THE CURRENT SITUATION IN PALESTINE(ORE 49)

Created: 10/20/1947

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CENTRAL INTELLIGENCE AGENCY

THE CURRENT SITUATION IN PALESTINE

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the current situation in palestine

Strategic Importance or Palestine.

Palestinemall, weak country whose war potential Is almost nonexistent but whose geographic position givestrategic significance out of all proportion to Its size and wealth. This significance stems not only from its location at the eastern end of the Mediterranean, Its proximity to the Suez Canal and the fact that it Is an outlet for the oil of the Middle East, but also from the psychological problem posed by Irreconcilable claims of Arabs and Jews for hegemony over the country.

To preserve the US position in the Middle East and to counter Soviet Infiltration, political, economic, and social stability must be maintained in the area. However, the seemingly insoluble Palestine problem, because of the ever-present possibility ofcivil and para-military strife, threatens the stability not only of Palestine but ol the entire Arab world as well.

The petroleum resources of the Middle East are vitally important to US security; continuing access to those resources depends on friendly US relations with the Arab people as well as with their governments. The former cordial relations have already been seriously damaged by US support of the UNSCOP partition plan. Rightly or wrongly, the Arabs feci that the establishmentionist state endangers their sovereignty and Independence, and they are therefore determined to oppose it with all the means at their disposal Even If this opposition docs not result in the Immediate cancellation of US oil concessions In Arab lands. It will almost certainly lead to such unrest and instability that Soviet infiltration will increase and may eventually achieve the same result.

The Palestine issue is capable of changing the development ot the Arab world from one of evolution In cooperation with the West to one of revolution with theof the ussr.

Future Developments.

the un general Assembly is now attempting to arriveolutionhe Palestine problem; the outcome of its deliberations, and the part that the US plays therein, will vitally affect us security. three main developments in the unga are possible:ecommendation that Palestine be partitioned into independent jewish and Arab states;ecommended solution which setsnitary state, thereby Inevitably leaving the political initiative in Palestine with the arab majority; or (c) failure to reach any decision at all.

it is impossible lo predict which of these developments will occur. Although both the us and the ussr have lent support to partition, there isossibility that il will not gain the necessary two-thirds majority in the unga. even il the unga

Sole: This papei- lias been coordinated wil'i tiie intelligence orgar.iianoiis or ihetate. army. navy, and air kcrces.

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accepts the principle of partition, however, the problems of obtaining generalon the boundaries between the Jewish and Arab states and of actuallypartition may prove so formidable that concrete action by the UNGA may be impossible of attainment. The UK has announced that, barring an agreed solution between the Arabs and the Jews, It "must plan for an early withdrawal" of its armed forces and administration from Palestine. The British withdrawal, aside from thc political consequences, will severely strain thc economy of the country because of the cessation of substantial military expenditures. It appears possible, therefore, that within the next few months the Arabs and Jews in Palestine may be left to their own devicesime when economic hardship will Intensify their normal antagonisms. In such an eventuality, fighting between the two groups would almost certainly ensue, and both the Jews and Arabs would probably receive substantial aid from outside the country. The US may then be compelled, because of aroused sympathy on thc part of thc US public, tourried stand in favor of the Zionists,tand would force even thc more moderate Arabs into strong opposition to the US. US prestige in the Moslem World, already seriously threatened, would be lost, and US strategicwould be endangered by the instability In the whole area.

3. Political Situation.

The political situation in Palestine borders on chaos because of the Irreconcilable aims of the Arabs and the Jews and because of the opposition of both to the UKregime. This opposition has prevented the UK fromandate whose terms of reference, through conflicting Interpretations, became contradictory and consequently unworkable. The Palestine Government, even with the backing0 troops, has not succeeded in maintaining internal security; the Britishn unwilling to resort to ruthless measures of suppression, and the security forces, in their normal operations, have not had the backing of any major group within the country Extremisl Zionist bands have been carrying on terrorist raids against the British administration, and thc semi-official Jewish Agency has refused to cooperate with the government against the terrorists because of the government's restrictive immigration policy. Similarly, the Palestine Arabs, notwithstanding traditional factionalism among themselves, arc solidly against the Mandatory regime.

In spite of the tension, there have been few cases Of violence recently between Arabs and Jews, tor both groups appear to be awaiting the inevitable change which will result from the UK's announced decision to leave Palestine. Thc Jews are strengthening their defense force, the Hagana, and attempting by means legal and illegal to increase the number of Jewish immigrants The greatest Arab political force, the Arab Higher Committee, is attempting under thc leadership of the Grand Mufti to dominate, and thereby coordinate, all Arab political activity At the same time it is also attempting to enlarge and arm thc Futuwwa and the Najjada. the two Arab para-military organ iza lions.

In view of this situation, the UK has announced its intention o( abandoning its Mandate over Palestine. The strategic value ot the country to the British has been offset by admimstiative difficulties. The Mandate hasostly butden to the UK in both civil and military expenditures, and in its present economic condition the

lem. moreover, is dojruiglng to British prestige.

Since all previous attempts by the Mandatory Power to resolve Arab and Jewish claims In Palestine have failed, the British have asked the UN to study the problem. In the eventN settlement to which both Arabs and Jews agree. Britain Is willing to remain ln Palestine throughout the necessary transition period. It Is unwilling, however, to Implement byN settlement which requires the use of force. Furthermore, the British have reserved the right to abstain from participating in any UN settlement which they consider unjust, even if offered assistance by the UN in implementing the settlement. In tbe absenceN settlement of the Palestine Issue. Britain intends to withdraw Its forces and administration from the country, leaving Arabs and Jews to settle the issue between themselves.

