Press Release
Department of Public Information · News Coverage Service · New York

Fifty-first General Assembly
Fourth Committee
19th Meeting (AM)
22 November 1996



Commissioner-General Says Agency Imperilled by Budget Deficits;
Palestine Observer Notes 'Unprecedented' Declines in Living Conditions

The relationship between the work of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) and the prospects for the Middle East peace process was addressed this morning, as the Fourth Committee (Special Political and Decolonization) took up the report of the Agency for the period 1 July 1995 to 30 June 1996.

The Commissioner-General of the UNRWA, Peter Hansen, told the Committee that, despite the imposition of austerity measures for several years to reduce expenses, the Agency had experienced chronic budget deficits that imperilled continuation of essential services to the Palestine refugee population. If it suffered deficits in the future, services would have to be cut outright. That might be viewed as part of a plan to withdraw the aid agency entirely.

The observer for Palestine added that, at a time when the peace process faced serious setbacks, the living conditions of the Palestinian people had declined to unprecedented low levels, in part because of Israel's closing of the West Bank this year. That closure had also adversely affected the Agency's ability to function.

The representative of Israel said her country was proud of its good working relations with the UNRWA, but consideration of the Agency was being used as a political tool against the new Government of Israel, which was being prejudged as an opponent of the peace process. The number of UNRWA resolutions should be reduced to one that directly related to the Agency's humanitarian tasks.

The representative of Jordan said that solving the difficulties of the Palestine refugees was central to achieving a lasting Middle East peace. The treaty between Jordan and Israel had reaffirmed the rights of the Palestinian people. He called for support for the Agency's efforts to provide Palestine refugees at least a minimal degree of decency.

The representative of Syria said the Palestine refugees now faced an economic embargo, the demolition of their houses, and the closing of schools. The Agency's financial difficulties reflected the failure of the donor States, which was endangering all that had been accomplished in the five years since the Madrid conference.

Statements were also made by the representatives of Norway, Canada, Turkey, Japan, China, Egypt, Ghana, Libya, Yemen, Viet Nam, Bangladesh, United Arab Emirates, United States, as well as by the observers of the Holy See and Switzerland. The Rapporteur of the Working Group on UNRWA Financing also made a statement.

The Committee will meet again at 3:00 p.m. today to continue its general debate on the UNRWA.

The Fourth Committee (Special Political and Decolonization) met this morning to begin consideration of the activities of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). It has before it the report of the Agency's Commissioner-General covering the period from 1 July 1995 to 30 June 1996, as well as his report on the financial crisis of the Agency. Other documents before the Committee address the following matters: persons displaced as a result of the June 1967 and subsequent hostilities; offers by Member States of grants and scholarships for Palestine refugees; revenues derived from Palestine refugees' properties; report of the United Nations Conciliation Commission for Palestine; and the University of Jerusalem "Al-Quds" for Palestine refugees. The report of the working group on the financing of the UNRWA is also before the Committee.

According to the report of the Commissioner-General of the UNRWA (document A/51/13), the last year saw continued emphasis on support for the Middle East peace process, and the improvement of socio- economic conditions within the Palestine refugee community. However, advances in the peace process, including the redeployment of Israeli forces in the West Bank and the holding of Palestinian elections, were followed by escalating violence against Israelis in early 1996, and the subsequent closing of the West Bank and Gaza Strip. Such security-related restrictions interfered with the Agency's operations, as it completed the historic relocation of its headquarters to its area of operations.

At mid-1996, the outlook for the Palestine refugees and the Agency was less promising than it had been one year earlier, the report notes. The turning point that had appeared on the horizon at that time did not materialize. The Agency was confronted by mounting concerns about security, emphasis on contradictory interests among parties, and increased questioning of the peace process. The Agency was simultaneously caught between growing humanitarian needs of the Palestine population, and the limits on the resources available to it.

The report states that the Agency's financial position grew increasingly serious with a fourth consecutive structural deficit foreseen for 1996, and financing for the regular programmes coming under increasing strain. Regular UNRWA programmes provided education, health and relief services to 3.3 million Palestine refugees in Jordan, Lebanon, Syria, the West Bank and Gaza Strip. Its 637 schools accommodated 421,854 pupils, and a network of 123 out-patient facilities handled 6.6 million visits.

