His Excellency, Moshe Sharett, Prime Minister of Israel
His Excellency, Pinhas Lavon, Israel Minister of Defense
Mr Arthur Lourie, Assistant Director General, Israel Foreign Ministry
Mr Theodore Kollek, Israel Prime Minister’s Office
The Hon. John M. Vorys, US Congressman from Ohio
The Hon. James P. Richards, US Congressman from South Carolina
Ambassador George V. Allen, Assistant Secretary Designate for Near East, South Asia and African Affairs
Ambassador Edward B. Lawson
Subject: Israel’s Position with Reference to Settlement of Israel-Arab Problem
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Ambassador Allen remarked that he had been told in the Arab States that, with reference to the refugee problem Israel could make an effective gesture which would cost her little if she would offer to take back those refugees who wished to come. He said the belief was that few would in fact take advantage of this offer, which, if made, would give Israel psychological and political advantages. Prime Minister Sharett and Minister of Defense Lavon both expressed strong views that this was an erroneous impression, and that if Palestinian refugees were offered a chance to come back, most of them would do so. But more than that, there would be created in the minds of all of the refugees that repatriation to Israel, at some time was possible: therefore resettlement in countries other than Israel was no longer to be considered by them. This would keep a perpetually fresh bitter spirit alive against Israel which will not and can not take back any appreciable number of refugees, and would work to the disadvantage of any overall resettlement scheme in Arab or other countries.
The Prime Minister went on to explain why Israel felt that it could not take back any refugees, principally because of security reasons. He then pointed out that Israel had had to absorb large numbers of Jews from the Arab States, many of whom arrived in Israel as destitute as the Arab refugees. (Special mention was made of the Iraqui Jews who were forced to leave their property and bank accounts behind.) He said Israel had taken care of these people in large numbers and within a very short period of time and had not called upon the UN for help, but the problem had been similar in nature.
The Congressmen, referring to the fact that Israel was delinquent in fulfilling the [December 1948] UN [General Assembly] resolution  concerning the repatriation of refugees, asked whether the Iraqui case had ever been brought out in UN discussions. Mr Sharett said, no. [- - -] Mr Richards suggested that [- - -] Israel had forced the Arabs to leave. The Prime Minister and Defense Minister objected strongly to the last statement. Israel, they said, had proved to the UN with documentary evidence that it was not responsible for the Arab refugee plight in leaving the country. This had been done at the insistence of the Arab leaders themselves. The fact that the Arabs attacked Israel in violation of the [November 1947] UN [partition] resolution, thereby forcing war and its problems on Israel, was also pointed out. Another thing he objected to, Mr Sharett said, was the continuous talk about “repatriation” of Arab refugees. This was the wrong term. The problem was “resettlement” not “repatriation”. Israel had absorbed some 700,000 immigrants and there was now no room left in Israel for the Arabs; even if one admitted the possibility of their return, it could not be repatriation to their former homes since in many cases the villages had been destroyed and the land was now in possession of others who could not be dispossessed. In addition[,] the cost of resettling the Arab refugees in Israel would be much higher than in the Arab States, and Israel could not bear this cost. Therefore, it would cost the UN and the United States more to bring them back here. Minister Lavon suggested that as far as “patria” was concerned, the refugees were better off in the Arab States where they would be among their own. Israel could not receive the Arabs back because of security considerations. The Prime Minister continued by saying that it was hard for the Israelis to understand why the UN and the Powers wished even to suggest this, realizing that it would only unsettle an existing situation and create more of a problem. The return of any large number of Arabs to Israel would only mean a more difficult minority problem and be a focus of infection and trouble. In any case, dislocation of people became a common problem following World War II, but repatriation did not follow, so why should Israel be singled out. In summary, the refugee problem was a question of security and economics.
As for compensation, Mr Sharett said that Israel was prepared to discuss this matter, but only after the Arabs ended their boycott. Even then, Israel insisted that the compensation go to the individuals concerned and not to the Governments who were maintaining their hostile attitude towards Israel. The Prime Minister pointed out that as long as the Arabs were hurting Israel economically, costing her money, it was ridiculous to consider depleting Israel’s limited resources to furnish them additional hard currency to use against Israel. If the Arabs stopped their boycott and agreement for compensation was reached, Israel might have to go to some International Loan Agency for funds, but that was a question of a loan which Israel would repay in time and another story.
With reference to the suggestion that a limited number of refugees be permitted to return and compensation offered the balance, Mr Sharett was quite insistent that the question of compensation and resettlement could not be mentioned together. Any suggestion of resettlement in Israel for even one refugee would mean a complete unwillingness by the entire group to accept plans for resettlement in the Arab states. Every refugee would think of himself as one of the few who might be allowed to return. Consequently, none would wish to consider resettlement elsewhere.
