Jewish Refugees of 1948

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 were never 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 thousands 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.

The Facts

Number of Refugees

The exact number of Palestinians who fled Israel from November 1947 to December 1948 will never be known. 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. About 140,000 remained, and roughly 50,000 soon returned after 1948 (estimates range from 30,000 to 90,000). 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.

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. 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 (IDPs). These were Palestinians who fled their homes but did not regain them upon returning. Estimates of IDPs vary widely: 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. 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. Other estimates would add some 4-5 million Palestinian pounds for Arab bank accounts blocked by the Israeli government. The total of 125 million Palestinian pounds amounts to $350 million in 1948, 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, 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. 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.

There are also 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. A higher percentage of the Jewish population was urban, mainly traders and professionals, which would tend to accumulate more assets than the Palestinian 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. 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. By the end of September 1950, $26.7 million ($229 million in 2007 prices) in Palestinian pounds was converted in Jordan to Jordanian currency.

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.

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. The amounts returned exceeded $10 million ($86 million in 2007 prices). 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.

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. It was the extreme Arab violence and discriminatory government measures in reaction to the 1948, 1956, and 1967 wars that led to the huge exodus of Jews.

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—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 (UNRWA).

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. 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.

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. 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 non-refugee families.

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. The favorable Oslo period ended with the Second Intifada in 2000.

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.

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 http://www.standwithus.com/app/iNews/view.asp?ID=341

Jewish Refugees of 1948

The Facts

Value of Assets Lost by Refugees

Reality vs. Political Machinations

Lessons Learned

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