal protection under Israeli law. The public statement Israel would make might be along the following lines.

“,In accordance with the provisions of paragraph 11 of the December 11, 1948, resolution of the United Nations General Assembly, the Government of Israel has decided that all bona fide Palestine refugees who desire to return to Israel and are prepared to live in peace with their neighbors in Israel may do so if they so elect. The Government of Israel is prepared to consult and agree upon feasible and equitable conditions and arrangements for the exercise of such option by the Palestine refugees. The Government of Israel requests the cooperation of all responsible authorities in acquainting refugees with these conditions and arrangements once agreed upon.

“The Government of Israel must reserve for itself the right to take such equitable measures as it deems necessary in the protection of its internal security with regard to the execution of the proposed program and also, in agreement with a properly designated neutral authority, to terminate the program at any time that it is not being carried out justly or peacefully pursuant to the above-mentioned United Nations General Assembly resolution.

“With international assistance, the Government of Israel proposes, through equitable arrangements to be worked out, to compensate those refugees electing resettlement.”

(b) The Arab refugees would agree to abide by the laws of Israel and to accept the responsibilities, such as taxation and, if necessary, military service, flowing from their decision to return. They would undertake their obligation under the 1948 resolution to “live in peace with their neighbors”, understanding that failing to do so would be basis for expulsion or such other punishment as is prescribed by Israeli law. They would sign, or have signed for them, a written undertaking that they understand that they cannot necessarily be returned to their former properties or holdings and are therefore prepared to accept substitute residence, and would sign a further undertaking that they understand that they may at any time, on notification to the proper authorities, leave Israel and relinquish Israeli citizenship. However, in so doing they could not take from Israel anything which they may have acquired or had formerly claimed in Israel, i.e., they would relinquish their right to compensation if they opt to [for] repatriation to Israel and subsequently decide to leave Israel.

(c) A United Nations Agency would be established to undertake to ensure that it was satisfied that at all times Israeli laws and regulations regarding repatriation of Arab refugees were just and equitable and fairly applied, that the Arab refugees had ample indoctrination in advance of their option to repatriation as to the rights and obligations in the event of repatriation, and that it would serve as an appeals board in the event that a refugee was expelled or chose to leave Israel.

(3) Phasing of the proposal:

(a) As soon as the designated United Nations authority were satisfied that the indoctrination program among the refugees had been satisfactorily carried out, the refugees would be given an option as to whether or not they would be repatriated or receive compensation and be resettled in the Arab states.

(b) Repatriation would occur at a rate increasing each year. Following the completion of two years residence in his allotted area, any refugee might indicate to the Israeli authorities and to the United Nations agency where he might wish to settle. The Government of Israel and the United Nations agency would make every reasonable effort to so relocate the Arab refugee in Israel, particularly if he could establish a claim to former property holding.

(c) At the request of Israel, or upon its own initiative, the agency could stop the repatriation program whenever in its opinion the program was not being carried out justly or peacefully. It would report its actions to either the Security Council or the General Assembly for further guidance or recommendations.

c. Comment

In suggesting a program such as the above, it is important that the following be borne in mind:

(1) Any program involving repatriation or compensation and resettlement will take time. From the point of view of actual physical repatriation the processing of applicants will take time even after a refugee has exercised his option. The identification of Arab property left in Israel now being pursued by the Palestine Conciliation Commission’s refugee office will not be completed until the latter part of 1957 at the earliest. An Arab refugee must be offered the prospect of filing a claim for compensation at the time he is given the option to repatriate.

(2) As suggested, a program for repatriation while being fair in the spirit of what has now become a United Nations shibboleth, must, in fact, be sufficiently unattractive to the large majority of Arab refugees in order to minimize the actual risk in instituting any form of repatriation through creatine an insuperable security problem for the Israelis or falsely arousing the Arab refugees’ hope as to what awaits them upon repatriation. It is for this reason that an indoctrination program, however difficult the task, must be undertaken and if the Arab Governments cannot be persuaded to cooperate with such a program there would be no point in proceeding any further with it. The program must be so designed so as to be halted at any time, if, through bad faith, it cannot work. Thus there must be not only the indoctrination program which would bring home clearly to those opting repatriation the full consequences of their decision. There also must be a period in which to permit testing as to the likelihood of those repatriated actually assimilating themselves into Israel and “living in peace with their neighbors”.