In discussing the economic boycott, the Prime Minister drew attention to how much it was costing Israel, and because Israel relied on aid from the United States, how much it cost the United States. He said that just Israel’s inability to bring crude petroleum through the Suez Canal to its refinery in Haifa was costing Israel about $12,000,000 a year. The crude oil had to be brought from Venezuela or around Africa. In addition, the refinery at Haifa was only operating at one-third capacity to meet Israel’s need, when it should be earning hard currency through export, and though Israel did not particularly want to, she could not be blamed for considering the possibility of purchasing crude oil from the Soviet Union because it was cheaper. He did not see how the United States could give economic aid to a country like Egypt without demanding an end to the boycott, or at least free passage through Suez as a quid pro quo. It would mean an overall saving to the United States. Congressman Vorys did not feel that the two problems were necessarily related.[n]
For background, see Uri Bialer, Oil and the Arab-Israeli Conflict (London: St. Antony's College/Macmillan Series, 1999), 115-46, 233.
Ambassador Allen then mentioned that part of Assistant Secretary Byroade’s speech last April when he said “to the Arabs I say you should accept this State of Israel as an accomplished fact”. Ambassador Allen asked the Prime Minister whether there had been much reaction in the Arab world to this statement and if the Prime Minister believed the Arabs were coming round to an acceptance of Israel’s existence. [- - -] The Prime Minister stated that no matter what their inner conscience might tell them, many Arabs hoped and believed that Israel would go under. He said they based this hope on 1) an economic failure, either through their boycott efforts, termination of United States aid, or a drying up of funds from world Jewry, or 2) in a period when the Powers would be preoccupied with problems elsewhere, an opportunity for a successful second [i.e., military] round would occur.
Ambassador Allen asked the Prime Minister if it would be proper to summarize the basic Arab attitude as understood by the Israel Government, as being a determination not to recognize that Israel was in fact a state within its present borders. The Prime Minister agreed that this was a basic obstacle to Israel-Arab understanding.
Congressman Vorys asked the Prime Minister if he had any suggestions for settling the problems that had been discussed.
The Prime Minister said he did not want to leave the impression that everything was as black as it had sounded. Peace might be a long way off. It might even be that they would have to wait until the present generation died off before [a] final settlement could be reached. In the meantime, however, there were certain steps that could be taken to move forward without a peace treaty.
He prefaced his views on the subject by saying that the Arabs were negative by nature and consequently it was easier to ask them to refrain from something than to do something. With this in mind he felt there were three ways to move forward in which the United States could help:
1) Border provocation was the cause of demands in Israel for retaliation or the giving of a lesson to the Arabs. The Arab States were responsible for this provocation because even if they do not organize every attack, they have not done all they could to stop them. He felt that the United States should be more forceful in making Israel’s reaction clear to the Arabs. He said that when an incident like the Negev pipeline being blown up occurred, he spoke to the American representative (?) in MAC [query in orig.; reference unclear] asking the United States to speak to the Egyptians about the gravity of the situation [reference to sabotage perpetrated in August or in October]. He did not feel that American representations on Israel’s behalf were as strong as they should be, nor the difficulty of his government following a policy of restraint fully understood. Stronger language was used with Israel after certain acts of retaliation than with the Arabs when the cases were basically similar. We should use stronger language with the Arabs to make them take steps to terminate border provocation. This would help reduce tension, a necessary step for the future settlement of the problem.
2) He felt that the United States should ask the Arab States to tone down and stop their warmongering anti-Israel propaganda. American statements that Israel was here to stay were all to the good and appreciated, but meant little as long as we did not protest when the Arabs made such wild statements as “wiping out the Jews”, “driving them into the sea”, et cetera. If the Arabs would just refrain from making such statements, this would improve the climate for resettlement.
3) The Arabs should be asked to terminate economic boycott measures. We should raise strong objections when the Arabs went so far as to tell foreign airlines that if they stopped in Israel they could not land, even in cases of emergency, in Arab States; we should insist on freedom of passage through the Suez Canal, especially since this would mean a saving in the amount of grant aid Israel would need. If more peaceful conditions came about, trade between Israel and the Arab world would be considerable and beneficial to both sides. In fact, the economic blockade was helping no one. It even cost the Arabs. (In the case of the Suez Canal, they were denying the Canal Zone Company a considerable revenue in transit tolls.)
Steps in these directions, he felt, could eventually lead to a peaceful settlement of all outstanding problems.
SOURCE: Memorandum of Conversation, December 7, 1954, encl. in White to State Department, despatch 356, December 13, 1954, USNA RG84 Egypt/Correspondence/Top Secret General, Box8 / DF320Arab-Israel.
George Allen, who was about to become assistant to the Secretary of State for the Middle East, Southern Asia and Africa, visited Israel on December 7-10 as part of his tour of the region. In his cover-letter, Ivan White described the “friendly atmosphere after dinner” and the “very frank discussion and exchange of ideas, which at times bordered on the blunt.” Prime Minister Sharett, he noted, was “aided, and on occasion, interrupted by Minister of Defense Lavon.”