The Agency's commitment to the peace process was demonstrated in its Peace Implementation Programme (PIP), whose level of activity was beginning to represent an increasingly large part of all its activities on the ground, the report states. Pledges and contributions of $68.9 million received last year led to a total of $192.6 million by mid-1996 since the Agency's establishment. Funds were used to improve infrastructure, create employment, and enhance socio-economic conditions in the five fields of operations. The Programme also supported rehabilitation of refugee shelters, provision of sewerage and drainage systems in camps and other activities.

The report states that in the first half of the reporting period, progress continued towards the goals of the Israel-Palestine Liberation Organization (PLO) Declaration of Principles on Self- Government Arrangements of 13 September 1993, and subsequent implementation agreements. Under the superseding Interim Agreement on the West Bank and Gaza Strip of 28 September 1995, Israeli forces began redeploying out of several West Bank cities and 450 towns and villages, where the Palestinian Police Force assumed security responsibilities. The 20 January election of the Palestinian Council broadened self-government.

The UNRWA supported those elections in a number of ways to reinforce the achievements of the peace process and expand opportunities to strengthen the Palestinian Authority-UNRWA partnership, the report goes on. "For the first time since 1967 most Palestinians in the West Bank were no longer in direct contact with Israeli forces and were largely able to manage their own affairs", the report states.

Despite the Israeli Prime Minister's assassination and escalating violence late in 1995, optimism continued to prevail respecting the peace process, the report states. However, the series of bomb attacks by Palestinians in February and March, which killed 56 Israelis, reversed that momentum. Israel postponed indefinitely negotiations and redeployment of military forces in Hebron, which was to have been completed by March, and began to separate the West Bank from Israel. By mid-1996, the peace process was stalled and future steps remained unclear.

"Certain developments after the end of the reporting period led the Agency to hope that official negotiations on the peace process would soon resume", the report states. West Bank clashes between Palestinian civilians and Israeli forces declined markedly during the period under review, and 17 Palestinians were killed by Israeli soldiers and settlers, as compared to 86 in the preceding reporting period.

Nevertheless, tensions remained, as Israeli authorities continued to impose security measures, including the demolition of houses, arrests, curfews and temporary closures of educational and religious institutions, the report continues. "At the close of the reporting period, some 3,200 Palestinians, including many refugees, remained in detention."

Under the Interim Agreement, international observers from the Temporary International Presence arrived in Hebron in May, where clashes between Palestinians and Israeli soldiers and settlers continued, the report goes on to say. As the closure of the West Bank and Gaza Strip during nearly half of the reporting period inhibited economic activity, exacerbated unemployment, and contributed to socio-economic deterioration, emergency job creation for 2,376 individuals was provided under PIP.

The virtual halt of the Agency's West Bank operations during the 11-day closure in March, following bomb attacks on Israeli targets, represented a departure from agreements with Israeli authorities that were in effect since 1967, the report states. The Agency nevertheless continued to cooperate with the Palestinian Authority. Assistance included relinquishment of an uninhabited refugee camp site at Nu'eima in the Jericho area to the Palestinian Authority in 1995, and technical support for a model village in that camp. Classrooms and teachers for 4,100 children of refugees, and training courses for the Authority's education department, were also provided.

According to the report, services were also provided to maintain 25 schools, to build 15 playgrounds, to maintain and repair sewers and storm drains, and to improve human resources in maternal health and family planning. The Agency disbursed a total of $38.9 million for members of the Palestinian Police from September 1994 through July 1995. It also emphasized senior-level contact between programme departments responsible for education, health and relief and social services sectors, and their counterparts within the Palestinian Authority.

The UNRWA entered a new phase in its history with the return of its headquarters to the area of operations, which began in February, the report states. In July 1996, the Office of the Commissioner- General, as well as the Administration, Legal and Finance, External Relations and Public Information Departments were relocated from Vienna to Gaza. Other departments joined the Agency's Amman headquarters. The resulting streamlining and integration of headquarters and field operations, effected longer-term cost-savings.

