In an effort to break the long deadlock over the question of the Arab refugees, Secretary-General Dag Hammarskjold made a number of proposals which he thought could facilitate the integration of the refugees in the region and have them become the beneficiaries of large-scale regional development plans. Hammarskjold's proposals were attacked by Arab representatives and came to naught.
1. Previous resolutions of the General Assembly on the subject of the Palestine refugees, the recent annual reports of the Director of UNRWA and relevant debates in the General Assembly reflect the predominant factors in the refugee problem. As generally recognized, these are psychological, political and economic in nature. An understanding of the problem is easier if the different aspects are considered separately first. I shall begin with a consideration of the economic aspect because this establishes a framework within which the political and psychological aspects can be viewed more constructively.
2. Viewed from the economic angle, the reintegration of close to one million Palestine refugees into the productive life of the Near East presents problems similar to those faced in all cases of reintegration into economic life of a largely unemployed population. This will be true wherever and however the reintegration takes place in the Near East. We can, therefore, concentrate our attention for the moment on an economic analysis, dealing with the area as a whole.
3. As complete an analysis as available information permits, together with the supporting statistical data, is annexed hereto. It reviews key economic indicators and projections with regard to all of the countries concerned in the Near East and for the area as an economic unit, primarily for the ten-year period 1960-1970.
4. As it appears from these statistics, the national income per capita in all the Arab countries remains very low, although the rate of increase of the national income now in some cases is fairly high. At income levels like these, it is not to be anticipated that reintegration of a refugee population, over and above the absorption of the natural population increase, could be brought about if it had to be accompanied by a lowering of the income per capita. If this did happen, the result might well be a fall in the rate of capital formation, thus hampering still further an increase of income.
5. In these circumstances, it is realistic to assume that the reintegration of the refugees in the Near East would have to run parallel to an increase in the national income at least proportional to the number reintegrated. That, in turn, would require that the added Population can be productively employed with at least capital equipment equivalent to the one available to those already in productive life. The conclusion is that the reintegration must go hand in hand with such a new capital formation. If the reintegration, in practice, would have to be co-ordinated with some increase of the per capita income which seems to be, if not necessary, at least lightly desirable the increase in national income and in capital formation would, of course, have to be more than equivalent to the addition to the population.
6. Given the present economic situation in the area, we can, in general terms, state that the reintegration of the refugees through normal economic processes into tile productive life will, for the immediate future at least, require capital imports sufficient to render possible an increase in national income and capital formation preferably more than proportional, but at least proportional to the increase in population. From an economic viewpoint, such capital imports would represent sound investment in an area with great potentialities and great needs for a more diversified production. In the long run, with increasing revenues from oil in some parts of the region, the emphasis would switch from capital imports to investment of surpluses in the areas where reintegration takes place.
7. The capital formation will to a large extent have to take the form of agricultural and industrial investments. The agricultural investments would have to take place in semi-arid areas of low natural productivity, which probably would require fairly great amounts in order to be put into satisfactory production. The Israel experience of the capital needed per head of the population for such a development of investments is in this context of interest. I refer to the annex regarding these and other relevant data.
8. An additional factor that has to be taken into account is that it is likely that agriculture, in order to remain competitive, will have to be highly mechanized, which, in turn, will render necessary the opening up of new areas of production, with ensuing investment, in order to absorb the agricultural population set free in the process of mechanization.
9. The population increases foreseen in the area are considerable. On the other hand, the natural resources of part of the region may in the years ahead yield considerably increased income in foreign exchange. Thus, and quite apart from the refugee problem, a significant degree of general economic development for the area as a whole will be required and possible. In general, the region can be seen as economically viable in the long run provided there is a fair degree of mobility of capital or labour, or both, among at least some of its parts. This will be encouraged if the area can begin soon economic development of appropriate scope, thereby providing attractive investment opportunities for a significant portion of such surplus capital as may become available from its natural resources.
10. Viewed from an economic angle, the reintegration of the Palestine refugees into productive life, although it must be considered as a fairly long process, is perfectly within reach provided that the area can be developed through sufficient capital formation; the recent acceleration in the rate of progress and the great natural resources are encouraging elements. However, capital imports would probably have to be considerable, if it is found desirable that reintegration be furthered without considerable delays.
11. Viewed in the perspective of what has been said, the unemployed population represented by the Palestinian refugees should be regarded not as a liability but, more justly, as an asset for the future, it is a reservoir of manpower which in the desirable general economic development will assist in the creation of higher standards for the whole population of the area. It follows that, irrespective of the fact that humanitarian reasons would urgently call for continued assistance to the refugees, such assistance is strongly indicated as a sound part of any programme of economic development for the area.
