Since the beginning of the Oslo process, the relative weight and attention given to each of the core issues to be negotiated has significantly evolved. Initially, the greatest conceptual and political challenge centered on the question of Palestinian statehood, with the refugee issue regarded, to a large extent, as a non-issue at best or, at worst, as one that would solve itself within the last stages of the negotiations. Yet a decade later, a convergence of various political, economic and cultural forces has reshaped the conflict environment and altered Israeli perceptions and expectations, with Palestinian statehood generally accepted as a given, and the refugee issue taking center stage.

While the issue is little discussed within the general public domain in Israel, perhaps the best way to describe the Israeli perspective, from a leadership standpoint, is that there seems to be a sense of being overwhelmed. This sense emerges from two factors: One is the realization that a failure to address the issue could ultimately prevent a final peace settlement, thus closing the window of opportunity on what is still held to be Israel's leading strategic objective - a negotiated comprehensive Permanent Status Agreement (PSA); the other is the inability to clearly define Israel's interests concerning most of the detailed elements involved.

An Israeli Systemic View of the Refugee Issue

The inability to clearly define Israeli interests stems from three factors which set the refugee issue apart from other core issues: complexity of elements, multiplicity of actors and high uncertainty concerning consequential outcomes and irreversibility.

A. Complexity of Elements

The various elements to be negotiated can generally be divided into four interrelated dimensions:
1. The sociopolitical dimension: The Palestinian refugee issue touches on a number of sociopolitical elements that embody deep-rooted Israeli fears, both past- and future-oriented. While the basic framework for the peace process is predicated on concluding the historical conflict between Jews and Palestinians, the refugee issue is the only core issue that relates directly to the events of 1948, rather than to those of 1967. The outbreak of the 1948 war and its consequences are central events in the identities of both nations - the establishment of the state of Israel for the victorious Jews and the Nakba and the creation of the refugee problem for the defeated Palestinians. Any Israeli leadership negotiating an agreement on the refugee issue will inevitably be faced with domestic political obstacles relating to historical narratives and collective identity and constituting myths, any re-examination of which will be presented by the opposition as threatening to the future character of the Jewish state. Hence, to a large extent, it is the explicit and implicit declaratory aspects of any agreement on the refugee issue that affect the Israeli perspective the most.

Within the negotiation framework, the challenges relating to the explicit declaratory elements are as follows:

a. To what extent and in what manner can history and competing narratives be accommodated within the text of the agreement? This is a vital question, as any phrasing drafted within the agreement can be expected to be meticulously analyzed and interpreted by the public. If an agreement is perceived or spun in the wrong way, it could cause significant damage to the peace process, undermine its legitimacy and prove to be political suicide to any leadership promoting it. The options for addressing this issue range from omitting any historical references, i.e., leaving the agreement as a strictly legal text, to recruiting the "wise men" of the world - prominent international figures such as Nelson Mandela, the Dalai Lama and Bill Clinton - to draft the opening text of the agreement, referring to the history of the conflict and emphasizing both sides' commitment towards its resolution.

b. How should the Palestinian demand for Israel to take responsibility for the creation of the refugee problem be addressed? This demand places the Israeli leadership negotiating the agreement in a difficult predicament vis-à-vis the Israeli public, as this element touches on two traditional collective standpoints: (i) the rationale that as it was the Palestinians who started the war, Israel cannot be expected to take responsibility for its consequences; and (ii) a lack of conceptual and emotional distinction made between the events of the war itself and the creation of the state of Israel, i.e., the idea of taking some responsibility for the creation of the problem is immediately associated not with the events of the war, but with the very presence of a Jewish community in this area, a presence that has yet to be accepted by the Arabs. This view may be summed up as: "We cannot apologize for existing."

