The Impact of Return on Compensation for Palestinian Refugees



Over the past several decades, the international community has recognized voluntary repatriation, in principle and in practice, as the preferred solution to refugee flows. Reflecting this development, the Office of the United Nations High Commissioner for Refugees (UNHCR), the international body responsible for protection of refugees, noted in its 1998 report that, since 1987, almost every major peace agreement concluded around the world has included provisions related to the return of displaced populations.

The UNHCR report also notes growing recognition of the need to secure title for refugee property and land as a primary component of reconciliation and development. Under the 1951 Refugee Convention, people obliged to leave their homes are assured “the widest possible exercise” of all other fundamental rights affirmed in the UN Charter and the 1948 Universal Declaration of Human Rights, including the right of return and the right to their property.

Ironically, more than 50 years after the creation of the Palestinian refugee issue, international debate and policy initiatives relating to the five million Palestinian refugees avoid approaching the issue according to international standards applied elswehere. They address the issue as if these principles are not applicable to Palestinian refugees, and as though the refugees’ return is neither practical nor feasible. Yet developments of the last decades in Indo-China, Central America, South Africa, Bosnia and elsewhere represent a growing body of experience with refugee return and compensation upon which to draw in resolving the Palestinian refugee crisis.

Types of Compensation:

In December 1948, the UN established a framework for the durable solution of the Palestinian refugee issue. According to UN Resolution 194, Palestinian refugees should be allowed to return to their homes, and compensation should be paid to those who suffered damages.

There are at least four types of compensation to be considered, including compensation for:

refugees choosing not to return;

returnees, for loss of property or material damages to property;

income derived from the use of refugee property; and (4) non-material damages.

Types 1-3 are recognized in UN resolutions with specific reference to Palestinian refugees. All four types are recognized in a wide range of international legal precedents. Based on Palestinian refugee demands to return, compensation will be required primarily for types 2-4.

Substantial documents detail the refugees’ material losses. They include the records of the UN Conciliation Commission for Palestine; maps of the Palestine Exploration Fund and of the Survey of Palestine; aerial photography; the Tabu (land registry); records of the Israeli Custodian of Absentees’ Property and of the Israel Lands Administration; and personal documents still held by refugees. The losses include 530 Palestinian villages and tens-of-thousands of homes destroyed by Israeli forces in 1948 to prevent the return of the refugees.

Valuation of Losses:

Considerable research and precedents exist to determine the value of all material and non-material losses. Because most of the refugee property, including some 17,000 sq. km of land, is controlled by the Israeli state, revenues may be calculated using Israeli government records. It is difficult to estimate the size of any compensation package for Palestinian refugees without knowing the number of Palestinians choosing to return, those choosing not to return, those choosing to return but not to their property, and those choosing not to return but wishing to have their property returned.

Existing studies of compensation for Palestinian refugees illustrate, however, the massive financial burden of compensating refugees who either choose not to return or are not allowed by Israel to do so. According to Atif Kubursi, estimates for individual compensation of material losses (i.e., type 1 compensation, if all refugees do not return) for Palestinian refugees, upgraded to 1998 dollars, fall in the range of $150 billion (Center for Policy Analysis on Palestine, 1996).

This breaks down to average compensation per Palestinian refugee family (based on a six-person family) of around $420,000-still substantially less than the $100,000 per individual proposed as compensation for Israeli settlers in the occupied Golan Heights.

Including the cost of human capital losses, using the same study by Kubursi, would inflate the overall level of compensation by over 50 percent, while adding in for injuries and psychological damages would increase the original sum to around $500 billion. Inclusion of these losses would bring the amount of compensation per refugee within the range of that proposed for Israeli settlers in the occupied Golan.

Impact of Return on Compensation:

By contrast, the financial costs associated with allowing refugees to return to their homes are considerably lower. That is because refugees who return may agree to substitute individual compensation for compensation types 2, 3, and 4, including compensation for reconstructing physical and social infrastructure on their land.

Using George T. Abed’s economic model for the reconstruction of the physical and social infrastructure of the 1967 occupied territories, the total cost for the reconstruction of all refugee homes inside Israel would be around $14 billion in 1990 dollars (Institute for Palestine Studies, 1990).

The additional cost of social infrastructure, according to the same per capita investment calculated by Abed and assuming full return of the refugees, would be along the lines of $3.7 billion for hospitals and other health facilities and $1.9 billion for educational facilities. Abed’s total sum is considerably less than the $150 billion in compensation for individual and public property calculated by Kubursi for 1998, even with the addition of cost increases between 1990 and 1998.

Using an average investment figure per refugee based on Abed’s 1990 estimate for resettlement of 1.2 million Palestinians in the West Bank and Gaza, the total figure for a return of all refugees to their homes would be $41 billion (1990), substantially less than Kubursi’s estimate of compensation for individual property, human capital losses, injuries, and psychological damages for non-returning refugees. Investments over a five-to-ten year period would bring Abed’s sum within the range of potential investments made by the international community for regional reconstruction.

Moreover, if the UN Relief and Works Agency (UNRWA) were to continue funding its programs, this could further reduce the size of new financial outlays from other sources. Based on the 1999 UNRWA General Fund Budget for education and health, its total investment over a ten-year period would be, respectively, $1.6 billion and $640 million. With a five percent increase per annum (the estimated donor increase necessary to maintain services) UNRWA’s total calculated investment would reach $2 billion for education and $800 million for health.

Non-Monetary Compensation:

The level of compensation may also be reduced if refugees not wishing to return choose to forego compensation for material losses, seeking instead the return of their property. Such was the framework put forward by the World Jewish Restitution Organization when East European countries claimed that sums for individual compensation would exceed their ability to pay. Likewise, in-kind compensation for those whose property cannot be returned (i.e., property used for roads, other public infrastructure, etc.) would reduce the overall value of monetary compensation.

With sufficient investment for reconstruction and progress toward reconciliation, refugees may choose to forego type 4 compensation. Compensation for psychological damages and pain may also be substituted by non-monetary types of compensation, such as the establishment of a truth commission to address human rights abuses and psychological losses. Although such compensation is not a standard component in agreements reached during the past decade, there are precedents for it.

Terry Rempel is Coordinator of Research and Information at Badil Resource Center for Palestinian Residency and Refugee Rights in Bethlehem

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