18 June 2008 VALUATION of PALESTINIAN REFUGEE LOSSES
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VALUATION OF PALESTINIAN REFUGEE LOSSES A Study Based on the National Wealth of Palestine in 1948 Thierry J. Sene chal 18 June 2008 Page 2 of 260 Contact information: Thierry J. Senechal [email protected] Tel. +33 6 24 28 51 11 This report is established by request of the Negotiations Support Unit (NSU), Negotiations Affairs Department of the PLO/Palestinian Authority. The views expressed in this report are those of the Advisor and in no way reflect the official opinion of the commissioning unit. This report has been prepared for the use of the NSU in connection with its estimation of Palestinian Refugees’ losses arising out of the 1948 war and should not be used by other parties or for other purposes. The views expressed in the following review are those of the author and do not necessarily reflect the opinions or policies of the NSU. The author would like to express his gratitude to Philippe de Mijolla for his continuous support on this project. Privileged and Confidential Thierry Senechal, 18 June 2008 Page 3 of 260 STRATEGIC SUMMARY of this study) can make an informed OBJECTIVES assessment of the level of judgment (if any) that has been used in deriving values. In addition, a full audit trail is integral to study. This report forms the third phase of a project which provides a quantification of In Section 1 of the report, we introduced the aggregate value of losses incurred by the scope of reference of our work and key Palestinian Arab refugees as a result of their findings from our initial review of past forced displacement from what is now estimates. In Section 2, we presented an known as Israel, following military action analysis of Palestinian wealth in 1948 based during the years 1947 and 1948. We aimed on the national income approach. We to provide a comprehensive view of a full concluded that such approach is not useful range of financial losses suffered by to provide a global assessment of approximately three quarters of a million Palestinian refugee losses but can be used Palestinian people so displaced. to determine a minimum bound for negotiations. Whereas the ultimate solution of the, hitherto intractable, right of return and/or In Section 3, we have introduced compensation issue would require fundamental adjustment principles, e.g. negotiations between Israelis and number of refugees, scope of land to be Palestinians, our objective has been to included (falling outside the Armistice Line), provide Palestinian negotiators with a number of Arabs remaining in Israel in 1948, reasoned, realistic and independent land sales in pre war years, growth rate of aggregate financial valuation. national income, and exchange rate determination. METHODOLOGY VALUATION FINDINGS In order to provide a manageable assessment of the wide range of aggregate We set out below a summary of the findings financial losses incurred by Palestinian of each of the loss types reviewed. refugees, we have broken down the present study into seven separate categories of loss. VALUATION OF RURAL LAND Each component has been separately Section 4 aimed at valuing losses incurred identified and defined, and then quantified by Palestinian Arab refugees from the 1948 using its own specially developed and war in terms of rural land and rural specific valuation methodology, always buildings. In the 60 years that have passed, rooted firmly in international valuation the issues and questions of reparation for standards. this loss have been much debated and many attempts at valuation have been made by We have taken care to report, in a various groups or individuals such as the transparent manner, the rationale and United Nations Conciliation Commission for functionality of our methods so that Palestine, the Israeli State itself, the Arab experienced negotiators (the intended users League and private academic researchers. Privileged and Confidential Thierry Senechal, 18 June 2008 Page 4 of 260 recognized that a loss took place in respect As we find it, the overall loss of rural of income forgone due to loss of jobs and property by the 1948 refugees represented complementary inputs over a finite horizon. a grand total of £P398 221 800 (in 1948 This constituted a legitimate grievance that values). This value has been calculated by had to be included in our comprehensive aggregating results for the following types assessment of Palestinian refugee losses. of immovable property: rural land for £P236 716 172 (excluding Beersheba sub- The loss of employment and livelihood district); Village built-up areas for £P6 represented a grand total of £P122,739,012 249 669 (land and buildings); and Beersheba (in 1948 value). We had to develop two sub-district land for £P155 255 959. distinct methodologies to assess the loss of employment and the loss of livelihood. We VALUATION OF URBAN PROPERTY have assumed that 25% of the Palestinian In section 5, we have been reviewing