47. Memorandum From the Under Secretary of State for Economic Affairs (Dillon) to the Under Secretary of State (Herter)1

SUBJECT

  • Proposed Program for Palestine Refugees

The attached memorandum from IO and NEA gives a total figure for the U.S. share for the Palestine refugee program of $850 million. By the use of various statistical assumptions of highly doubtful validity the memorandum reduces this figure to a total of $290 million, which is labeled “Net cost of program to U.S.” I think this figure is highly unrealistic.

A fairer analysis would seem to be the following:

Total cost of U.S. share approximately $800 million. (This eliminates the $55 million which we will in any event be required to contribute to UNRWA prior to June 30, 1960.)

[Page 109]

An estimate of $300 million representing the U.S. cost of continuing care for the Palestine refugees in the ten year period 1960–1970 at the present scale, assuming no resettlement takes place. This would leave a net cost for the U.S. for the resettlement program over and above that of keeping the refugees in their present state of approximately $500 million.

I doubt if the Congress would approve such a $500 million program unless it was enthusiastically accepted by both Israel and the Arab states, and unless there was some shift in the present orientation of the UAR toward the Soviet Union. In any event this program should be considered in an inter-agency forum, such as the OCB so that views of other interested departments, i.e., Treasury, could be obtained before any decision is taken to encourage the Israelis that we will in fact proceed with a program of this magnitude.

CDD

Attachment

Memorandum From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Rountree) and the Assistant Secretary of State for International Organization Affairs (Wilcox) to the Acting Secretary of State2

SUBJECT

  • Study and Cost Analysis of Proposed Program for Palestine Refugees

You have approved paragraph 3 of the recommendations set forth in the IO/NEA memorandum of June 19 on the Palestine problem,3 namely, that there be undertaken urgently a study and cost analysis of the various recommended means whereby Israel and the Arab host governments might be assisted in carrying out programs for the integration and repatriation of the Palestine refugees after the conclusion of the UNRWA mandate on June 30, 1960. It should be recalled that these programs are based on the premise that Israel would first publicly accept the principle of repatriation and compensation and give effect to that commitment. The study has now been concluded with the collaboration of the International Cooperation Administration and a number of bureaus in the Department.

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The total cost of the program is estimated at about $1,370,000,000, to be paid over a ten-year period. The United States share is estimated at $850,000,000. This is a large sum dwarfing past United States contributions to the relief and rehabilitation of Palestine refugees. However, it should be viewed not only in terms of liquidating the political and economic problem of the million refugees but also as a significant means of developing the productive capacity of the Near East. The carrying out of the programs envisaged should, therefore, further other programs for the area in which the United States could expect to participate. For example, it is estimated that approximately $480,000,000 of the United States expenditures could appropriately be channeled through development programs for the area over the next few years. Moreover, regardless of the programs in which the United States might participate for the benefit of the refugees, it is estimated that it would have to contribute to their relief over the period 1960–70 at least $80,000,000 (if it continued to contribute at a 70 per cent rate). The June 19 recommendations can therefore be viewed as calling for the expenditure of approximately $290,000,000 beyond what the United States might otherwise pay over the period 1960–70 for high priority development projects in the area and for continued help to the refugees. It should be remembered that the steps recommended on June 19 have as their objective the absorption of all refugees by the end of the ten-year period.

In addition, it is estimated that UNRWA requirements until June 30, 1960, will be $78,000,000, of which it is anticipated that the United States will contribute $55,000,000 (including its contribution of $23,000,000 for relief and rehabilitation during Fiscal Year 1959 as already authorized by the Congress).

The basic assumptions of the study are given in Annex I (Tab A).4 The resulting cost estimates are set forth in general terms as follows:

Total Cost (millions of dollars) US Share
I. UNRWA requirements until June 30, 1960 (Annex II—Tab B) 78 55
II. A. 10 year program starting on July 1, 1960, for the repatriation in Israel or integration elsewhere of all Palestine refugees.
1. Repatriation to Israel of 100,000 refugees (Annex III—Tab C) 185 123.2
[Page 111]2. Compensation in lieu of repatriation (Annex IV—Tab D) 417 200
3. Integration either through Jordan and Sinai development projects (Annex V—Tab E) 251.2 165.4
or through settlement otherwise within the absorptive capacities of Arab states (Annex VI—Tab F) 404.1 282.9
4. Decreasing relief over 10-year span (Annex VII—Tab G) 110.6 77.4
Total Cost 1,367.9 849.9
B. The expenditure of the following amount of the above sum, while resulting in the absorption of refugees, could appropriately be channeled through the high priority development programs for the Near East in which the US could expect to participate over the next few years (Annex VIII—Tab H) 483.3
Regardless of the nature of the programs for Palestine refugees in which the US might participate, the US (if it continued to contribute at a 70% rate) would have to contribute for their relief over the 10-year span at least 77.4
560.7 560.7
C. The programs for the complete absorption of the refugees recommended in the June 19 memorandum would represent a cost to the US in excess of what it could expect to spend for high priority [Page 112]area development programs and for continued relief of [unknown amount of source text missing] 289.2