The leverage held by Israeli decision-makers on such matters is greatly dependent on how they perceive the public mood and its capacity to endure: To a large extent, the leadership is constrained by what it thinks it can sell to the public without being toppled. There has been significant change in the manner in which the events of 1948 are presented and explained and that specific references to the Nakba are already included in history lessons, thus preparing the ground for a much more open public debate than many leaders would assume. While Israelis are unlikely to accept full responsibility, polling figures suggest that they are more likely to accept shared responsibility - with some 40% willing to acknowledge some responsibility for the refugees' predicament. Hence, addressing the issue through a discussion of shared responsibility, not only with the Palestinians but also with the Arab countries which fought in the war, may help to further increase the political flexibility around the negotiating table.

c. How should Palestinians' demands for acknowledgement of what they consider to be the refugees' right of return to Israel be addressed? This poses perhaps the most difficult challenge for Israeli decision-makers. Because this demand, put forward within the context of permanent status negotiations, is a politically symbolic demand rather than an operational one, it is viewed very suspiciously by the larger Israeli public. The demand for "the right of return" is commonly interpreted as something that stands in clear contradiction to the principle of a two-state solution: How could Palestinians seek both their own state and the right to live in the other state at the same time? Hence it is viewed as a demand put forward so as to embed within the agreement a symbolic element that would completely undermine the concept of peace, hinting at ulterior motives on the part of the Palestinians.

From the individual perspective there is first a great need to legitimize a distinction between the collective implications of the 1948 war and its individual manifestations, thereby disassociating the collective/national claims over the land from the intuitive recognition of an individual's right to return to his or her own house, regardless of the circumstances of departure. In this regard, it would seem that the ground is already partly prepared, as the idea of compensation for property is widely acknowledged and although Jewish claims for compensation for property left by Jewish refugees from Arab states cannot be addressed through a bilateral Israeli-Palestinian agreement, at the very least they help to open and facilitate public discussion.

The second need is to address the issue through a discussion of collective historical rights. Legitimizing the notion that both peoples hold such historical rights to all the land, notwithstanding the current practicality of dividing this land into two sovereign entities - a national home for each people - could not only provide a bridge between Israelis and Palestinians but also go a long way towards reducing Jewish ideological opposition to an agreement.

d. How can the Jewish right to self-determination and regional acceptance of Israel as the Jewish homeland be ensured? Underlying the negotiations on the refugee issue is a trade-off whereby Israel provides symbolic gestures and financial compensation and in return receives recognition and acknowledgement of its future rights. Israel perceives that a negotiated deal will mark the end of its long conflict with the Arab world in general and with the Palestinians in particular. The Israeli leadership will need to have clear declaratory elements to this effect included in the agreement.

2. The geopolitical dimension: The element of "the right of return" is in essence a symbolic political issue rather than an operational one. Therefore, whether Israel agrees to accepting the immigration of five, 5,000 or 50,000 Palestinians, this would not carry any real geopolitical meaning or form any demographic threat to the Jewish character of the state of Israel. However, there are still many geopolitical elements that will be designed within the PSA framework that could affect Israel's interests.

Many of the operational arrangements concerning the solution to the refugee issue relate to the establishment of permanent residency and citizenship, i.e., either give refugees the opportunity to stay in their current places of residence and promise them equal status as other citizens of the host country, or help them to emigrate to the newly established state of Palestine and/or a third country. For Israeli decision-makers negotiating the settlement, this raises the question of whether Israel should hold a position concerning the full integration of refugees in places such as Jordan or Lebanon. So far, Israel's guiding rationale on this issue has been a wish to maintain political stability, especially in Jordan. However, two constraints undermine this rationale: the bilateral nature of the agreement and the nature of the arrangements themselves, which will be implemented through the individual choices of so many people, with political and economic ramifications which are hard to assess and, therefore, harder to translate into policy preferences. This interdependency between economic and political processes makes both defining Israeli interests and their order of preferences all the more difficult.

A related question is whether Israel should demand a say in the numbers, and even the identities, of refugees from outside the occupied territories wishing to move in. An intensive and uncontrolled immigration into what would be Palestine raises concerns about growing pressures on the borders that are likely to translate into new forms of violence. It can be assumed that the Palestinian leadership would also prefer controlled and balanced processes of immigration, coordinated with the development of its absorption capacities. Some form of international monitoring on this issue would be welcome.

