Of the four core issues to resolve for an Israeli-Palestinian peace (security, borders/settlements, Jerusalem and Palestinian refugees) it is the refugee question that gets the least attention by non-specialists.  And it is the core issue least addressed publically in detail by Israeli and Palestinian leaders.  

Israelis, including Prime Minister Netanyahu, emphasize that Israel will not jeopardize the Jewish character of their state by allowing any Palestinian “right of return.”  At the 2011 U.N. General Assembly, he said “we want them to give up the fantasy of flooding Israel with millions of Palestinians.”  (Israel now has about 1.5 million Palestinian citizens, 20% of the population, and about 290,000 Palestinians living in Jerusalem.)  Palestinians, including President Abbas at the same UNGA, focus on the suffering of the refugees and call for implementation of their “sacred” rights as stated in U.N. Resolution 194 of December 11, 1948, that “refugees wishing to return to their homes and live at peace with their neighbors should be permitted to do so at the earliest practicable date and that compensation should be paid for the property of those choosing not to return…”   
What is a Palestinian refugee?  How did they come to be refugees?  The operational definition of the U.N. Relief and Works Agency for Palestinian Refugees (UNRWA) is any person whose “normal place of residence was Palestine during the period 1 June 1946 to 15 May 1948 and who lost both home and means of livelihood as a result of the 1948 conflict.”  UNRWA includes successor generations in this definition, meaning that the number of refugees who qualify under UNRWA standards is now nearly five million.  

UNRWA was created in December 1949 and began working in May 1950 when it assumed the work of the U.N. Relief for Palestinian Refugees operation and acquired the files of the International Committee of the Red Cross.  In 1949 the U.N. Conciliation Commission listed 726,000 refugees.  UNRWA in 1950 registered some 860,000 and later assumed responsibility for over 300,000 persons displaced or made refugees by the 1967 war.  UNRWA now has almost five million registered refugees with some 1.5 million living is 58 camps located in Jordan, Lebanon, Gaza Strip, Syria and the West Bank including East Jerusalem.  It operates 700 schools, including vocational training, and 137 primary health care clinics.  UNRWA states its mission is to help Palestinian refugees achieve their full potential in human development.  In addition to education and health services, it also provides relief for the most vulnerable.  Almost all funding is from voluntary contributions.  For 2011 the U.S. contributed about $239 million of a total budget of just under $1 billion.

Palestinian refugees face widely different circumstances.  In the West Bank and Gaza their standard of living is similar to that of the non-refugee population.  In Jordan, most are full citizens, live similarly to other citizens and only about 17% live in camps, which effectively have become urban neighborhoods.  In Syria, the refugees are non-citizens but have normal access to employment and social services, and their condition is about the same as others in Syria.  In Lebanon, stateless refugees are prohibited from owning property and have many restrictions on seeking employment, inducing many to leave the country.  Elsewhere in the Arab world, the Palestinians are typically treated as foreign visitors and residents.

The government of Israel has long been ambivalent about UNRWA but the prevailing view is that its educational, health and material support of the refugees in the West Bank, Gaza and beyond has been a source of stability and has relieved Israel of a large burden of care.  Similarly, the PA strongly supports continued UNRWA operations in the West Bank and Gaza, as well as in the Arab countries.   

These are the basic facts.  But Israelis and Palestinians hold very different narratives on how the Palestinians actually came to be refugees, who is responsible and what should be done to resolve the problem.  The underlying basis of this difference is that the refugee issue is inextricably a part of Israel’s founding narrative on the one hand and of the Palestinian narrative of dispossession and catastrophe (al Nakba) on the other.  Moreover, the nearly 1.5 million Palestinians now living in camps are an enormous humanitarian challenge.

The Palestinian narrative holds that the dispossessions started well before the 1948 war with Zionist armed groups terrorizing Palestinian towns and villages, killing, expelling and frightening some 700,000 inhabitants to leave.  These armed groups also destroyed many villages.  This all followed a conscious decision of the Zionist leaders and continued during and for months after the war.  The same thing happened again in the 1967 war.

To resolve the issue, Palestinians refer to Resolution 194 and demand that the refugees be given the choices stated therein, including the right of return, and also that they have the right to Palestinian citizenship or of the country of their choosing.  Israel must acknowledge responsibility and pay compensation.
The Israeli narrative holds that the 1948 war was forced on them because the Arabs rejected the U.N. partition plan of 1947, that most refugees fled voluntarily or because of guidance by Arab leaders, and that refugees are a usual result of war.  Israel is not responsible.  To accept historical responsibility for creating the refugee situation could feed the Palestinian and Arab view that the Israeli state was “born in sin” and open up Israel to demands for billions of dollars in compensation claims (one reason why the Israeli formulation, “end of conflict, end of claims”).  As a sovereign state, Israel has the right to define itself as Jewish and to regulate immigration and entry.  Accepting a right of Palestinian return would be an act of suicide and no state can be expected to do that.

To resolve the issue, the Palestinian refugees should be absorbed by the Arab states, or elsewhere, any compensation should be paid by the international community and no responsibility or culpability assigned to Israel.  Some Israeli leaders express willingness to consider admitting a very limited number of refugees under the rubric of family reunification.

