Jewish refugees 1948
Jews flee West Bank after Jordan annexed the region in 1948.
Israel liberated the region in 1967 after being attacked by Jordan.

Jewish Refugees of 1948

by Sidney Zabludoff

The sixty-year-old Palestinian refugee issue has little connection with reality. It has become solely a bargaining chip used by Arabs and Palestinians in peace talks with Israel and, as such, is a distraction from the real issues of terrorism and boundaries.

Indeed, continuing to call Palestinians refugees is a misnomer. They no longer live in tents or temporary quarters. In addition, the Palestinian refugee issue is unique. Since 1920 all other major refugee crises involving the exchange of religious or ethnic populations, while creating hardships, were dealt with in a single generation.

Meanwhile, issues such as the "right of return" and compensation never were adequately resolved and were largely forgotten. The same pattern evolved for Jews who fled Middle Eastern and North African countries, even though their number was some 50 percent larger than Palestinian refugees and the difference in individual assets lost was even greater.

The Palestinian refugee issue has festered for sixty years and remains a major stumbling block in reaching an Israeli-Palestinian accord.

At the same time, there has been little discussion of the larger number of Jews who were forced out of Middle Eastern and North African countries where they had lived for thousand of years. The reality of the issue has given way to cloudy political motivations, and the facts about the numbers of refugees and assets lost in both cases are little known.[1]

The Facts

Number of Refugees

The exact number of Palestinians who fled Israel from November 1947 to December 1948 will never be known. The estimates range from about 400,000 to one million. The most plausible is some 550,000. Based on census figures and demographic trends, in 1947 there were most likely about 740,000 Palestinians living in the area that became Israel.[2]

About 140,000 remained and roughly 50,000 soon returned after 1948 (estimates range from 30,000 to 90,000).[3] About two-thirds of those who left Israel went to the West Bank and Gaza with the remainder mainly going to Jordan, Lebanon, and Syria.[4]

The number of additional Palestinian refugees resulting from the 1967 war is also based on rough approximations. Most observers use some 300,000, of whom nearly 100,000 returned in the months following the war.[5]

In addition, about half of those fleeing were already refugees from the 1948 war. The result is that new refugees probably amounted to about 100,000. Thus, the net total of refugees created by both wars was some 650,000.

Within Israel, there were also internally displaced persons (IDP). These were Palestinians who fled their homes but did not regain them upon returning.

Estimates of IDPs vary widely. Various Israeli scholars indicate 10,000 to 23,000; international organizations (International Red Cross and UN Relief and Works Agency-UNRWA), 25,000 to 46,000; and Palestinians, 150,000 to 300,000. Using the international organizations' estimate, the IDPs would roughly equate to the 40,000 Jews forced out of the West Bank and Gaza during the 1948 war.

Before 1948, there were slightly more than one million Jews in the Middle East and North Africa outside the area that became Israel, including the 40,000 in the West Bank and Gaza.[6] The total number fell by half in the years following the 1948 war and then declined to some 100,000 following the 1967 conflict.

The Jewish population fell further in the ensuing years and by 2007 amounted to just 15,000 to 35,000. The bulk of those remaining reside in Iran. Thus roughly one million Jews became refugees because of actions of Middle Eastern and North African countries.

When the two refugee exoduses are compared, it can be concluded with a high degree of likelihood that the number of Jewish refugees was some 50 percent greater than that of Palestinian refugees.

Value of Assets Lost by Refugees

A considerable number of estimates exist as to the value of the assets lost by the Jewish and Palestinian refugees. This includes numbers published by both groups that are well above any realistic amount and as such are likely politically motivated. Determining the value of property, businesses, financial holdings, and movable assets such as automobiles and furniture will under any circumstance be susceptible to a wide range of estimates. The best estimates are usually bank accounts if the data are available.