3. The economic dimension: An agreement on the Palestinian refugee issue involves a complex array of economic elements with significant long-term ramifications. Under the general title of "compensation and rehabilitation," the arrangements over the refugee issue are aimed at helping to transform the conflict environment into a more economically prosperous and balanced political economy. Such an objective requires the following considerations to be taken into account:

a. Compensation to whom and for what? Like other aspects of the issue, there has been very little Israeli public debate about the question of compensation. The seemingly most straightforward part is the need to compensate for property left behind by the refugees. But the intricacy of the issue becomes apparent when one starts operationalizing this process. First is the need to identify all the properties for which compensation is required, a task on which a lot of expert work has already been done. Second is the need to value the properties, a task on which many contradictory expert opinions have already been formed. Beyond both of these laborious tasks is a still harder one: the question of ownership. There is tension between the legal definition of land rights and the political aim of the arrangements - in other words, to whom should the money go? In many cases wealthy families held the deeds to the land, while most Palestinians held no land deeds but lived on and worked the land. Moreover, 60 years on, questions of inheritance rights also pose difficult policy challenges. Which legal model of inheritance rights should be adopted? While these may seem to be legal issues, their real impact is social, cultural and political, as each decision reflects alternative processes of power distribution.

Israel would probably like to see a professional international body established which could make these decisions so as to best promote Palestinian economic development. Another option that has been considered is the possibility of providing compensation for the very status of refugeehood. From an Israeli perspective, this is seen as part of the declaratory reconciliation package. One Israeli concern is how the status of refugee would be determined. Would it be restricted to the United Nations Relief and Works Agency (UNRWA) definition? Would Palestinians from refugee families living in London be considered as well?

b. How much compensation? And who pays? Since the refugee issue has begun to receive the attention of expert evaluators, a whole spectrum of numbers has been thrown around. However, two considerations are especially important. The first is for the agreement to clearly state a final estimate, figure or mathematical formula of Israel's contribution to the settlement. The second, perhaps even more important from an Israeli perspective, is the number of parties contributing the funds. This, again, is an implicit declaratory element associated with the discussion on responsibility.

c. Towards what end? Assuming an international fund will be created, its resources would have to be divided between public and private ends. What would be the public programs financed through the fund? How would the money be distributed between the Palestinian state and host countries such as Jordan? And who would be in charge of carrying them out? While the Israeli leadership could be expected to entrust many of the answers to international experts such as the World Bank, the participation of other agencies such as UNRWA would raise serious concerns.

4. The legal dimension: Palestinian attempts at raising political international support on the issue have been largely advanced through legal discourse. Hence, Israeli legal positions have emerged to a great extent as part of an attempt to counter Palestinian political strategy through the use of legal claims. Nevertheless, within the framework of a signed settlement, Israel might run the risk of opening the door to future claims. For example, does a politically symbolic gesture of accepting shared responsibility for the creation of the refugees' predicament hold legal meaning? Does providing compensation for property necessitate a waiver of future claims by all recipients? This requires the Israeli leadership to be equipped with expert legal advice that would, on the one hand, mitigate any real future threats and, on the other, not overtake the political rationales and objectives underlying the peace agreement.

B. Multiplicity of Actors

The second challenge to a clear definition of Israeli interests emerges from the multiplicity of actors and agendas involved in the refugee issue. Because it is not bilateral in nature, the refugee issue presents much broader negotiation challenges.

The first is the question of representation. In continuation of the Oslo process, negotiations on a PSA are carried out between Israel and the PLO as the sole representative of the Palestinian people, both within and outside the occupied territories. However, various trends within the Palestinian political system over the last decade have significantly undermined this assumed monopoly, casting doubts on the level of legitimacy and acceptability of any agreement among the wider Palestinian society. This is especially relevant to Israeli positions, since the only thing that Israel can minimally aspire to receive in return for its symbolic and financial concessions is the recognition of its right to exist as a sovereign Jewish entity in the Middle East.

From an Israeli perspective, a weakened representational position of the PLO does not mean that such an exercise is strategically futile. It would, however, require other elements to enhance its legitimacy. One such vital element would be the Arab states' support, possibly reflected through some accommodation of the Arab Peace Initiative.