The report states that the Agency's financial situation continued to worsen during the reporting period with an $8.4 million deficit for 1995, and a fourth consecutive deficit expected for 1996. The combined effect of austerity measures and the lack of sufficient funds prevented Agency services from expanding to meet demand. Belt-tightening efforts progressively downgraded the level of services and generated longer-term costs, and cumulatively eroded the ability to maintain core functions for the refugee population. The resulting choice facing the Agency was to either drift towards insolvency, or to decide to withdraw entirely from certain core programmes or other areas.

In resolution 50/28 A, the General Assembly noted with profound concern that the structural deficit problem confronting the Agency portended an almost certain decline in living conditions of the Palestine refugees and therefore had possible consequences for the peace process. An extraordinary meeting was scheduled for September to address those issues. The Commissioner-General decided to undertake a management review with the assistance of external consultants to energize institutional reforms that would make the UNRWA more adaptable and more responsive to the needs of Palestine refugees.

To promote self-reliance of the refugee community and ensure the longer-term viability of UNRWA programmes and services, the report states that the Agency sought to involve refugees actively in providing services and assuming greater responsibility for their own future. As a result of institution-building and other initiatives, local committees managed over 60 per cent of the women's programme centres as well as community rehabilitation and youth activity centres.

The report states that the UNRWA's relationship with the Government of Jordan remained excellent, where the refugee population, the largest in any field, continued to enjoy access to government services and a relatively high standard of living. The Government of Jordan reported expenditure of $263 million on services to Palestine refugees and displaced persons during the reporting period for education, fuel subsidies, health care, electricity subsidies, ration subsidies, security and defence, social services, water and sewerage networks and other services in camps.

"There was no improvement in socio-economic conditions among the Palestine refugee population in Lebanon, which continued to face limited access to public sector services, constraints on commercial activity and restrictions in many sectors of employment", the report states. Poor living and housing conditions in camps were reflected in high demand for special hardship assistance and shelter rehabilitation. Initial steps were taken to improve environmental health conditions in eight camps, and the internal sewerage scheme in El-Buss camp was completed.

The August 1995 decision by the Government of Libya that Palestinians should leave the country had special impact on Lebanon, where many of them had lived, the report continues. Of concern were new visa requirements for Palestine refugees in Lebanon and a new rent law. The Agency maintained a constructive relationship with the Lebanese Government, which reported expenses on behalf of Palestine refugees of $297,000 on camp sites in the period under review. Ongoing Agency programmes in Lebanon were budgeted at $39.9 million for 1996.

The report states that the security situation deteriorated markedly as a result of the escalated conflict in Israeli- controlled south Lebanon. Following an escalation of violence, in which 300,000 Lebanese civilians fled their homes as a result of fighting in south Lebanon, the UNRWA undertook an emergency relief operation. Basic food commodities and medical and other supplies were distributed over a three-week period to nearly 13,000 refugee families in the Saida and Tyre areas, with armed escort provided by the United Nations Interim Force in Lebanon (UNIFIL).

The Syrian Government reported expenditures on behalf of Palestine refugees of $37.8 million in the reporting period, and the Agency's 1996 budget for ongoing programmes in Syria was $27.3 million. Particular attention was paid to the health sector, where the Agency cooperated with the Health Ministry in disease surveillance and family planning.

The UNRWA also maintained close cooperation with the United Nations Educational, Scientific and Cultural Organization (UNESCO) and a number of other United Nations agencies, the report continues. Special inter-agency initiatives during the reporting period included joint monitoring by the UNRWA and the Office of the United Nations High Commissioner for Refugees (UNHCR) of the situation of Palestinians required to leave Libya, support by UNIFIL for UNRWA operations in Lebanon and other matters. The UNRWA also maintained ongoing contacts with the League of Arab States, the Organization of the Islamic Conference (OIC) and benefited from cooperation with local and international non-governmental organizations.

Also before the Committee is the special report of the Commissioner-General of the UNRWA on the critical state of the UNRWA's finances (document A/51/495), conveyed in a note of the Secretary-General. The report draws attention to the Agency's serious structural deficit, the impact of austerity measures undertaken to reduce that deficit on the quality of services to Palestine refugees, and the implications of reduced services for the stability of the region.

In his note, the Secretary-General writes that funds pledged at an extraordinary meeting of major donors and host governments held in Amman on 23 September would allow the Agency to meet minimum obligations for 1996. However, the structural deficit would continue into future years unless the gap between the essential needs of Palestine refugees and resources is closed. The Secretary- General emphasizes his support for the Commissioner-General's appeal for adequate funds to bridge the projected 1997 gap and deal with the Agency's deficit.