In 1949 at the urging of the United States, the Israeli government offered to take 100,000 returnees as part of a peace deal.  When overall peace efforts collapsed, this offer was withdrawn.  Over the decades since, no progress was made in bridging the wide gap until after a group of Israeli historians (the “new historians” as Benny Morris termed them) in the late 1980s and ‘90s used newly-declassified Israeli documents to re-evaluate what had happened in the 1940s.  They concluded that there was a basis to some of the Palestinian assertions and that the events were a mixture of both narratives.  This led to a number of changes in Israel, including the willingness of leaders to risk shifting away from the traditional narrative in talks with Palestinian counterparts.

Thus, by 2000 in a series of talks that led to Camp David and then to follow-on negotiations at Taba, the two sides engaged on the refugee issue as part of the search for a comprehensive deal.  While some progress was made at Camp David, and President Clinton said he thought getting to agreement was more a matter of formulations rather than one of practical realities, the basic gap remained on the right of return versus Israel’s fear of any return beyond limited humanitarian reunifications.  At the Taba talks, according to a person present, the Israelis put forward a suggested joint narrative on which there was much progress but no agreement.  Those negotiations ended early in 2001 with the Israeli elections and Prime Minister Barak’s eventual defeat in February.

Having replaced Ariel Sharon in 2006, Prime Minister Olmert initiated a new peace effort, including direct talks with President Abbas.  This initiative ended in 2008 when Olmert was forced from office.  Palestinian attempts in those negotiations to accommodate some Israeli positions became public with the leak in January 2011 of the so-called Palestine Papers, the notes from internal and bilateral meetings with Israeli counterparts.  These documents had their leaders open to accepting a very limited return of 10,000 refugees over 10 years and Abbas saying that large-scale return was illogical since that would mean the end of Israel.  

This leak put in sharp relief the “right” and desire versus the reality, caused uproar in Palestine and put Abbas and his negotiators on the defensive.  Yet it also resulted in broader Palestinian discussion of the realities of the return issue that could help in finding a solution when serious peace negotiations began again.  The maintenance of the “right” of return remains very important to Palestinian refugees, but there apparently is also recognition that its actual implementation is a different matter.  This is what President Clinton was referring to.

With the failure of Israeli-Palestinian peace efforts and a rightward shift in Israeli politics, there is now a reversion there to the traditional position and several efforts are underway to re-characterize the Palestinian refugee problem in a way even less amenable to agreement.  Also, over recent years the Netanyahu government has insisted that the Palestinian Authority (PA) must recognize Israel as a Jewish state.  Palestinians have strongly rebuffed this, seeing it as a way Israel tries to win concessions on the right of return in advance of negotiations.
In April, Israel’s Foreign Ministry announced a major campaign to link the issue of the Palestinian refugees with that of the Jews who left Arab and Islamic countries for Israel.  The Ministry’s announcement declares that “a true solution to the issue of refugees will only be possible when the Arab League will take historic responsibility for its role in creating the Jewish and Palestinian refugee problem...There should be a joint solution between the Arab countries and the international community in order to provide compensation for both Palestinian and Jewish refugees…There should be an immediate discontinuation of the perpetuation of the Palestinian refugee issue.”  

Subsequently, six members of Congress introduced legislation that would “ensure recognition of the plight of the nearly one million Jewish refugees who were displaced from countries in the Middle East, North Africa and the Persian Gulf as a result of the Arab-Israeli conflict” and “would help secure equal treatment of Palestinian and Jewish refugees.”

In Israel, blanket characterization as “refugees” of Jews immigrating there from Arab and Islamic countries has been controversial.  Many such immigrants have declared it was the “pull” of Zionism and attraction of a Jewish homeland that motivated their immigration and not the “push” of their circumstances in their home country.  This is apart from the question of property and other losses and costs.  

In May, a Senate amendment to the Foreign Operations bill sought to distinguish between those Palestinian refugees who were alive just after the 1948 war and were personally displaced and those born subsequently.  Estimates of those still alive from 1948 range between 30 and 50 thousand, compared to the nearly five million now registered and the 1.5 million living in camps.  Israeli news reports assert that this amendment was the result of an initiative by an Israeli parliamentarian.

The State Department  strongly objected to the amendment, stating that the refugee issue “strikes a deep, emotional chord among Palestinians and their supporters, including our regional allies…and the proposed amendment would be viewed around the world as the U.S. acting to prejudge and determine the outcome of this sensitive issue.”  Compromise language was inserted that would require the State Department to submit a report providing the approximate number of persons currently receiving UNRWA assistance who fled because of the conflict and those persons born subsequently.  The report would also address “the extent to which the provision of such services to such persons furthers the security interests of the U.S. and of other U.S. allies in the Middle East.”

There is also increasing commentary in Israel on the perceived dangers of sizable movement of Palestinian refugees into a new state of Palestine in a two-state solution.  The argument is that Palestine would be unable to absorb many refugees and the resultant confusion and economic crisis could lead to a breakdown in security with a resultant threat to Israel.
There has never been any realistic expectation that the Palestinian refugee issue could be resolved by any sizable return to Israel.  Those working to advance a peace deal, including President Clinton as stated in his parameters after Camp David, believed it possible that Israel would acknowledge some sort of relationship to the dispossession, express regret or sympathy, participate modestly in compensation and agree to some humanitarian return.  They also believed that the Palestinians would eventually accept return to Israel on a limited humanitarian basis.  But it has been well understood that such an outcome would be possible only in the context of many tradeoffs among all the core and other issues in a final comprehensive deal, including the creation of their own new state of Palestine as their homeland.  Mutual recognition of the other’s suffering, longings, and legitimacy would be a very important part of a final agreement.