Tab E

THE PALESTINE REFUGEE PROBLEM—FUTURE UNITED STATES POLICY

B. Remedial Steps (continued)

4. Proposal for Compensation

a. Basic Factors Involved

(1) The refugees who do not return to Israel under a repatriation program must be compensated. This has been understood as their right since the adoption of the General Assembly resolution of December 11, 1948.

(2) To date, the refugee office of the Palestine Conciliation Commission has been engaged in the identification and evaluation of individual land holdings left by Arabs in Israel. The refugee office states that the identification phase of the project should be completed during the latter part of 1957 but that the evaluation phase will take several months longer unless it has additional staff available. It has operated on the presumption that individual claims for compensation should be paid on the basis of their property being identified and evaluated.

(3) Certain criteria had been laid down for estimating total possible cost for compensation by the Palestine Conciliation Commission. The main emphasis has been on evaluation of real property remaining in Israel. The secondary emphasis has been on certain classes of movable goods and property. No consideration has been given to rentals, professional and commercial facilities and good will, and normal household goods. Given the indicated criteria for evaluation, the refugee office originally placed an estimate of approximately $300 million on holdings left in Israel which might be the basis of claiming and receiving compensation. A current estimate by the refugee office is in the neighborhood of $460 million.

(4) No formal UN efforts have been made to establish procedures for the processing and payment of compensation claims.

(5) A program for compensating the Arab refugees should have the following elements:

(a) It should be expeditious and equitable in the processing and payment of compensation claims.

(b) It should, if possible be more attractive to the Arab refugees than repatriation. At the same time, it must be governed by the consideration of the details involved in administration and the availability of funds.

(c) Too extensive payment of compensation to refugees in any given area in the Arab world may have serious dislocating effects on the economies of the area. Arab Governmental cooperation, therefore, in the handling of payments of compensation will be desirable from the outset.

b. Proposal

(1) Pursuant to the Secretary’s speech of August 26, 1955, and following Israel’s announcement that it accepted repatriation, the United States would announce that it was prepared initially to make available $100 million to help finance a long term loan to Israel for the purpose of expediting the payment of compensation claims against Israel to those refugees accepting compensation in preference to repatriation. If possible, prior to such an announcement, the United States should have undertaken to assess the sources of available funds over and above the $100 million.

(2) A Compensation Board would be set up as a UN agency to process and pay all claims for compensation along the following lines:

(a) During the indoctrination period suggested in the repatriation proposal, the Arab refugee would be informed of his rights to receive compensation as the alternative to repatriation.

(b) At the time that he exercised his option for repatriation or compensation, if he signified that he chose to be compensated, his option for compensation would entitle him to cash benefits up to $100 at any time that he chose to accept cash, subject to such spending regulations as the local Arab Government might deem necessary.

(c) In accepting the cash payment up to $100, or any part thereof, the Arab refugee would not be entitled to change his option at any time thereafter to repatriation, except on specific application to the Government of Israel and the receipt of its consent.

(d) In accepting any or all of the cash payment up to $100, the recipient refugee would not be barred from establishing claims for higher amounts of compensation. He would, however, be expected to produce such evidence to substantiate the claims that might be required and could be validated by the UN Compensation Board which would be set up to administer the payment of compensation and to review and validate claims for compensation over and above $100.

(e) The Arab host Governments would be expected to work out with the Compensation Board such arrangements as in their opinion could best regulate large payments of compensation so that any undesirable effects on the local economies could be minimized. For example, an Arab host Government might lay down a requirement that payments of large amounts of compensation over a specified figure would have to be made to a bank and could be drawn upon by the compensated refugees at times and under conditions indicated by the Arab Government.

c. Comment

In suggesting a program such as that above, it is important that we bear in mind the following:

(1) No Arab refugee is going to be attracted away from repatriation unless or until he has demonstrable assurance that compensation or some part thereof would be readily forthcoming upon his opting to be compensated in preference to being repatriated.