The Commissioner-General writes that for the first time in its history, the UNRWA suffered continuing shortfalls in its regular budget in recent years, due mainly to stagnant or declining contributions and increasing needs, resulting from demographic growth, new refugee registrations and inflation. The deficit and the Agency's austerity measures affected the quality of services provided to the 3.3 million Palestine refugees registered with the Agency.

At an extraordinary meeting of major donors and host countries, it had been pointed out that in light of the UNRWA's unique role in the region, the deterioration or reduction of its services would be potentially destabilizing, the report states. That would be immediately interpreted as reflecting a weakening of the commitment of the international community to resolve the problem of the Palestine refugees.

When peace negotiations had been in full swing, the report continues, the international community had recognized the importance of demonstrating the benefits of peace for Palestine refugees in the Gaza Strip and West Bank, as well as in Jordan, Lebanon and Syria. Donors had generously responded to the Agency's Peace Implementation Programme by providing funds for special projects in all fields. However, with the peace process having reached a more delicate stage in its evolution, it was more critical that Palestine refugees be able to sustain their hopes for a successful outcome.

Pledges at the Amman meeting totalled almost $15 million, of which $11.25 million was for the UNRWA's regular budget, the Commissioner-General writes, which, together with promised funds subject to parliamentary approval, would allow the Agency to meet its minimum obligations for 1996. It was hoped that funds made available by the international community, together with the Agency's internal reforms, would do away with the
structural deficit and set the Agency back on the right track.

Also before the Committee is the report of the working group on UNRWA financing (document A/51/509), containing information on the origin and background of the working group, its activities during 1996, the financial situation of the UNRWA and concluding remarks.

The report states that two meetings of the working group were held on 13 September and 14 October, to consider recent developments in the UNRWA's financial situation and to prepare the report to the Assembly. The Agency ended the 1994-1995 biennium with an adjusted deficit of $14.4 million in its regular budget. The third consecutive annual deficit reduced the Agency's working capital by more than half, despite efforts adopted to bring income and expenditure in line. Cost-saving austerity measures imposed from 1993 to 1996 were now having a detrimental impact on the quality of services to the refugee population.

Two meetings of major donor and host governments were held in Amman, on 8 and 9 May and 23 September 1996, to address the Agency's financial situation, the report states. About $14 million was pledged in support of the Agency's work in 1996.

The report concludes with the working group's expression of concern for the financial situation facing the Agency at the end of 1996. The depletion of its working capital and the emergence of the structural deficit had serious implications for both the Agency and the Palestine refugees.

It states, "The working group feels that the General Assembly must be more actively engaged than in previous years in ensuring that UNRWA is given the resources it needs to fulfil the mandate which the international community has given it", particularly in view of the natural growth in the refugee population, worsening socio-economic conditions and the potentially destabilizing effect on an already volatile political situation of any significant reduction in the Agency's activities.

The working group applauds steps already taken by the Commissioner-General to improve the UNRWA's internal management. It calls for greater clarity regarding harmonization of the UNRWA's activities and the Palestinian Authority and host governments. "In the meantime, the working group believes that UNRWA should be circumspect about taking on additional capital commitments which strain its existing resources and which will lead to recurrent cost implications." The report further states that continuation of chronic structural deficits could force the Agency to make cuts and reductions in its core programme areas of education, health care and social services.

Governments are urged to consider making additional contributions to finance Agency deficits and to ensure that support of emergency and special programmes, the Peace Implementation Programme, the European Gaza Hospital Project and the costs of relocation of the Agency's Vienna headquarters to the area of operations will not divert or decrease contributions to the Agency's regular programmes.

The Secretary-General's report on revenues derived from Palestine refugees' properties (document A/51/371) states that he received a reply from Israel dated 3 May in response to his request that the Israeli Government provide information on the steps it had taken to implement relevant provisions of Assembly resolution 50/28 A to G of 6 December 1995, which called on Israel to render all facilities and assistance to the Secretary-General in protecting Arab property, assets and property rights in Israel and to establish a fund for the receipt of income derived on behalf of the rightful owners.