III. Support of UNRWA through June 30, 1960, would be with funds appropriated under the Mutual Security Act. The United States’ share of settlement programs, including the large development projects, and the terminal relief programs would at least in part be with funds requested under a separate authorization and appropriation. Use might also be made of the Development Loan Fund.

Annex I

BASIC ASSUMPTIONS5

1.
Every person registered with UNRWA as a refugee is accepted as one for the purpose of this study.
2.
The number of refugees will continue to grow at the present rate of 3 per cent a year. The following breakdown of refugees is used:
No. of Refugees—1000
Registered Ration Recipient
Number of Palestinian refugees reported by UNRWA, June 30, 1957 933.5 836.8
Jordan (517.4) (433.5)
Gaza (221.0) (214.5)
Lebanon (102.6) (101.4)
Syria (92.5) (87.4)
Estimated, as of June 30 1960 1,020.0 914.4
Estimated, as of June 30 1965 1,182.4 1060.1
Estimated, as of June 30 1970 1,370.7 1229.0
3.
UNRWA would continue to function until June 30, 1960. Until then, the US support of UNRWA would be maintained at the present level, it being anticipated that the UNRWA budget for 1959–60 will be enlarged due to increased caseloads and to liquidation and transfer costs.
4.
After June 30, 1960, assistance for repatriation, integration, development projects and terminal relief would be channeled either directly or through international organization such as WHO, UNICEF, Arab development institutions, or through the Development Loan Fund. Compensation payments would be made to refugees in a form and manner agreed upon by the Compensation Fund Administration and the host state concerned.
5.
While under the proposal the option to be repatriated would be granted to all refugees, it is assumed that ultimately about 100,000 refugees would, in fact, be repatriated.
6.
Every refugee not repatriated would receive an initial compensation payment of $100, regardless of whether or not he could establish a valid claim to abandoned property. Individual valid claims in excess of $100 would be accepted and liquidated during a subsequent phase of the program.
7.
The total value of abandoned property in Israel is $480 million, as estimated by the land specialist contracted by the Palestine Conciliation Commission for its Identification and Evaluation Program.
8.
Due to the prevalence of community land ownership in certain parts of Palestine, whereby individual property rights were calculated in terms of given percentages of the community land, the fact that in many instances such ownership was fractionalized to insignificant amounts through inheritance, the faulty records kept and conflicting claims, it is anticipated that the scope of valid claims presented would be considerably less than the total value of abandoned property.
9.
Registered refugees who are not ration recipients would be considered as integrated upon the receipt of their initial compensation payment of $100 per refugee. The remainder would be considered as integrated and self-supporting upon the receipt of their initial compensation payment and their settlement. Settlement would be effected either through absorption into the development projects envisaged or through the payment (through the host government) of a settlement fee varying from $400 per refugee in the case of refugees in Lebanon, Syria and Jordan, integrated in those areas, to $800 per refugee in the case of refugees in Gaza and Jordan transferred to and integrated in Syria and Iraq.
10.
For the purposes of this study, settlement is estimated as beginning on July 1, 1960, and progressing at various rates, depending on the project. However, as settlement will to a certain extent be dependent on progress toward the completion of the various projects, the rate at which refugees can be taken off relief may during the initial stages be somewhat less than indicated.
11.
There will be a progressively declining terminal relief and education program after June 30, 1960, to provide for the needs of [Page 114]those refugees not yet integrated. This program would be completed within ten years insofar as the refugees integrated through the development projects are concerned; for the remainder of the refugees it would be completed within five years.
12.
Relief is calculated at the yearly figure of $30 per refugee and education at a yearly figure of $10 per refugee. These figures are based on UNRWA experience.
  1. Source: Department of State, NEA Files: Lot 70 D 229. Secret.
  2. Secret. Drafted on September 24 in IO and NEA and initialed by Wilcox and Rountree. Sent through S/S.
  3. An undated copy of this memorandum is in Department of State, NEA Files: Lot 59 D 582, Israel—General, 1958.
  4. Only Annex I (Tab A) is printed here.
  5. Secret.