The most solid estimate for assets given up by Palestinians fleeing the 1948 war was by John Measham Berncastle, who undertook the task in the early 1950s under the aegis of the newly formed United Nations Conciliation Commission for Palestine (UNCCP). He was a British land value estimator who had worked in Palestine since 1935. His estimate was 120 million Palestinian pounds of which about 100 million was for land and buildings and 20 million for movable property.[7] Other estimates would add some 4-5 million Palestinian pounds for Arab bank accounts blocked by the Israeli government.[8]

The total of 125 million Palestinian pounds amounts to $350 million in 1948. This is equal to some $650 per 1948-1949 refugee. This number seems reasonable when compared to similar data. For example, per capita assets for Poland, the Baltic states, and southeast European countries during the late 1930s ranged from $550 to $700,[9] these being the most equivalent asset statistics available.

To this must be added the asset losses for those additional 100,000 who fled in the aftermath of the 1967 war and the 40,000 IDPs. The latter are included even though they often were given new property and/or compensation.[10] At a realistic $700 per capita that would amount to another $100 million in lost Palestinian assets. Thus the total of assets lost by Palestinians is some $450 million. In 2007 prices this would amount to $3.9 billion. In per capita terms for 2007, this would be $4,740 or for a family of seven more than $33,000. The 2007 values used in this article are calculated by using the U.S. Consumer Price Index.[11]

There also are no precise global figures of the assets lost by the Jewish refugees from the Middle East and North Africa. Using a similar methodology, the minimal amount would be $700 million at period prices and $6 billion at 2007 prices. For the Jews of the above East European countries the per capita range is $700-$900. Jews had higher per capita assets than for the country as a whole because most lived in urban areas and held a large share of the professional jobs. The same demographic structure existed in most countries of the Middle East and North Africa. For example, while Jews made up 3 percent of the Iraqi population in 1948, they accounted for 20 percent of the population of Baghdad.

There are two key reasons for the higher value of assets for Jewish refugees. Most important, the number of Jewish refugees from Middle Eastern and North African countries is some 50 percent higher than that of Palestinian refugees. Second, the demographic nature of the two groups varied, as explained. A higher percentage of the Jewish population was urban, mainly traders and professionals, which would tend to accumulate more assets than the Palestine population that was more rural.

For both Jews and Palestinians, there are also two factors that somewhat reduced the amounts that needed to be repatriated. Assets, especially financial ones, were sometimes saved by moving or smuggling them out of the country. Both sides did so. Many wealthy Arab families from Jerusalem, Haifa, and Jaffa left Palestine soon after the November 1947 UN partition resolution, taking with them their financial and other movable assets. Those fleeing after the fighting began obviously took whatever financial assets and other movable assets they could carry. There were no limits on the amount of money and goods. As a result, by the end of September 1950, $26.7 million ($229 million in 2007 prices) in Palestinian pounds was converted in Jordan to Jordanian currency.[12]

In the early days many Jews fleeing Middle Eastern and North African countries, mainly the wealthy ones, were able to smuggle money out of the countries in which they lived. For example, a number of Iraqi Jews moved money into Iran.

But when it came to the mass exodus, each Middle Eastern or North African country had stringent regulations on the value of currency and high-valued goods, such as jewelry, that the refugees could take with them. In some countries Jews had a longer time to sell their property than did the Palestinians. But most often the transactions were at substantially reduced prices-less than 10 percent of their market value –– and thus the losses were still substantial.

The second factor concerns assets repatriated. Israel returned more than 90 percent of Palestinian blocked bank accounts. The process started in 1953 under the UNCCP and was mainly completed by 1959, with the small remainder being paid out during the early 1960s. Similarly, for the most part contents of safe deposit boxes and items held in custody by the banks also were returned. The amounts returned exceeded $10 million ($86 million in 2007 prices).[13]

There also were a few cases where Jewish property was restored. Egypt did pay some claims for compensation for nationalized Jewish property, mainly to Jews who had English or French citizenship, normally at prices at the time of confiscation. For example, an undisclosed sum was paid in 2007 to a French-Egyptian-Jewish family for a hotel in Alexandria that the Nasser regime seized in 1952.[14] In the case of Algeria, refugees who fled to France, including Jews, after independence in 1962 received resettlement support.

