CENTRAL INTELLIGENCE AGENCY THE CURRENT SITUATION IN PALESTINE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A003000120004-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 27, 2016
• Document Release Date: December 3, 2013
• Sequence Number: 4
• Publication Date: October 20, 1947
• Content Type: REPORT

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CENTRAL INTELLIGENCE AGENCY
THE CURRENT SITUATION IN PALESTINE
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20 October 1947
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"This document contains information affecting the na-
tional defense of the United States within the meaning of
the Espionage Act, 50 U.S.C.,-31 and 32, as amended. Its
transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law."
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ORE 49
20 October 1947 Copy No 45
THE CURRENT SITUATION IN PALESTINE
1. THE STRATEGIC IMPORTANCE OF PALESTINE.
Palestine is a small, weak country whose war potential is almost nonexistent
but whose geographic position gives it a strategic 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 of wide;
spread civil and para-military strife, threatens the stability not only of Palestine but of
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 feel that the establishment of a Zionist state endangers their
sovereignty and independence, and they are therefore -deterrhined to oppose it with all
the means at their disposal. Even if this opposition does 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 of the Arab world
from one of evolution in cooperation with the West to one of revolution with the sup-
port of the USSR.
2. PROBABLE FUTURE DEVELOPMENTS.
The UN General Assembly is now attempting to arrive at a solution of the 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: (a)
a recommendation that Palestine be partitioned into independent Jewish and Arab
states; (b) a recommended solution which sets up a unitary 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 to predict which of these developments will occur. Although both
the US and the USSR have lent support to partition, there is still a possibility that,it
will not gain the necessary two-thirds majority in the UNGA. Even if the UNGA
Note: This paper has been coordinated with the intelligence organizations of the Departments of
State, Army, Navy, and Air Forces.
4)
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accepts the principle of partition, however, the problems of obtaining general agree-
ment on the boundaries between the Jewish and Arab states and of actually imple-
menting partition 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 the
political consequences, will severely strain the 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
devices at a time 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 the part
of the US public, to take a hurried stand in favor of the Zionists. Such a stand would
force even the more moderate Arabs into strong opposition to the US. US prestige in
the Moslem World, already seriously threatened, would be lost, and US strategic inter-
ests would be endangered by the instability in the whole areal.
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 UK Manda-
tory regime. This opposition has prevented the UK from implementing a Mandate
whose terms of reference, through conflicting interpretations, became contradictory
and consequently unworkable. The Palestine Government, even with the backing of
83,000 troops, has not succeeded in maintaining internal security; the British have been
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.
Extremist Zionist bands have been carrying on terrorist raids against the British
administration, and the 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, are solidly against the Mandatory regime.
In spite of the tension, there have been few cases of violence recently between Arabs
and Jews, for both groups appear to be awaiting the inevitable change which will result
from the UK's announced decision to leave Palestine. The 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 the 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 the Futuwwa and the Najjada, the two Arab para-military
organizations.
' In view of this situation, the UK has announced its intention of abandoning its
Mandate over Palestine. The strategic value of the country to the British has been
offset by administrative difficulties. The Mandate has proved a costly burden to the
UK in both civil and military expenditures, and in its present economic condition the
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UK can ill afford to maintain it. Censure of the UK's handling of the Palestine prob-
lem, moreover, is damaging 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 event of a UN settlement to which both Arabs and Jews agree, Britain is
willing to remain in Palestine throughout the necessary transition period. It is
unwilling, however, to implement by itself a UN 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 the absence of a UN 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 bf the two major groups of its population. The Arab majority of 1,200,000
is engaged almost exclusively in extensive cultivation which enables it to live at little
above subsistence level. The Jewish minority of 600,000 is engaged variously in inten-
sive mechanized cultivation or in small-scale industry. Although the economy is
primarily agricultural, Palestine is compelled to import 50 per cent of- its grain needs
and a large proportion of its other foods. Most of its arable land is now under cultiva-
tion, and 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 small indus-
tries are 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 of the manufacturing industries.
Total exports of those manufacturing industries which trade principally with the Arab
countries fell in value by 40 per cent in 1946 as compared with 1945. This decline was
due entirely to an 88 per cent reduction in the exports by these industries to the Arab
countries. Continued existence of many industrial enterprises dependent on export
markets will rest largely upon the ability of such enterprises to find outlets in some
other areas.
Since the war, the balance of payments position of Palestine has been steadily
growing worse, primarily as a result of a rapid increase of imports relative to exports.
The considerably widened gap between imports and exports has been met principally
by gifts and remittances from abroad and by drawing upon limited foreign exchange
reserves. To maintain the volume of imports at 1946 levels and to place the Palestinian
economy on a self-sustaining basis, marked adjustments in -various segments of the
economy will be required. It is conceivable that through irrigation projects the agri-
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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 Palestine
reach a modus vivendi. Until then, Palestine's chronic adverser balance of trade will be
further affected by the loss of the Arab market, and its economy will remain a philan-
thropic project, sustained primarily by US capital. The probable cessation of British
military expenditures will prove an added hardship to an already unbalanced economy.
5. FOREIGN AFFAIRS.
. .
Technically, Palestine's foreign affairs are under the complete control of Great
Britain, the Mandatory Power. Actually, however, both the Jewish and the Arab ele-
ments maintain 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 the UK. The Arabs eschew any participation in the govern-
ment but 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 can be a party 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 adherence to a number of conventions of a non-
controversial nature (e. g., the abolition of slavery, freedom of transit and navigation);
A few treaties have been concluded (e. g., a treaty with the US in 1924 regarding the
rights of nationals, and with Egypt in 1929 regarding the transit of Palestinian pilgrims
through Egyptian territory, and customs agreements exist with the neighboring Arab
states.
6. MILITARY SITUATION.
The British, the Jews, and the Arabs all maintain military or para-military organi-
zations in Palestine. The present British forces consist of an Airborne Division, an
Infantry Division, an Armored Division, an Infantry Brigade, and several nondivisional
units borrowed from the British-controlled Transjordan Frontier Force and the Arab
Legion. These field forces are distributed over the whole country. Together with a
large number of headquarters troops, they number 83,000.
The Jewish community has about 200,000 Omen and women with some degree of
military training, who are members of Hagana (the Jewish Agency defense force) ;
16,000 are on a full-time basis; and about 5,000 are fully equipped and fully trained
"shock troops." The two terrorist organizations, the Irgun Zvai Leumi and the .Stern
Gang, number approximately 8,000 and 500 respectively.
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There are two pait-military Arab organizations, the Futuwwa and the Najjada,
both of which are metre or less controlled by the Arab Higher Committee' under the
leadership of the Grand Mufti. They have approximately 30,000 ill-trained and poorly
armed members, but it has beeri estimated that an Arab force of 100,000 to 150,000
could be raised if sufficient arms could be imported.
Both the Jewish and, the Arab forces have been trained in terrorist and guerrilla
tactics for local political ends but have little more than small arms at their disposal.
Since the iecent 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 the 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 limited to a small textile industry, its potash, .and the
petroleum refinery at Haifa, which is fed by the Iraq Petroleum Company pipeline from
Iraq and which has an annual capacity of 27 million 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 the hos-
tility of both 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 Palestine against a major power; and until internal security is estab-
lished, Palestine would prove a weak base for a counteroffensive by the UK (or any
other power) anywhere in the Near East.
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U. S. GOVERNMENT PRINTING OFFICE
1784-8-1947
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