(2) While the figure of $100 is arbitrarily arrived at as being the minimum payment for a refugee choosing compensation, it should be pointed out that, given the suggested available loan to Israel of at least $100 million, payment of $100 to each individual refugee now on UNRWA’s rolls could be met immediately out of the available funds, assuming that every single refugee opted for compensation instead of repatriation. Actually, since it can be expected that a substantial number of refugees will at least initially opt for repatriation, the funds which would remain, after all those who opted for compensation had been paid, would be sufficient to meet some of the larger claims and serve as an ever-present inducement for at least some refugees who had opted for repatriation to change their minds.

(3) It may be expected that the above-mentioned program will be criticized as being in effect a bribe not to repatriate. This will have to be countered in such manner as possibly pointing out that $100 per refugee will, in family groups, constitute nearly the equivalent of four years of rations from UNRWA, that $100 per refugee will be, so far as estimates presently available show, well above the average amount to be received by the individual refugee should a claim be based solely on his individual validated claim for compensation. The general estimate thus far available is that a very small percentage of the refugees will actually have readily identifiable claims and that even a smaller percentage will have by far the largest amounts in claims.

(4) By the payment of a fixed minimum fee to each Arab refugee, predictably half of the initial over-all amount of compensation which would be paid out to refugees could, in fact, result m an immediate increase in available money in Jordan and could, therefore, be a possible attraction to the Jordan Government to participate in such a program. At the same time, it might give the United States an opportunity to lessen its direct bilateral assistance to Jordan. Syria, on the other hand, with the fewest refugees would benefit the least by any influx of funds.

(5) A Compensation Board would have to be established to process the larger compensation claims. In the first place, it may be presumed that compensation as such would be resisted unless it was the basis for individual refugees being able to seek an amount of compensation over and above a fixed minimum figure. The claims of larger amounts obviously would have to be handled in as judicial a manner as possible since those who have the largest claims may be expected to bring the maximum amount of political and legal pressure to bear on that entity or those Governments concerned in the processing of compensation claims. The present refugee office of the PCC being in general disrepute as far as the Arabs are concerned, it cannot be expected that they could undertake this important function. It is suggested that the Compensation Board should be made up of reputable international civil servants from the UN, having nationalities other than those of the affected countries in the Palestine area, and should be paid by the United Nations funds. The actual payment of claims for compensation should be handled by the Compensation Board but each payment of compensation would be charged formally against the loan to Israel. Representatives of Israel and the interested Arab host Governments could appear before the Compensation Board, or could be called before the Compensation Board on all matters directly affecting them. It would, of course, be expected that the Compensation Board would have full and working liaison with the United Nations agency handling the repatriation.

Tab I

THE PALESTINE REFUGEE PROBLEM—FUTURE UNITED STATES POLICY

E. Tactics and Timing

1. General Considerations

The three key approaches envisaged in the recommendations are, in the order of their importance to the problem, the following:

a) Israel—The acceptance by Israel of the principle of repatriation and its willingness publicly so to state and to give effect to the principle is crucial to any effort to resettle Arab refugees. Without such a willingness on the part of Israel, there is no chance of any significant cooperation from any Arab Governments.

b) Iraq—Other than Syria where such resettlement is not now politically feasible, the only country in which a significant number of refugees can be resettled is Iraq. Without an agreement from Iraq to allow a large number of refugees into the country, only limited solutions are possible.

c) Jordan—Over half of the refugees are concentrated in Jordan where only limited numbers of refugees could be resettled; the remainder would have to be resettled to Iraq. Jordan’s political position is not secure enough to permit it to take the initiative among Arab states in accepting publicly resettlement. Its acquiescence would have to depend on prior Iraqi approval.