A major unknown is community property such as hospitals, mosques, synagogues, and religious schools. One estimate put the value of such Jewish-owned property in Egypt at $550 million in 2007 dollars.[15] It can be assumed, however, that the Jewish amounts are larger than those of Palestinians because of the higher number of refugees and a larger number of locations.

Other financial demands were made by both sides, none of which were seriously considered. The Israelis wanted compensation for direct damage caused by the Arab attack on Israel ($463 million in 2007 prices), of which 65 percent involved the heavily damaged Jewish Quarter of Jerusalem and the economic damage caused by the closure of the Suez Canal to Israel ($5.3-$5.9 billion in 2007 prices).[16] Other claims that had no determined value included direct expenditures incurred in repulsing the Arab invasion, indirect war damages on individuals, companies, and government due to the invasion, and losses caused by Arab boycott of firms doing business with Israel.

The Palestinians have mentioned psychological damage to individuals as well as the lost income. When these are added to property losses, the total according to one Arab estimate runs from $181-$290 billion in 2007 prices.[17] Some estimates by Jewish groups also seem to be high. For example, the World Organization of Jews from Arab Countries indicates that the value of the properties they lost was some $100 billion (2006 values)[18] and another estimate is $300 billion in 2007 values.[19]

It should be noted that it is impossible to determine an exact value for asset losses and an argument can be made for higher asset values. The roughly $10 billion in current value losses by both sides described above is determined by bringing the 1949 value up to 2007 value by adjusting for inflation.

Often, however, prices of property increase faster than inflation and interest on financial assets is greater than the price increases. One method of determining current value is to use government long-term bond yields instead of inflation rates. This would increase the combined Jewish and Palestinian losses to some $36 billion in 2007 prices. The bottom line, however, is that no matter what methodology is used the losses of Jewish refugees from Middle Eastern and North African countries are almost certainly at least 50 percent higher than those of Palestinian refugees.

Reality vs. Political Machinations

In understanding the refugee issue, it is necessary to distinguish between the reality of the circumstances and political hopes and machinations.

Causes of the Refugee Outflow

Clearly, Israel in 1948 acted in self-defense against Arab states that wanted to eradicate the new country created by the United Nations. Many Palestinians fled in 1948 because Arab states said they should get out of the way of the war until the new state was defeated. Others took flight to avoid the fighting.

Instances did occur in which Jewish forces drove the Palestinians out of their homes and Palestinian civilians were killed. But these occurrences were comparatively rare and take place in all wars. Unquestionably, the prime responsibility lies with those who started the war –– in this case the Arab states.

By contrast, the expulsion of the Jews from Arab states was purely vindictive. Attacks on Jews and their property in these countries intensified in the 1920s with the discussion of a possible Jewish state in Palestine.

The killings and property losses grew worse in the 1930-1945 era partly because of the added factor of Nazi propaganda and the Nazi and Vichy occupation of North Africa. During this period there was a small but steady increase in the number of Jews from Arab countries migrating to Palestine.

It was the extreme Arab violence and discriminatory government measures in reaction to the 1948, 1956, and 1967 wars that lead to the huge exodus of Jews. Throughout the region there were anti-Jewish riots involving harassment and killings reminiscent of East European pogroms. Moreover, often there was confiscation of property, along with limitations on employment and economic opportunities similar to Nazi German actions in the 1930s.

Added to this was the independence from France of North African countries, which removed the French protection. Actions against Jews in Iran were much more limited than in Arab countries. Nevertheless, there was a steady outflow after 1948 that accelerated after the increased discrimination that followed the 1979 Islamic Revolution. The current Jewish population in Iran is about one-fifth that of 1948.

Perceptions of the Jewish and Palestinian Refugee Issues

Why does the Palestinian refugee issue remain strong while the larger expulsion of Jews is a backburner issue? The answer is simple and straightforward. Whereas the Jews who were forced out of Middle Eastern and North African countries were effectively and quickly resettled in Israel and Western nations, most of the Palestinians who fled and their descendants –– some 4.7 million in 2006[20] –– are still considered refugees after sixty years or three generations. About one-third are in the West Bank and Gaza and the remainder in nearby countries, most prominently Jordan.