4. Economic Situation.

The economy of Palestine rests on precarious foundations because of the paucity of its natural resources, its rapidly Increasing population, and the diametrically opposed political aims of the two major groups of its population. The Arab majoritys engaged almost exclusively In extensive cultivation which enables it to live at little above subsistence level. The Jewish minoritys engaged variously inmechanized cultivation or in small-scale industry. Although the economy is primarily agricultural, Palestine is compelled to Importer cent of its grain needsarge proportion of its other foods. Most of its arable land is now underand only extensive and costly irrigation and reclamation projects in the Huleh swamp area and the Negev desert could Increase the agricultural yield. Citrus fruits are Palestine's only substantial agricultural export.

With the exception of potash and agricultural products. Palestine's smallare dependent on imported raw materials. Established almost exclusively with Jewish capital and maintained by Jewish enterprise, these industries prospered during the war years because of UK military requirements in the Near East and because the normal source of supply for the Arab states was interrupted. Since the war. however, the reopening of the prewar sources of supply and the antagonism felt by the Arab world for the Zionists have seriously threatened many ol the manufacturing industries Total exports of those manufacturing industries which trade principally with the Arab countries fell in value byer cent6 as compared5 This decline was due entirely to aner cent reduction in the export* by these industries lo the Arab countries Continued existence of many industrial enterprises dependent on export markets will rest largely upon lhe ability of such enterprises to find outlets in some other areas.

Since the war. lhe balance of payments position of Palestine has been steadily growing worse, primarilyesultapid increase of imports relative to exports The considerably widened gap between imports and exporls lias been met principally by gifts and remittances from abroad and by drawing upon limited foreign exchange reserves To maintain the volume of imports6 levels and lo place the Palestinian economyelf-sustaining basis, marked adjustments in various segments ol the economy will be requited s conceivable lhat through irrigation projects lhe agn

cultural yield could be substantially Increased and that different Industries aligned to non-Arab markets might in time be developed. Major adjustments of this nature, however, would be very difficult to bring about. Until such adjustments are made, an important part of Palestine's industry will be dependent on Arab markets. Those markets, because of the Arab boycott and other factors, are for the most part closed to Jewish goods and will remain closed until the Arab world and the Jews of Palestineodus vivendi. Until then, Palestine's chronic adverso balance of trade will be further affected by the loss of the Arab market, and its economy will remain aproject, sustained primarily by US capital. The probable cessation of British military expenditures will prove an added hardship to an already unbalanced economy.

ArrAias.

Technically, Palestine's foreign affairs arc under the complete control of Great Britain, the Mandatory Power. Actually, however, both the Jewish and the Arabmaintain widespread open and clandestine relations with foreign powers and organizations to promote their respective and conflicting aspirations.

The Jewish Agency for Palestine, which enjoys semi-official status because of its recognition in the Mandate as the representative of the Jewish population, is an integral part of the World Zionist Organization and is closely tied to influential centers of Zionism In the US and thc UK. The Arabs eschew any participation in thcbut are closely connected individually with the Arab states and with the Arab League. Although Palestine is not an independent state and therefore is not eligible for membership in the Arab League, Palestinian observers attend League meetings and take part in discussions.

Palestine canarty to international agreements, conventions, or treaties only when the UK signs such pacts on Palestine's behalf. Officially, foreign relations have been restricted for the most part to adherenceumber of conventionson-controversial nature (e, g. the abolition of slavery, freedom of transit andew treaties have been concludedreaty with the US4 regarding the rights of nationals, and with Egypt9 regarding the transit of Palestinian pilgrims through Egyptian territory, and customs agreements exist with thc neighboring Arab states.

Situation.

The British, thc Jews, and the Arabs all maintain military or para-militaryin Palestine. The present British forces consist ol an Airborne Division, an Infantry Division, an Armored Division, an Infantry Brigade, and several nondivisional units borrowed from the British-controlled Transjordan Fronlier Force and the Arab Legion These field forces are distributed over the whole country Togetherarge number of headquarters troops, they

The Jewish community hasen and women with some degree of military training, who arc members of Hagana <the Jewish Agency defense0 areull-time basis, andre fully equipped and fully trained "shockhe two terrorist oi sanitations, the Irgun Xvai Leumi and the Stern Gang, numberespectively.

There arc two para-military Arab organizations, thc Futuwwa and the NaJJada, both of which are more or less controlled by the Arab Higher Committee under the leadership ol the Grand Mufti. They have0 ill-trained and poorly armed members, but It has been estimated that an Arab forceould be raised if sufficient arms could be imported.

Both the Jewish and thc Arab forces have been trained in terrorist and guerrilla tactics for local political ends but have little more than small arms ot their disposal. Since the recent announcement by the UK Government that it intends to withdraw from Palestine, in the event that the Arabs and Jews fail to agree on the solution of the Palestine problem, both communities have intensified their recruiting activities. Neither of their respective forces, however, will increase in military potential unless they can be armed, supplied, and financed from foreign sources. In thc event of open hostilities between the Arabs and the Jews, the aid In men and arms which the Arabs will receive from the neighboring Arab states will exceed, particularly In the early stages of the conflict, any similar aid which the Jews might import

Its industrial potential Is limitedmall textile Industry. Its potash, and thc petroleum refinery ot Haifa, which is fed by the Iraq Petroleum Company pipeline from Iraq and which has an annual capacity ofillion barrels The textile industry, as well as the refinery, is dependent on imported raw materials

In view of the violent antagonism between the Arabs and the Jews and of theof bath communities to the British Mandatory regime, the entire British force In Palestine Is engaged in maintaining internal security. Unless the Internal political situation changes radically, these British troops, even with substantial reinforcements, could not defend Palestineajor power; and until internal security IsPalestine wouldeak baseountcroflensivc by the UK (or any other power) anywhere in the Near East

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