The second group of questions associated with the multiplicity of actors relates to the host countries. While the principles that would govern the various processes towards resolving the refugee issue will be decided bilaterally, the bulk of the people affected live outside the borders of both Israel and the occupied territories. Any bilateral conclusion of this issue will have significant political and economic consequences for Lebanon, Syria and, perhaps most importantly from an Israeli point of view, Jordan.

The third group of questions relates to non-governmental organizations - those currently active as well as those to be created to implement the arrangements reached. Israel would not be inclined to repeat its bitter experiences with UNRWA, but many questions remain as to the status Israel should seek within such forums.

The last group of questions, seemingly outside the negotiation framework, relates to the Arab citizens of Israel. This community shares some of the grievances and needs of the wider refugee community on issues such as property claims and questions of identity. The consideration of this additional group opens a door to another whole system of conflict resolution processes needed to address the relations between Jews and Arabs within the state of Israel.

C. High Uncertainty Concerning Consequential Outcomes and Irreversibility

Unlike agreements on other issues, the end result of the implementation of a refugee agreement is very hard to picture. Will the bulk of the refugee population accept the settlement? Will the economic resources funneled through financial compensation succeed in closing some of the development gaps and prevent further political grievances? How many people will actually choose to relocate and to where? How would this affect the Jordanian and Palestinian political systems? Such uncertainties, and the sense of risk associated with them, are further exacerbated by the notion of irreversibility, for the movement of people and resources and their effect on the sociopolitical environment cannot be undone. Hence, Israeli decision-makers perceive a high level of risk on this issue.

Four integral principles seem to cut across all the dimensions described above:

1. Stability. The wish to maintain stability is a common rationale, cutting across all Israeli considerations concerning the refugee issue, hence the Israeli emphasis on operational solutions that will maintain regional political, socioeconomic and demographic stability.
2. Targeted economic assistance (rehabilitation). One of the driving rationales underpinning the resolution of the refugee issue is the concept of "rehabilitation," i.e., the need to significantly improve the welfare of refugee communities to a standard on a par with the rest of the population wherever they choose to live, which would also help create the post-conflict environment that all sides aspire to.
3. End of claims. "End of claims" refers to the idea that the implementation of the PSA, and the refugee chapter in particular, would end all Palestinian claims against the state of Israel. While part of the legal discourse surrounding the negotiations, this rationale is still vague in strategic terms. Whose claims does this idea refer to? Is it to be understood as a collective/national waiver? This brings us back to the complexity of actors involved.
4. End of conflict. The concept of "end of conflict" is an embodiment of the Israeli cultural notion of peace and is perceived as the ultimate goal of the agreement. A comprehensive peace agreement signifies the end of this century-old conflict, whereby the Palestinian and Arab societies agree to fully accept Israel as a permanent neighbor in the Middle East. In terms of the timetable, the principle of "end of conflict" cannot merely be attributed to a signed piece of paper but is tied to the implementation of its content and the actual manifestation of the post-conflict environment, whereby tension would be lessened, gradually changing the nature of the conflict.

Conclusion

The fact that both sides have reached the point where the refugee issue remains, to a large extent, the last piece of the agreement puzzle, shows just how far both sides have traveled towards a comprehensive negotiated agreement. From an Israeli perspective, more strategic work is needed at the political/policy-making level so as to determine the resolution level required for the agreement itself. The Israeli leadership should then articulate the leading principles it needs to secure within the agreement. To this end, more work is needed to enable the set of alternative operational frameworks involved to be presented to the decision-makers. At the same time, more research and strategy development work is needed to assess existing attitudes and possible avenues for widening the public discourse in Israel.

From an international perspective, the foremost contribution could be to convince both sides to support the creation of a task force of leading experts that could work alongside the negotiation process and present operational designs. This would translate strategic options into operational ones so as to help the decision-making process.

This article draws on a Chatham House workshop with leading Israeli and international experts devoted to the refugee question. A longer version of this article was prepared as a briefing paper for Chatham House. <