Calling these people refugees makes no sense. Few if any live in tent camps or temporary residences. Most own their homes and live in areas of towns that can be classified as working class neighborhoods. Rather than refugees, they are simply the recipients of assistance, mainly for education and health. Outside of the West Bank and Gaza, only Jordan has granted citizenship to all Palestinians and fully integrated them into the local society. But even those assimilated into Jordan and elsewhere are still considered refugees by the United Nations Relief and Works Agency (UNWRA).

The political motivations are clear. In the years after the 1948 war, the refugee issue was kept alive partly because the Arab countries felt disgraced by having lost the war they had initiated. This sense was further aggravated by a strong nationalism that persisted for decades. After all, Jordan and Egypt could have absorbed the Palestinians in the West Bank and Gaza, which they controlled as part of their own countries.

Meanwhile, both Arab governments and the Arab League opposed granting citizenship to Palestinian refugees in their countries because it would undermine the use of the right of return to eliminate the Jewish state. In addition, it was quickly forgotten that the Arab states were the aggressors who bore the prime responsibility for causing the Palestinian refugee problem. The end result was that the Palestinian refugees became political pawns.

This fact was stated succinctly by the former head of UNRWA, Ralph Galloway, when he said: "The Arab states do not want to solve the refugee problem. They want to keep it as an open sore, as an affront to the UN, and as a weapon against Israel. Arab leaders do not give a damn whether Arab refugees live or die."[21]

Meanwhile, Israel did not aggressively pursue the Jewish refugee issue. Although it raised the matter in the early years of the new state,[22] after that the issue seemed to wane. Israel was eager to absorb those forced out of Middle Eastern and North African countries since it bolstered the Jewish population in Israel. Meanwhile, at first some Palestinian spokesmen denounced the expulsion of the Jews from Arab countries and even suggested a Jewish right of return.[23] They realized that the Jewish eviction undermined their own arguments.

The Palestinian and Arab leaders continued to press the Palestinian refugee and right-of-return issue, especially after the Oslo accords led to discussions of a two-state solution, mainly as a major bargaining chip in these negotiations. The more extremist leaders gave the issue great prominence as a means of achieving their goal of eliminating the Jewish state by creating an Arab majority. In all these cases, pushing the refugee issue cost them nothing since UNWRA, which was supporting the refugees in their countries, was financed largely by Western nations.

These political machinations made the Palestinian refugee situation unique. It is the oldest refugee situation handled by the United Nations and is the only one in which refugee status is granted to descendants. Moreover, the prolonged emphasis on refugee camps and the right of return goes against historical reality. Massive displacements of individuals across borders have occurred throughout human history. In most instances the refugee issue was dealt with by their absorption in other countries. Some were resolved by the conflicting nations.

For example, during the 1920s 1.75 million Greeks and Turks moved across new boundaries based on their religious beliefs –– Greek Orthodox and Muslim. Others exchanges were tacitly agreed to.

Such a case involved the fourteen million Hindus/Sikhs and Muslims exchanged in 1947 between the newly formed countries of India and Pakistan. Indeed, from World War I to the 1950s, it was a widely held global view that the separation of ethnic and religious groups by moving them across borders would reduce tensions among countries and the chances of war.

In other cases the moves were forced as a result of border changes. For example, at the end of World War II, at the insistence of the USSR, the Polish borders were moved west as the Soviets took over Polish territory and Poland took over areas previously in Germany. Millions were forced to move from their homes to new areas and no compensation was paid.

Normally, although initially the refugees faced poverty and difficult times, within one generation the resettled population assimilated into their new country. A case in point is the current president of Pakistan, Pervez Musharraf. He was born in New Delhi and at age four was one of the many Muslims who moved to Pakistan. The story of refugees (survivors) of the Holocaust, by far the most devastating event inflicted on any group during the twentieth century, also followed a similar pattern. Most survivors just wanted to get on with their lives in a new and secure environment.

