Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 1

320.2 AA/11–1852: Telegram

No. 522
The Acting Secretary of State to the Embassy in Israel¹

secret

Washington, November 18, 1952—7:14 p.m.

517. For purpose reviewing problems relating Palestine polit items to be considered by Ad Hoc Polit Comite, reps NEA and UNA met with USUN at NY Nov 15. Agenda items listed hereunder in numbered paras followed by main points discussed and conclusions reached. Emb Tel Aviv and USUN shld fol instrs included paras numbered one and two.

1. How can US most effectively estab gen recognition that repatriation refugees to Israel no longer feasible?

If other dels bring up for discussion fact refugees cannot return to former homes, either by introduction of a res or otherwise, we shld do our part make known we consider any large scale return impossible. If matter not raised by others, we shld not raise it. Rather in this event we shld leave question as principle which UN has already estab.

We consider only possible solution resettlement in Arab states for most, if not all, refugees. Progress cannot be made so long as certain Arab leaders use refugees as polit weapon and continue keep issue inflamed. It wld perhaps be too much at this time for us tell refugees they cannot go back—that there is no home for them—but might be possible slow down Arab leaders who keep issue in foreground.

It was agreed Israel might find some econ benefit by permitting certain number refugees return particularly farmers.

Israel Govt shld be asked by Emb Tel Aviv and by USUN for info re Israel’s intentions for repatriation Arab refugees to Israel. We believe action by Israel for limited repatriation wld advance prospect for other peace measures and Israel shld be asked indicate whether it wld work out constructive plan to admit given nr.

2. Compensation:

(a) How far shld USUN go in supporting principle of compensation and practical measures for giving it effect?

We shld support the principle. “Practical measures for giving it effect” shld be worked out by experts after problem has been defined. Berncastle PCC land specialist is supervising examination of records which shld show extent of problems i.e., by ascertaining how much property in Israel owned by refugees and by determining its value.

(b) Is it feasible for Israel pay compensation without large Amer assistance? Is such assistance likely be forthcoming? If not is it politically desirable encourage idea of compensation and initiate steps such as undertaking of PCC, looking toward payment compensation?

Seems likely US assistance to Israel will be required for several years. There are however factors which are encouraging. These include:

(1) Possibility Israel might be able set aside certain amt (possibly 5 or 10 percent) from present $300 mil fon exchange budget for payment compensation. This cld liquidate obligation over period years either to individual Arabs or by servicing internatl loan for that purpose.

(2) Israel’s econ understood to have reached bottom last winter but now shows signs recovering—even though very slowly. There is probability Isreal’s industry and agri are capable of reaching position of increasing returns during next year or so—given neces raw materials and equipment. In many instances existing capital equipment cannot be used fullest possible extent because of lack raw materials. Reparations payments by Ger cld create situation that cld provide raw materials and permit further industrial expansion. Increased citrus exports during years ahead, and recovery potash and other Dead Sea resources, shld contribute materially to Israel’s capacity to pay, including decrease in need for fon governmental assistance.

(3) Compliance by Egypt with UN Res re Suez Canal wld benefit Israel to important but unknown extent. Estimates vary from several mil dols to $100 mil or more each year. Savings to Israel wld result from cheaper freight rates on petroleum and by giving Israel access cheap markets for purchases and sales. Since reopening Suez Canal to all traffic is concern maritime powers, Egypt cld act without ref Israel or Palestine question.

(4) Any lessening Arab econ boycott against Israel wld increase Israel’s capacity to pay.

(5) Any confirmation existence important natural resources such as petroleum wld have beneficial effect on Israel’s fon exchange position.

It was agreed compensation directly connected with resettlement refugees. Also refugees shld not have both compensation and repatriation. Israel must provide alternative: either permit refugees return or pay them compensation for their losses (or combination of two alternatives). The more refugees having property in Israel permitted to return, the less wld be amt compensation to be paid by Israel.

It was recognized that if Israel shld set aside portion its fon exchange budget for compensation while US is providing assistance this may produce difficulties in obtaining appropriations as there might appear to be duplication sums paid as compensation and requests for Arab resettlement funds. It was agreed however that advantages of encouraging Israel Govt set aside portion its fon exchange income for compensation outweigh disadvantages.

Israel Govt shld be approached by Emb Tel Aviv and USUN for purpose ascertaining what plan Israel has if any to pay compensation, and stress upon them to produce such plan at earliest possible date as if gen position against repatriation appears in GA compensation question can become acute.

3. If question of Jerusalem raised and subj of internationalization debated, is any scheme (territorial) internationalization feasible at this time? If so shld US take any initiative this direction?

Agreed no purpose wld be served by discussion internationalization Jerusalem at this time. US shld take no initiative in matter. However shld any aspect of question be raised we shld support status quo. For instance shld res be introduced to effect Israel not transfer its FonMin to Jerusalem, we shld support res. (Amb Jessup requested instrs this point.)

Note: An immed problem is to determine whether US shld be represented at inauguration new Pres of Israel shld inauguration take place Jerusalem as seems probable.

4. Direct negots

(a) What shld be extent US initiative in calling for direct negots between Israel and Arab states?

Agreed we shld encourage other dels to table res calling on parties settle differences by direct negots. We shld not introduce such res but shld support it if introduced by others.

(b) Is expression of widespread GA sentiment for direct negots likely encourage or discourage Arab countries from settling their differences with Israel?

Agreed a res calling on parties to settle their differences by direct negots might encourage some Arab states settle their differences with Israel. It was felt it wld do no harm and cld be very useful, to provide Arabs with basis on which justify negots with Israel.

5. Future of PCC

Agreed our contd membership PCC contingent on Comm’s indicated responsibilities. If Comm were to continue with basically present terms ref we shld remain on Comm. However if as anticipated Arabs propose new or same Comm with greatly expanded membership or terms ref we might well wish indicate we cld not serve on such body, particularly if it were composed members some of whose partiality is well established, or its term ref were related to enforcement or implementation existing GA Res. Also new members wld undoubtedly wish reactivate Comm with resultant confusion. No conclusion was reached.

Bruce

1. Sent also to New York as telegram Gadel 61; repeated to London, Paris, Ankara, Amman, Beirut, Baghdad, Cairo, Damascus, and Jidda.