12. In the light of these considerations, and disregarding for the moment both political and psychological factors as well as the humanitarian aspects of the problem, I strongly and unreservedly recommend the continuance of the United Nations activities in support of the refugees, for all the time and to all the extent necessary, pending the reintegration of the refugee population into the productive life of the area for which there are economic reasons to hope in connexion with its general development. This will require the prior, or at least concurrent, resolution of political and psychological problems to which the discussion can now turn.
13. There is the question of where the integration of the refugee population can or should come about. Short of further and intense studies it is impossible to say what could best be achieved from an economic viewpoint. The absence of these studies however, should not delay the general development to which reference has already been made. This can and should proceed on the basis of information already available. There is no immediate danger of over-development in any particular part of the area.
14. The question of where integration should be sought has, as in well known, an important political aspect. In resolution 194 (III) the General Assembly:
"II. Resolves that the refugees wishing to return to their homes and live at peace with their neighbours 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 and for loss of' or damage to property which, under principles of' international law or in equity, should be made good by the Governments or authorities responsible. "
The stand thus taken by the General Assembly Would involve integration of refugees into the productive life of Israel as well as of the Arab Countries in accordance with the choice of' the refugees themselves. This stand has been consistently maintained by the Arab governments concerned. However, Israel, stressing that the resolution relates to "refugees wishing ... to live at peace with their neighbours . . .", has limited itself to offering, with conditions, a form of compensation to former landowners in the country and does not exclude an extension of the uniting of families scheme under which former Arab residents have already come back to Israel territory.
15. The economic development which has been presented here as necessary to an integration of the refugees requires that we overcome various political difficulties which now hamper progress in the desirable direction. One of them is the Palestine problem in its various aspects; another one the problem of inter-Arab relationships; a third one the problem of an Arab economic co-operation so framed as to render possible the exploitation of the natural resources of the area to the full benefit of all the countries in the area. In the two last aspects mentioned, important progress has been registered. Attention may be drawn especially to the decision of the Economic Council of the Arab League to implement a previous decision regarding an Arab development fund and to establish a preparatory council for Arab economic unity. However, fairly complete mobility of capital within the area can only be regarded as a long-range objective not an immediate possibility. Regarding the Palestine problem no progress towards a solution is now in view.
16. While, under prevailing conditions, there is nothing to prevent internal economic development in each of the countries from proceeding to the extent possible, at least a gradual approach to the solution of the political problems mentioned above is a condition for that degree of development, on a regional or on a national basis, which is attainable and highly desirable in view of the unsatisfactory level of income in the area. In these circumstances, it is not adequate to direct attention primarily to the relationship which exists between these political problems and the question of the refugees. In fact, a solution of those political problems should be sought, inter alia, in order to create conditions for a sound general economic development in the area, irrespective of its significance for the reintegration of the refugees. If the problems are solved sufficiently well to provide for such conditions, the proper political setting would probably ipso facto be created also for a solution of the refugee problem in its political aspects.
17. Although the refugee problem may, usefully, in the first instance be studied ill economic and political terms, it is basically a human problem. No reintegration would be satisfactory, or even possible, were it to be brought about by forcing people into their new positions against their will. It must be freely accepted, if it is to yield lasting results in the form of economic and political stability. The views now voiced by spokesmen of refugees would seem to indicate that the refugees would not voluntarily accept integration into the productive life unless they have been given freedom of choice in accordance with the United Nations decision or in some other acceptable way as they now regard such freedom as the means through which the wrong that they consider themselves to have suffered could be put right and their individual self-respect safeguarded. However, it should be noted that a de facto economic integration that is, an integration which does not result from a choice in accordance with the resolution would not prejudice any rights established by the resolution. In view of this serious psychological problem it is to be hoped that in the course of the lengthy process which must be anticipated in the economic sphere, ways will be found to bring about a mutually satisfactory adjustment of stands and reactions on all sides which would resolve these psychological difficulties by the time when integration of most of the refugees becomes an economic possibility.
18. It follows from the preceding argument that my previous recommendation for the continuance of the work of UNRWA is not conditioned by political considerations, although such considerations may lend added strength to the economic reasons on which I base my recommendation. The perspective is not a discouraging one, provided that the world is willing to assist the region in its economic development and provided, further, that, step by step and as economic conditions permit, progress regarding tile political and psychological obstacles is sought in a constructive spirit and with a sense of justice and realism.
19. Just as I support the continuance of UNRWA pending progress in the economic field, I recommend, after a careful study of the technical operations of UNRWA. certain arrangements which seem to me to be indicated as essential improvements in the continued work of the Agency. In part 11 of this paper, I will turn to those improvements, the main significance of which is that the UNRWA operation should be so conducted as to be in harmony with the general view of the refugee problem which I have set out above.