population was fully employed in the information on urban land holdings and economy and therefore was entitled to a buildings in Palestine in 1947. We arrived at compensation for the loss of employment, a total value of £P126,830,885 (in 1948 the remaining 75% being compensated for value). This figure has been obtained as the loss of livelihood. At this stage, we have follows: £P20,674,429 (urban land) plus computed the loss of finite time periods £P140,497,816 (Urban buildings) minus that will need to be discussed in great £P34,341,360 (deduction for sale of length. property from Arabs to Jews 1945-1947). It should be noted that construction costs VALUATION OF PERSONAL PROPERTY AND information has been found to help value MOVABLE ASSETS urban buildings in pre war Palestine. In Section 8, an estimation of losses by Palestinian Arab refugees of movable assets VALUATION OF HOLY PLACES has been presented. Parameters in respect In Section 6, we have valued holy places. of livestock, private vehicles, commodities, The loss of such property represents a grand foreign assets and household chattels total of £P 1,602,280 (in 1948 price). It should owned by Palestinian Arabs and their be noted that such exercise has not been consequent loss have been provided on the performed in the past by Arab or Israel basis of historical data. We arrived at an valuers. This was therefore a first attempt aggregate figure of £P44,853,524 (in 1948 to derive a value for real estate associated values) broken down as follows: to a religious purpose. We were satisfied 1. £P5,072,520 (1948) in livestock and with information obtained regarding the agricultural implements scope of loss holy places and we have 2. £P235,534 (1948) in private vehicles designed a valuation protocol from official 3. £P1,765,265 (1948) in commodities construction costs data obtained in Section 4. £P14,542,770 (1948) in foreign assets 5. 5. £P23,237,435 (1948) in clothing and household chattels. VALUATION OF THE LOSS OF EMPLOYMENT AND LIVELIHOOD (LOST OPPORTUNITIES ) In our valuation, we have assumed that Section 7 provided a valuation of refugees have left behind all their employment and livelihood losses of properties. We understand the past valuers Palestinian Arab refugees. We have been have proposed ratios for property left concerned with the notion of lost behind, i.e. Prof. A. Kubursi arguing that opportunities rather than psychological refugees had taken with them half of their damage. In carrying out our valuation of the property. However there is no basis to loss of employment and livelihood, we have justify such ratio and we have decided to Privileged and Confidential Thierry Senechal, 18 June 2008 Page 5 of 260 assumed, unless proved otherwise, that all Section when additional information is movable property has been lost. obtained. VALUATION OF BUSINESS LOSSES Section 9 attempted to value the loss of GLOBAL ESTIMATE AND PRESENT DAY income-producing business property VALUATION suffered by Palestinian Arabs as a result of the 1948 war. At the end of 1947, Palestine’s overall economy was healthy, We can summarize the findings of our especially when compared to other assessment as follows: countries still suffering from the effects of Value in World War Two. The industrial sector as a Loss Value in £P Section USD 1948 at category 1948 whole was predominantly Jewish, Arabs 4.0319/£P being mostly involved in agriculture, milling grain, tobacco manufacturing and parts of Sect 4 Rural land 398,221,800 1,605,590,475 the textile and metal industries. Enumeration of national wealth has been Sect 5 Urban land 126,830,885 511,369,445 carried out in pre war Palestine. Sect 6 Holy places 1,602,280 6,460,233 We estimated that the value of Palestinian Loss of income-producing property at £P85,516,266 Sect 7 employment 122,739,012 494,871,422 and livelihood (in 1948 value). Of course, special care has Personal property and been exercised to distinguish the shares of Sect 8 44,853,524 180,844,923 movable Arabs and Jews. Information has been assets obtained for small enterprises, hotels and Business Sect 9 85,516,266 344,793,033 restaurant, commerce and construction losses businesses, laundries and small workshops Arab share of Sect 10 state-owned 37,062,985 149,434,249 which were predominantly Arab-owned. At property this stage of our review, we could not TOTAL 816,826,752 3,293,363,781 identify the Palestinian share of large industrial companies. The total value of Palestinian refugee losses VALUATION OF STATE -OWNED PROPERTY in 1948 has been assessed at £P816,826,752 State-owned property was a significant part or USD3,293,363,781. of the Palestinian economy. Infrastructure such as roads, railways and seaports, as well In the last section (Section 11), we have as postal services and telecommunications examined the possible methods of adjusting played a crucial role in mobilizing the the value of losses to reflect current day factors of production facilitating economic monetary values.