Any final Israeli-Palestinian settlement that fails completely to solve the refugee problem will not provide a realistic and durable solution to the conflict. A new eruption of Palestinian-Israeli violence would only be a question of time. The frustration of Palestinians' aspirations for a "just" solution - according to their understanding of the term - would incite and inflame the Arab agenda in general and particularly the Palestinian agenda. Were Israel to leave this problem unresolved, it would encourage the Palestinians to continue to nurture their political goal of destroying Israel.
Thus it is surprising to observe the almost utter indifference to the Palestinian refugee problem exhibited across nearly the entire spectrum of the Israeli political establishment. Instead of giving the issue a high priori¬ty at the multilateral talks, Israel has seemed unconcerned. Instead of being the interested party urging pursuit of a solution - instead of raising it at the Oslo and Cairo negotiations, and forcing the Palestinians to adopt a realistic approach - Israel has done its best to avoid a discussion.
When it comes to the Palestinian demand for the "right of return," Israel's position (except for the brief episode in 1949),' has been consistent: The polit¬ical establishment is unanimous in denying any "right" to return to Israel.
Israel denies the legality of the Palestinian claim. If it recognizes the "right" of return, it would also be admitting responsibility, and perhaps even culpability for creating the problem. But Israel categorically denies any responsibility for the war of 1948. On the contrary, the guilt and responsibility are all Arab-Palestinian, and it is completely irrelevant whether Arab leaders encouraged the local population to leave their homes, or whether they departed to escape the fighting. Israel would deny any responsibility even if there were no practical demands for a "return" of refugees; even more so when recognition of such a right would deny Israel the right to control and veto the number of returnees. Israel's posi¬tion is very clear: the option of "return" should, under no circumstances, be provided to the Palestinians.
This explains why so many Israelis reject a formal commitment to absorb even a limited number of Palestinian refugees. Of 70,000 refugees who applied for family reunification from June 1967 to June 1994, Israel admitted only 22,179. This figure also includes returnees to East Jerusalem. Israel's policy in this regard was always strictly humanitarian, and Israelis see no reason to make a political commitment regarding any fixed quota. Furthermore, Israel considers that a unilateral decision, and will not permit Palestinians to be involved in its deliberations.
Israel totally rejects "return" for material reasons. There is no possibili¬ty of allowing the refugees to return to their original homes and lands without completely undermining the fabric of Israel's society and people. Many Israeli towns and villages, both rural and urban, are built on former Arab-Palestinian land. One cannot hand back these lands and properties without uprooting hundreds of thousands of Israelis, if not more, thus opening up a Pandora's box and courting disaster for Israel.
Even if "return" were not literally to former property, but merely a gen¬eral Palestinian immigration into Israel, the result could be a very signifi¬cant increase of Palestinian Arabs that would threaten the Jewish character of the state. Israel is already concerned with a possible irredentist threat from its present Arab minority. Palestinian Arabs today make up some 18 percent of Israel's population, and in two areas adjacent to Arab territories across the border - the Galilee and the Negev - their relative strength is significantly higher (in the Galilee they already number at least 50 percent).
The "return" of the refugees would significantly worsen this delicate bal¬ance, increase the irredentist threat, and even endanger Israel's 1967 borders.

Compensating the Refugees

The traditional position of all Israeli governments, as of the mid-19S0s, has been unequivocal refusal to admit any responsibility for financial compen¬sation to the Palestinian refugees.
While Israel bears no responsibility for the creation of the Palestinian refugee problem, no one denies that Israel greatly benefited from the Arab property that came under its control, and that formed an important ele¬ment in the infrastructure for absorption of massive Jewish immigration after the 1948 War of Independence. Israel's refusal to pay any compensa¬tion was based on a very practical argument: Israel was obliged to absorb almost all the Jews forced to flee Arab countries (from Iraq to Morocco), who in turn left behind most of their property. Contrary to the Arab poli¬cy that refused to absorb and integrate Palestinian refugees, Israel wel¬comed, absorbed, rehabilitated and supported these hundreds of thou¬sands of Jewish refugees, without any Arab compensation. Under the cir¬cumstances, Israel saw no reason to pay any compensation without a pre¬cise accounting of the numbers absorbed by Israel and the value of their property left behind. No such accounting was ever made. It is quite rea¬sonable to assume that were such a calculation made, the result would demonstrate at least parity between the two groups' properties, if not a bal¬ance favoring the Israeli claims.
The question worth examining, however, is quite different: should such a quantitative comparison be the only or the main Israeli consideration? Indeed, this was not Israel's position during the first years of statehood. The US suggested in 1949 that Israel allow the return of one-third of the refugees (assumed to be some 200,000) while the U.S. would cover the costs of resettling the other two-thirds in Arab countries. Israel's prime minister at the time, David Ben-Gurion, rejected the prospect of admitting such a large number of Palestinians, but he did offer them compensation. In so doing, he did not agree to personally compensate each individual refugee. Rather, he called for the creation of an international fund. Israel would be one of the fund's contributing members, but would have no responsibility for the solution; and the fund should initiate collective resettlement pro¬jects in the region, and not enter into individual claims and compensation.
Once the U.S. realized that it was not realistic to expect the return of a substantial number of refugees to Israel, it encouraged the idea of com¬pensation. Israel had been requested to pay some U5$30-S0 million - a very low figure compared to any realistic evaluation of the Arabs' abandoned property. An Israeli government commission estimated the value of that property at some $400 million. An Arab League evaluation at the time reached the sum of $3 billion.