In its reply, Israel reiterates that while the number of resolutions regarding the UNRWA has been reduced in the past years from 10 to 7, the content of those resolutions remains occupied with political issues irrelevant to the work for which the UNRWA was responsible, and thus detached from the new reality. It states that the UNRWA can play an important role in promoting the social and economic advancement foreseen in the agreements between Israel and the PLO, and looks forward to continuing to cooperate with the Agency.

The report of the Secretary-General on offers by Member States of grants and scholarships for higher education, including vocational training, for Palestine refugees (document A/51/370), states that in 1995-1996 Japan awarded 10 fellowships through the UNRWA. The Government of Switzerland awarded scholarships to Palestine refugees through the UNRWA's scholarship programme. Sixty-two students graduated between 1993 and 1995; 221 students from the UNRWA area of operation were still pursuing their university studies in 1995-1996.

The UNESCO granted 175 fellowships to Palestine refugee educational staff of the UNRWA between 1981 and 1994 and offered five new awards to Palestinian students since October 1995. In 1995, the World Health Organization (WHO) received 43 applications from the West Bank and Gaza Strip for fellowships scheduled to begin in late 1995. Three applications submitted to the World Intellectual Property Organization (WIPO) to train UNRWA staff members were being considered for courses conducted during 1995-1996 and two applications were being considered for 1996-1997.

Four scholarships were offered by the United World College of the Adriatic in Italy, Pearson College in Canada, Armand Hammer College in the United States and the Li Po Chun in Hong Kong in 1996.

Also before the Committee is a report of the Secretary-General on the matter of the University of Jerusalem "Al-Quds" for Palestine refugees (document A/51/476). The University's establishment had first been requested by the Assembly in its resolution 36/144 G. In his report, the Secretary-General reviews his efforts to complete a functional feasibility study on establishing the proposed university. He requested that the Government of Israel facilitate the visit of a United Nations expert, who would assist the Secretary-General in the preparation of that study. The Acting Permanent Representative of Israel had sent a reply to that request in which Israel's opposition to the university was reiterated.

The report of the Secretary-General on persons displaced as a result of June 1967 and subsequent hostilities (document A/51/369) reiterates that the Agency was not involved in any arrangements for the return of refugees, nor was it involved in any arrangements for the return of displaced persons who were not registered as refugees. Its information is based on requests by returning registered refugees for transfer of their entitlements for services to the areas to which they have returned and subsequent correction of records. So far as is known to the Agency, between 1 July 1995 and 30 June, 784 refugees registered with the UNRWA returned to the West Bank and 329 to the Gaza Strip. Thus, the estimated number of displaced registered refugees who were known by the Agency to have returned to the occupied territories since June 1967 was about 15,280. The Agency was unable to estimate the total number of displaced inhabitants who had returned.


PETER HANSEN, Commissioner-General for the UNRWA, said the Agency administered, with a very large staff composed mainly of Palestine refugees, an education and health system and a social support system, which touched on the lives of every Palestine refugee in the region.

Because of the Agency's services, there was hardly a country in the world today with a higher rate of literacy than the Palestine refugee population, he said. While that quality of literacy and high level of education reflected the quality of the Agency's schools, it was also the result of the great motivation of the Palestinian students. The Agency's health system had achieved infant mortality rates lower than in any other Arab country.

Donors should recall that the conditions in which the refugees lived were extremely harsh, he continued. He had never seen refugees enduring a greater level of suffering than the Palestine refugees in Lebanon. Theirs was not just a physical deprivation. Rather, it was the suffering of having to live a life without hope. Life in the Gaza Strip, where the UNRWA now had its headquarters, also involved great levels of hardship and deprivation. The difficulties of maintaining the historical levels of services provided to refugees was becoming more and more difficult, and
efforts to reduce services due to financial difficulties were often greeted with suspicion. Some suspected an "international plot" to withdraw the aid agency entirely.

In the period under review, he said, the Agency had moved its headquarters from Vienna to Gaza. The Agency had now overcome the difficulties associated with the move and was operating from that location. Unfortunately, member countries that had been keen on effecting that move had not provided the necessary funding. The Agency still needed $300 million to cover the cost of that move. The Agency had also undertaken a reorganization to achieve higher levels of efficiency, which would be reported to donor countries during an upcoming meeting in Amman.