While neither Lebanon nor Saudi Arabia would be called upon to play any active role in the program, their acquiescence would be helpful. In addition, as a courtesy, we would want to convey to them at an early stage the elements of the program. The recommendations do not envisage approaches to either Syria or Egypt. The United Kingdom should be taken into our confidence and its cooperation requested at a very early stage. The same is true for the Secretary General. No early approach to the French is envisaged.

In order to reduce to a minimum public speculation and Syrian and Egyptian efforts to obstruct, at least the first approaches to Israel, Iraq, and Jordan should be carried out with as much secrecy as possible.

Israel’s public announcement of its acceptance of repatriation should be made on the heels of our approaches to Iraq and Jordan. Immediately thereafter the United States should publicly announce its readiness to provide the initial funds for compensation.

1. Source: Department of State, Central Files, 320.51/7–257. Secret. Drafted by Ludlow, Bergus, Sisco, and Gamon.

   During a meeting called to discuss this memorandum, Dulles appointed Herter’s special assistant, Henry S. Villard, to explore the Palestine refugee problem along the lines contained in the memorandum. (Memorandum from Howe to Macomber, July 29; ibid., 784.00/7–2957) Villard’s report, entitled “Palestine Refugee Problem, Villard Study, 1957–58”, comprises 58 documents pertaining to the refugee question which date from July 2, 1957 to May 7, 1958. The memorandum of July 2 and its nine attachments are item No. 1 of the report, which is ibid., 320.51/7–257.

2. See Document 327.
3. Attached to the source text is a detailed paper entitled “The Palestine Refugee Problem—Future United States Policy”, which is divided into nine seperate tabs, each containing a discussion of a seperate aspect of the subject.
4. Not printed. Tab A contained a description of the nature of the problem in terms of its historical background and its various elements.
5. Shortly after its creation, the Palestine Conciliation Commission (PCC) established an Economic Survey Mission under the direction of Gordon R. Clapp to examine the economic situation in the area and to make recommendations. The first interim report, or Clapp report, signed at Beirut on November 6, 1948, recommended a program under which direct relief would gradually be replaced by works projects, at a cost of $54,900,000 for the period January 1, 1950, to June 30, 1951. (G.A. 4th sess., Ad Hoc Political Committee, Annex, vol. I, pp. 16–29; for a summary, see Foreign Relations, 1949, vol. VI, pp. 1472–1476.) On December 8, 1949, the General Assembly unanimously adopted Resolution 194 (III) approving the Mission’s recommendations and providing for a new agency, the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA).
6. Johnston handed his undated memorandum to Rountree during a conversation on June 7. The memorandum of conversation by Bennsky, with attached memorandum, is in Department of State, Central Files, 886.411/6–757. A copy of Johnston’s memorandum is attached to the source text as part of Tab F.
7. A copy of the memorandum is attached to the source text as part of Tab F.
8. Labouisse spoke with Secretary Dulles on June 19. The memorandum of conversation by Ludlow is in Department of State, Central Files, 886.411/6–1957.
9. Documentation concerning U.S. interest in the PCC is ibid., 320.51.
10. Not printed. The paper attached as Tab B posed the need for remedial steps to assure that UNRWA’s activities continue as effectively as possible for the immediate future and that the refugees present no greater problem for the security and stability of the area than they did currently. It also discussed the solution of UNRWA’s immediate financial difficulties as one such step.
11. Not printed. The paper attached as Tab C contained a discussion of increased contributions to UNRWA and bilateral assistance to friendly Arab governments (particularly) Jordan as a second remedial step.
12. Printed below.
13. U.N. General Assembly Resolution 194 (III).
14. Printed below.
15. Not printed. The paper attached as Tab F contained a discussion of Johnston’s proposal of June 7 and Hammarskjöld’s paper of June 17 as remedial steps together with the texts of the papers themselves.
16. Not printed. Tab G contained a discussion of possible U.S. action in the United Nations on the refugee question.
17. Not printed. Tab H contained a chart listing estimated financial costs of the proposed program for Palestine refugees for fiscal year 1958.
18. Printed below.
19. Tabs B and C (neither printed) contained the first two parts of the discussion of remedial steps. See footnotes 10 and 11 above.