Return to the Palestinian Authority

Israel will have to grapple with two additional issues. The first is the return of the 1967 displaced persons (DPs) to the West Bank and the Gaza Strip; the second is the legislating of a Palestinian "Law of Return" (once an inde¬pendent Palestinian entity is established) which grants all Palestinian Arabs the right to immigrate and to be integrated into the new state, should they desire (very much like the Israeli Law of Return).
Regarding the former issue, one should differentiate between two groups of DPs: Firstly, the permanent residents of the West Bank or the Gaza Strip who were caught away from home in June 1967 or thereafter and have not been allowed to return; and secondly, the 1948 refugees who fled a second time, comprising most of the former residents of the Jericho refugee camps (now in ruins). The total number of DPs in 1967-68 was a lit¬tle over 300,000. Considering their birth-rates, it would be a fair assump¬tion that their number today is between 550,000 and 600,000, after the deduction of some 88,000 DPs who have returned since 1968. (A total of 56,375 permits were issued through June 1994 and the total number of indi¬viduals returning under these permits was 66,099 to the West Bank and 18,671 to the Gaza Strip. In addition, Israel approved residency for more than 3,000 women who entered the territories as visitors and married local Palestinians.)
It is quite understandable why Israel rejects the return of the second group. It makes no sense to uproot these refugees for the third time, only to relocate them in new refugee camps. Their future should be determined at the time the parties discuss and agree on a comprehensive solution to the refugee problem. Nevertheless, were the Palestinian Authority to promise that all these returning DPs would be resettled and rehabilitated within the five years of the interim phase, Israel would not object to their return. The majority of Israelis might even consider this a positive step.
From this point of view, it is quite surprising that the resettlement of the 1948 refugees was not on the agenda of the Oslo and Cairo talks, during the formulation of the guidelines of the "Gaza and Jericho First" agreement. Israel should have insisted that, together with its departure from the Gaza Strip and the establishment of the Palestinian Authority, the Palestinians undertake responsibility for all refugees presently living in the Gaza Strip: bringing an end to their legal and formal refugee status; relieving UNRWA of its duties in the area; stopping the distribution of all food rations; and dismantling the refugee camps and moving their residents to new and permanent housing.
One can understand why the Palestinians would have rejected such demands as long as the parties had not yet agreed on the ultimate permanent political solution; but it is difficult to comprehend why Israel did not raise these issues.
It is still not too late to discuss these matters, even during the interim phase. As to the first group, with the exception of those DPs who might be a security risk, there should be no reason to object to their return to their homes and families. Nevertheless, those Israelis who reject the present government's political plan, and oppose any Israeli territorial compromise, no doubt will protest. From their point of view, the return of hundreds of thousands of DPs to the West Bank would worsen the present demo¬graphic balance between Jews and Palestinians (while today the Jewish set¬tlers comprise some 12-13 percent of the area's total population, their num¬ber would drop to some eight to nine percent if all DPs were allowed to return). They would claim that Israel was initiating a Palestinian "trans¬fer," only in the wrong direction, contradicting long-term Israeli interests.
Another problem would arise if some of the returnees tried to reclaim properties in the West Bank that have been turned over to Israeli settlements - Israel's legal position has been that the properties of "absentees" come under the authority of the "custodian of enemy property," i.e., become "pub¬lic land." It is reasonable for Israel to insist that, as long as the core issues of the final settlement have not been discussed and resolved (these are sched¬uled for discussion during the final phase of the process), and as long as the final borders and the future of Israeli settlements have not been determined, Israel will refuse to undertake acts that might precipitate these discussions.
A different kind of problem might be the immediate burden created for the Palestinian Authority in the West Bank. The massive influx of hundreds of thousands of returnees, without a local economy strong enough to absorb and integrate them, might be a cause for anti-Israeli irredentist and terrorist activities. From this perspective, Israel should not leave the decision to the Palestinians. The question should be raised during the negotiations, and Israel should insist on getting a clear answer as to how the Palestinians intend to deal with it. It is quite possible that the solution would be an immi¬gration quota, in accordance with the local economy's absorptive capability.
No one should expect a massive and uncontrolled return of the 1967 DPs. The first to return should be those with a home and a family awaiting them. These should be followed by DPs returning in accordance with the expanding economic absorptive capacity of the West Bank, with their place¬ment carefully considered so as to avoid creating a serious security problem.
Another issue would be Israel's position regarding a Palestinian "Law of Return," as part of the final status resolution. If prior to such legislation the two parties agreed on all the other, "easy" questions (like the estab¬lishment of an independent, sovereign Palestinian state, the final borders, Jerusalem, Israeli settlements and the refugee question), it is quite possible that Israel would show flexibility on this law.
Israel could not, on the one hand, refuse to admit any Palestinian refugee within its borders, while on the other hand vetoing the Palestinians' attempt to solve this crucial problem within their own terri¬tory. Furthermore, if a Palestinian state is indeed established, Israel could hardly maintain the right to intervene in the sovereign legislation of that state. Israel cannot reject the right of Palestinian or Arab intervention against its own "Law of Return," with the claim that this comes under Israel's sovereign jurisdiction, and at the same time veto a similar Palestinian law. And yet, very much like the return of the DPs during the interim phase, a massive return of refugees could create a security and irre¬dentist problem. To avoid precisely this eventuality, both parties should work together and agree on reasonable limits.

Endnote

1. The Israeli government agreed in 1949 to allow the return of 100,000 refugees to their homes and villages, but, in reaction to Arab rejection of this gesture, soon changed its mind and retracted its offer.

Taken from a publication of the Tel Aviv University Jaffee Center for Strategic Studies entitled The Palestinian Refugee Problem, by Shlomo Gazit. It was published in 1995 in the framework of Study No.2 of the Final Status Issues: Israel-Palestinians.