1. The Situation
Our efforts to advance the Arab refugee problem toward solution have now reached a crossroads: (a) the Arab governments, having objections to the Johnson proposals and fearing their acceptance would constitute tacit recognition of Israel, but not wishing to bear the onus of outright rejection, have kept relatively quiet and are maintaining freedom of maneuver; (b) the Arab refugees are reported by qualified observers to be showing interest in the prospect of receiving compensation and to be largely in favor of resettlement rather than opting to live under a Jewish government; and (c) in private Israel has flatly rejected the Johnson approach or anything deriving therefrom, has scorned the utility of the Harman-Talbot talks that sought to find common ``building blocks" for a refugee settlement, but has avoided clear public rejection of the Johnson Plan.
In our discussions with the parties we have not directly supported Johnson's proposals but have limited ourselves to describing their merits as we see them and commending them to the careful attention of the Parties.
a) Primary. Resolution of the Arab refugee problem over a period of years on the basis of a reasonable amount of repatriation and a large amount of resettlement with compensation.
b) Fall-back. Freedom to cease active support of Paragraph 11 of Resolution 194 as a result of rejection of the Johnson proposals by both the Arabs and Israel or by the Arabs only and to move at a time of our choosing toward disengagement from the Arab refugee issue.
3. Possible Course of Action
Two acceptable courses of action are available: (a) we can give up, or (b) we can decide it to be in our interest to seek seriously to gain the acquiescence of the Parties to a process roughly along the lines charted by Johnson and our bilateral negotiations with Israel. The latter course would require engaging our influence with both the Arabs and Israel, but we would be obliged to "lean on" Israel particularly hard because the process envisioned by Johnson cannot begin unless Israel changes its position from rejection to acquiescence. Likewise, our fall-back objective becomes more difficult of achievement if Israel does not acquiesce.
Whatever our decision, the principles of the Johnson approach should be made public at some time so that they become a part of the Parties' thinking in the future just as Eric Johnston's unsuccessful Jordan Valley plan has been a determining element in projects for the development of the Jordan waters.
4. Pro's and Con's of Giving Up
By giving up we would avoid fully engaging United States prestige in a project which at best has only small chance of succeeding, and we would avoid creating stresses in our relations with Israel and to a lesser extent with the Arabs. If in the process of giving up we were successful in achieving our fall-back objective we would be in a position to disengage when and if circumstances permit.
But if we give up now, rising domestic pressures for disengagement may rule out another major effort to find an equitable solution involving repatriation of a reasonable number of refugees to Israel. In any event a new major effort based on equity probably could not be cranked up for five or six years (the last major effort was in 1955-56). In all fairness, the Arabs should not be forced to resettle all the refugees unless they have refused a reasonable proposition. If we stop our effort now, the Arabs will know that Israel is blocking us. As a result (a) our image of even-handedness as between Israel and the Arabs will be tarnished, and (b) our effectiveness in dealing with the Arabs on other Arab-Israel issues such as the Jordan waters will be impaired. Further, if we give up now, we shall have greater difficulty in achieving our fall-back objective without transparently forcing Arab rejection. Also, by giving up we would clear the way for Israel to press its troublesome direct negotiations resolution and for the Arabs to urge reconstitution of the PCC and establishment of a custodian for Arab properties in Israel. Finally, if Israel defeats us on this issue, Israel will be encouraged to believe it can defeat us on other important issues such as improvement in the effectiveness of UNTSO.
5. Pro's and Con's of Leaning on Israel to Acquiesce
Your Administration is pledged actively to seek progress in ending the Arab-Israel conflict. The present PCC initiative, which is a step in this direction, was undertaken at the instance of the United States Government and was launched by despatch of your letters of May 11, 1961, to six Arab leaders and your talk with Ben-Gurion on May 30, 1961. Given the central role of the refugee problem in the Arab-Israel conflict, there is merit in mounting a full-scale effort to resolve it. The problem becomes more pressing each year with the growth in the number of refugees and their discontent, and the rising impatience of contributor nations to get out from under the financial burdens of supporting the refugees. Ben-Gurion agreed with you that a solution on the twin bases of resettlement with compensation and repatriation was "worth a try". Yet Israel so far has refused to acquiesce in proposals which would enable a try to be made despite our far-reaching efforts to meet Israel's vital concerns. (In this connection, I recommend you read Enclosure 1.0/) There is general consensus, including domestic Jewish leaders, that Israel can accept 100,000 Arab refugees without endangering its security. If Israel acquiesces, any failure to achieve progress will clearly be attributable to the Arabs and will open the door to United States and United Nations disengagement.
Generation of influence strong enough to move Israel from a position of rejection to one of acquiescence will create stresses in our relations with Israel, with a reflection of these stresses in the attitude of the domestic supporters of Israel toward the Administration. Creation of the stresses may bring no immediate benefits in terms of progress on the refugee issue (but would facilitate achievement at least of our fall-back position).
If we do decide to "lean on" Israel, we would propose also to exert on the Arabs, to encourage their acquiescence, those limited pressures available to us, such as hinting at a change in our attitude toward the direct negotiations resolution, reduction of financial support for UNRWA, and movement toward disengagement from the refugee issue.
6. Consequences of Failure
a) Failure of a strong line with Israel. If you take the decision to "lean on" Israel but Israel does not cooperate despite the pressures and the present favorable conjunction of circumstances, our ability to induce Israel's cooperation in other courses of action we consider useful would be correspondingly reduced.
b) Failure of a strong line with the Arabs. We believe that failure to obtain Arab acquiescence need not result in any marked change in the nature of our relations with the Arab states.
c) Failure of a strong line to achieve progress. We believe that engagement of United States prestige in an effort that eventually fails to solve the Arab refugee problem will not be damaging to the United States. To the contrary, the international community is likely to applaud our attempt and will be more likely to go along with the withdrawal of our support from Paragraph 11.
Your decision is required whether it is in the over-all United States interest to pursue seriously the PCC initiative on the Arab refugee problem understanding that (a) there is only a limited possibility of achieving our primary objective; (b) it will be necessary to "lean on" both parties--Israel probably harder than the Arabs--to gain acquiescence; but (c) if no progress is made, we would at least be able to achieve our fall-back objective under which it would be possible in due course to disengage from or modify our existing commitments on the refugee issue.
If you decide that the United States should throw added weight behind the PCC initiative, we recommend that you (a) inform Mrs. Meir of this fact and request that Israel take no public action either in the coming General Assembly debate or elsewhere which would embarrass the United States or Johnson, (b) make clear to her that following the General Assembly debate the United States will expect there to be meaningful consultations under the aegis of the PCC on the refugee issue, using the conceptual framework which Johnson's work has established, and (c) advise her that you are displeased at Israel's lack of reciprocity on a matter of major importance despite the numerous benefits received from the United States.
If you decide, however, that we should give up the PCC initiative, we recommend that you (a) inform Mrs. Meir only that we look to Israel to do nothing in the General Assembly debate that would embarrass either the United States or Johnson, (b) state our expectation that Israel will honor its commitment not to introduce the direct negotiations resolution, and (c) express to her your dissatisfaction with Israel's attitude in dealing with us on this matter.
Whatever decision you take, we recommend you receive Dr. Johnson prior to initiation of the General Assembly debate on the refugee item.