The Palestinian refugee question, like the refugees themselves, has been politically marginalised and demoted on the diplomatic agenda. Yet, whenever the diplomatic process comes out of its current hiatus, the Palestinian leadership will be able to negotiate and sell a deal only if it wins the support or at least acquiescence of refugees – because if it does not, it will not bring along the rest of the Palestinian population. Refugees currently feel alienated from the Palestinian Authority (PA), which they regard with suspicion; doubt the intentions of Palestinian negotiators, whom they do not believe represent their interests; and, as one of the more impoverished Palestinian groups, resent the class structure that the PA and its economic policies have produced. As a result of their isolation, refugees in the West Bank and Gaza are making demands for services and representation that are reinforcing emerging divisions within Palestinian society and politics. There arguably are ways to address refugee needs, both diplomatic and practical, that are not mutually exclusive with core Israeli interests. This report examines what could be done on the Palestinian side to mitigate the risk that the Palestinian refugee question derails a future negotiation.

The Palestinian refugee question, since its emergence in the late 1940s, has first and foremost been a national question. Because the establishment of Israel – in what Palestinians call the Nakba (catastrophe) – transformed the vast majority of Palestinians into refugees, the contemporary Palestinian national movement is largely a product of their desire to reverse their dispossession. The issue retained its salience after the Palestine Liberation Organisation (PLO) formally endorsed two states in 1988 as well as after the Oslo agreements starting in 1993, because its fair resolution was considered crucial to legitimate any two-state settlement. Today, the reduced international visibility of refugee affairs notwithstanding, the issue retains its place in Palestinian national consciousness. For Palestinian leaders to do anything that smacks of abandoning refugees, and especially of renouncing their claims, is to cross a redline that touches at the core of national identity.

Though Palestinians disagree on whether the refugee question can be resolved within a two-state framework, the failure of negotiations has rendered this debate largely theoretical. For a time after the beginning of the Oslo process, it seemed to Palestinian elites that a basic trade was in the making: in exchange for a full Israeli withdrawal to the 1967 borders, including from settlements and Arab East Jerusalem, Palestinians would sacrifice unrestricted return to their former homes – the traditional Palestinian conception of the right to return; instead, it seemed, they would accept a compromise, “just solution” based on UN General Assembly Resolution 194, permitting the return to Israel of only a small portion of the overall refugee population.

Twenty years later, this formula has unravelled, and with it, in the eyes of many Palestinians, the premise of the two-state framework. In the 1990s, the refugee question was a lightning rod in Israel largely because it was thought to threaten the Jewish majority; today, Israel’s final status positions have hardened, its objections to refugee return as much principled as statistical. When coupled with the Israeli demand for recognition as the nation-state of the Jewish people, Palestinians believe that, instead of being offered a just solution, they are being asked to renounce what they see as an inalienable right in exchange for less than their irreducible minimum on other final status issues. When compared to the deal the PLO originally foresaw in 1993, they are being asked to concede more on refugees in exchange for less on everything else.

Many factors lie behind this shift. The second intifada, inter alia, shifted mainstream Israeli political thinking toward the right, which puts greater emphasis on the Jewish narrative. On the Palestinian side, the national movement’s centre of gravity moved, after Oslo, from the diaspora to the Occupied Territories, and more recently has been circumscribed to the West Bank. While refugees continued to be well represented in the power structure – indeed, PA President Mahmoud Abbas himself is one – refugee affairs are less prominent. With the Palestinian people increasingly fragmented, both politically and geographically, each of its constituent groupings has become relatively isolated and ever more consumed by its own problems.

For the Palestinian leadership, the main priority must be to reclaim representation of the majority of refugees, for without their acquiescence it will be exceedingly difficult to implement any comprehensive agreement with Israel; this therefore should be a concern of all who seek one. The growing chasm between the political elites and the refugees also portends greater instability, particularly should refugees or their advocates, despairing of the diplomatic process, seize the political initiative. But stability in and of itself is no answer: the marginalisation of refugees within their host societies has left them with little choice other than to fantasise about returning to their former homes in Israel.

This will be a significant challenge, especially since an ever-dwindling number of Palestinians – refugees or not – support the leadership’s political agenda. Nevertheless, much can and should be done:

• Calcified refugee camp leadership committees ought to be renewed, whether by election or selection. While their predicament is largely a reflection of the dysfunction of the overall political system, the relative isolation of the camps could facilitate a more representative local leadership. Particularly given the limited resources of the UN Relief and Works Agency (UNRWA) and the PLO/PA, credible local leadership is needed. While some, particularly in Israel and among entrenched Palestinian elites, might see empowered local leadership as a threat, the risks of instability absent such structures are far greater.
   
• Donors should continue to fund UNRWA. Its support cannot solve the refugee predicament, but the precipitous decline of services could exacerbate it and provoke regional instability.
   
• The Palestinian political elites could undertake measures to improve daily life for refugees and ensure that ongoing economic reforms in the Occupied Territories benefit rather than further marginalise them. Development done properly, in consultation and coordination with camp leaders, can overcome suspicions among refugees that its purpose is, as often charged, the “liquidation of the refugee question”.
   
• Palestinian elites, in the camps and beyond, and particularly in the West Bank, should combat the notion that refugee political claims can be maintained only through the relative isolation of camps from the broader social fabric. Refugees increasingly have come to realise that socio-economic deprivation is not the only way to maintain identity; reinvigorating the political structures to nurture it and further their aspirations would be more effective and humane.
   
• The current suspension of negotiations should be used as an opportunity to reconstruct the Palestinian national movement on a genuinely inclusive and representative basis. Crucial for reaching a two-state agreement, it is particularly important for the refugee question: individual refugees, in any foreseeable reality, will not all be afforded the unrestricted possibility to return to their original homes and villages. But they can be afforded a voice in their movement’s positions on the refugee question. With significant contradictions between the traditional Palestinian approach to the refugee question and the two-state paradigm, this is perhaps the only mechanism for identifying a compromise approach. Given the gap between private PLO negotiating positions and popular opinion, concessions on the refugee question, without bringing the public along, could prove fatal to the leadership’s weakened credibility.

These palliative and preparatory steps focus on the Palestinian side, not Israel, despite the fundamental role that it would play in any resolution of the refugee question. Like the report as a whole, they address what the Palestinian leadership and international community can do now, not only to improve the lives of refugees but also to prepare for eventual final status negotiations. Many of these measures cannot be undertaken without Israeli acquiescence, so Israelis seeking to advance a resolution of the refugee question – some options for which are touched upon in the report, but which of course will require refinement once talks begin – should seriously consider the steps proposed herein.

This report is one in a series by Crisis Group arguing that the peace process requires a fundamental re-conceptualisation, one that would begin with each of the two sides, as well as the mediator, re-evaluating and altering its own approach before resuming talks. Necessary steps include involving and addressing the needs of neglected constituencies; building a more effective Palestinian strategy, in which refugee agendas would play a clear role; and promoting a more diverse and capable mediation architecture. It behoves the three main sets of stakeholders – the Palestinian leadership, the Israeli government and the international community – to understand that their current approach, especially to the refugee question, is a recipe not only for failure and strife, but for undermining the two-state solution.

Jerusalem/Ramallah/Gaza City/Brussels, 9 October 2014