In all these cases there is a natural tendency of each dispossessed group to remember the past and what they lost. Although such feelings are passed down through generations, it does little to affect these groups' absorption into their new setting. Like others, the Palestinians would probably have followed the same course if not for the disruptions caused by terrorism bolstered by incessant anti-Israeli propaganda.

The Economic Ingredient

Soon after Israel occupied the West Bank and Gaza following the 1967 war, the plight of the Palestinian refugees improved. Overall, the area's economy grew significantly. Israeli government economic assistance helped, but an even more important factor was the natural heavy dependence of the Palestinian economy on the Israeli market for its labor and goods. In addition, Palestinian wages were high compared to those of nearby Arab countries making Palestinian goods less competitive in these countries. Indeed, as Hebrew University economics professor Nadav Halevi stated at a UN conference in Cairo: "The Palestinian economy needs the Israeli one more than the Israeli economy needs the Palestinian one."[24]

As a result of the improved post-1967 economic situation, by 1974 90 percent of Palestinian refugees owned their own homes and their spending was close to that of nonrefugee families.[25] Refugees made up nearly half of the Palestinian population of the administered territories.

The favorable economic trend lasted until the First Intifada in the 1980s, when terrorist activity led to a downturn until the mid-1990s. Then, as a result of the Oslo accords, a more peaceful period emerged leading to resurgent economic activity and a 6-7 percent annual rise in GNP per capita.[26] During both growth periods, the economy benefited significantly from the enhanced integration of the Israeli and Palestinian economies.

The favorable Oslo period ended with the Second Intifada in 2000. There was some recovery from 2003 to 2005 but this soon diminished when Hamas came to power and then took over Gaza. From September 2000 to mid-2007, the Palestinian GNP per capita declined about 30 percent.[27] Clearly, terrorism has been a main factor undercutting economic opportunities for refugees as well as the entire Palestinian economy. Israeli antiterror measures hamper the movement of goods and labor between Israel and the territories.


Compensation for Refugee Losses

All refugee crises since World War I have involved considerable discussions of how to compensate for the property and other asset losses of individuals. International agreements on the subject have increased dramatically, especially since World War II and the founding of the United Nations. During World War II, a number of Allied agreements called for the return of property stolen by the Nazis and their collaborators. The United Nations and its agencies have passed several resolutions on returning property and the right of return of refugees.

In all these cases the agreements have had little effect, becoming no more than idealistic pronouncements. Moreover, all parties to the issue have different interpretations of the language used. This is true of the 1948 UN resolution 194, which refers to the right of return of Palestinian refugees. Finally, there is no balance since the United Nations has passed numerous such resolutions relating to the Palestinians but not one referring to the dispossessed Jews of the Middle East and North Africa.

The examples of compensation falling short are numerous. Less than 20 percent of asset losses by Jews in Nazi-occupied Europe have been returned despite the fact that the Holocaust was an event unequaled in modern history –– the extermination of more than two-thirds of continental European Jewry.[28] The nine hundred thousand French pied-noirs who fled Algeria in 1962 lost property valued at $20 billion. Only about 10 percent of that was reimbursed by the French government in the form of assimilation assistance over the next fifteen years.[29]

More akin to the Arab-Israeli situation was the division of the British-ruled Indian subcontinent in 1947 into two states, India and Pakistan. Killings, riots, and property destruction led to the flight of Muslims in India to Pakistan and of Hindus and Sikhs from Pakistan to India. Among the more than fourteen million refugees, less than 2 percent returned and/or recovered their land or business. Although there was considerable discussion of individual compensation, it never worked out. Again in the Greek-Turkish population exchange of 1923, individual compensation was suggested but dropped because of its complexities in favor of a global settlement between the parties. In both cases, the land and shops abandoned by those fleeing were turned over to the incoming refugees.

Such an exchange of property also took place between Jewish and Palestinian refugees. Israel used previously owned Palestinian land to absorb Jewish refugees. The Syrian government seized Jewish property and turned it over to Palestinian refugees.[30] But more commonly in other Middle Eastern and North African countries, seized Jewish property was not used to resettle Palestinians. Governments and local individuals simply took over the Jewish property and profited by not paying compensation.

A fairer resolution of the compensation issue involved the Israeli government's settlement with the Palestinian IDPs. In 1953, it reached an agreement with UNRWA to take over responsibility for resettling these Palestinians. As a result they were no longer considered refugees but rather citizens of Israel. During the next ten years the Israeli government provided the IDPs either their original property and/or compensation for the losses. Although some Palestinians felt the offers were too small and have raised the issue in recent years, the group as a whole has become an integral part of Israeli society.

For most refugee crises of the post-World War II era, compensation came mainly in the form of temporary assistance. Such rehabilitation efforts usually lasted for several years while the refugee groups were becoming assimilated into their new surroundings. It is only the Palestinian one in which such support continued for a prolonged period. In 2007 prices, UNRWA has spent $13.7 billion since its inception in 1950.[31] Its 2007 budget exceeds $500 million. The result is that UNRWA, over the past fifty-seven years, has spent 3.5 times more than the Palestinian refugees lost in assets, and this excludes assistance they received through other aid programs provided to the Palestinians mainly by Western countries.

Lessons Learned

Most important, the refugee issue is not only bogus but a major distraction from the real issues: establishing a Palestinian state and eliminating terrorism. Only these steps would provide Israel security and allow the Palestinian economy to flourish as it did following the 1967 war and the signing of the Oslo accords.

Restoring such a reality would mean:

  • Shelving the right-of-return issue and accepting the outcome of similar religious or ethnic disputes that created a significant number of refugees. Each side would continue to live in their new domains, and property and other asset claims would be dropped. At the same time, Arab countries –– mainly Syria and Lebanon –– would accept the Palestinians as citizens and help integrate them into the local society and economy. Or if they so chose, these Palestinians could be resettled in a new Palestinian state.

  • Eliminating the refugee status of Palestinians. Instead of providing support to so-called refugees, economic assistance would be given to a new Palestinian state. Similar aid could be provided to other nearby countries to facilitate their absorption of Palestinians.

Obviously, however, negotiations to reach an Israeli-Palestinian settlement will have to deal with the refugee issue and its subparts such as the right of return and/or compensation. Put into perspective, it remains as a bargaining chip for Arab and Palestinian negotiators who continue to emphasize the issue via their political drumbeat. The only way to move toward the reality of how such events have been handled in the past is to stress the clear fact that there were more Jews who fled Middle Eastern and North African countries than Palestinians who left Israel.

If it is decided to establish a fund to reimburse the original Jewish and Palestinian refugee families or their heirs for the asset losses, there are two options. The most just method would be to pay each family/heir what it lost. Such a procedure, however, would be extremely complicated and take many years to determine each person's losses.

The second alternative is to establish a global fund in which each family/heir receives an equivalent amount. This would be unfair to the few Jews and Palestinians who in each society held the bulk of the wealth. This is a common situation in all countries. For example, in Iraq in the late 1940s, 2 percent of the Jewish population held 44 percent of the group's assets.[32] To overcome this problem, a higher award could be paid to those who could prove they possessed assets worth more than a stipulated amount.

Under either option an estimated $10 billion would be needed to support an asset restitution fund. Realistically, only a small portion could be expected to come from the countries from which the refugees fled. Most funds would have to be provided by developed or oil-rich Arab countries. During the peace negotiations in 2000, the Clinton administration suggested such a fund should be financed by developed countries. The Arab countries, Israel, and the Palestinians all quickly approved that idea since they would not have to contribute. This is reality!

Sidney Zabludoff is an international economist who specializes in financial matters. Over the past twelve years he concentrated on issues related to returning assets stolen by the Nazis and their collaborators to Holocaust survivors and their heirs. Previously he worked on numerous economic issues at the CIA, White House, and Treasury including the movement of illicitly earned funds.

The full article plus notes can be found at

See also "The Forgotten Refugees," a documentary on the Jewish refugees from Arab countries.