During the period, there had been strong ups and downs in the emotional climate of the region, he said. Prior to 1996, high hopes and optimism had existed. Since then, the climate had declined, reaching its nadir with the events of February and March, which cost many innocent lives. In September of this year, conditions worsened considerably with the outbreak of fighting in areas of Gaza and the West Bank. Those events, and the subsequent closures of Gaza and the West Bank, had severely affected the refugees.

He said that living conditions and income had declined fully 40 per cent for the refugees in the West Bank and Gaza. Unemployment and underemployment in Gaza were at 60 per cent. More people were unemployed than employed. "The social fabric is being torn, and it is becoming more difficult to meet the needs of the refugees under these circumstances", he said. The Agency had also suffered the same difficulties that the refugees did, and the effect had been to diminish the effectiveness of the Agency.

The Israeli Government had made efforts to minimize the effects of its measures, he added, but it had a long way to go to fulfil its entire obligations in the area. The Agency had been able to launch job creation in the region, but there was no solution possible within the confines of humanitarian aid alone. Only a political solution could reimpose a degree of normalcy in the area.

Well over half of the Palestine population lived in Jordan, Lebanon and Syria, where the Agency expended more than half its budget, Mr. Hansen said. The Agency was having difficulty even maintaining normal levels of services. The Agency was involved in helping redress the losses the refugees had suffered. Unfortunately, the international community was not fully doing that. The UNRWA's budget did receive support and had, in fact, been increasing, but its activities had not kept pace with increasing needs.

He said that if the Agency suffered any additional deficits in the future, services would have to be cut outright. The Agency relied solely on contributions. Unlike a government, it could not print money. "The Agency cannot go on with deficits", he said. "It cannot also go on with austerity measures." The latest round of austerity measures had been implemented in June. Unfortunately, such measures did not save money in the long run. Savings on vehicle maintenance, for example, would mean greater costs in the future. Austerity had also meant that teachers could
not be hired for schools that already existed.

At a meeting of donors in September, enough funds had been pledged to permit the Agency to hobble to the end of 1996, he said. Next year, the Agency faced a deficit of some $60 million. That would result in the need not merely to cut back, but to amputate the limbs of the Agency. "Consider how that will look to the refugees", he suggested. He hoped that it would be possible to avoid such cuts and "amputations", and, more importantly, to
avoid sending the refugees the message that the international community had ceased to care.

SVEIN AASS (Norway), Rapporteur of the Working Group on the Financing of the UNRWA, said the Agency was facing an unprecedented financial crisis. Unless ways were found to address its structural deficit, the UNRWA would be forced to further reduce its services. Financial starvation might even put an end to the Agency's work altogether. It was shocking that one of the options put forward by the Secretary-General was for the Agency "to keep going until all available funds were used up, then declare itself insolvent and go out of business". That was not a feasible option, given the dire importance of UNRWA's services.

He recalled that, in an effort to address the crisis, the Commissioner-General had convened an extraordinary meeting for major donors, host governments and the Palestinian Authority in September. Despite the application of austerity measures, the UNRWA had ended the 1994-1995 biennium with an adjusted deficit of $14.4 million in its regular budget. Contributions from donors lagged behind the Agency's needs, which were increasing due to inflation and the rising numbers of UNRWA's beneficiaries.

He urged all governments to make generous contributions to the Agency, so it could continue its services uninterrupted and, if possible, restore services cut as the result of the austerity measures. Socio-economic conditions among the refugees were worsening. In view of the potentially destabilizing effect any reduction in the Agency's activities might have on an already volatile political situation, he urged the international community to increase its support.

NASSER AL-KIDWA, Permanent Observer for Palestine, said that like any other refugees, the Palestine refugees had inalienable rights to their homes and properties. That fact had been annually reaffirmed by the General Assembly since 1948. Further, displaced persons had the right to return to the territory occupied by Israel, and the right to Palestinian nationality and citizenship.

He said the UNRWA performed valuable work, which should continue until a definitive solution to the problem was reached. A positive and constructive relationship existed between the Palestinian side and the Agency at all levels. As mentioned in the Commissioner-General's report, there had been some positive political developments in the beginning of the most recent reporting period. However, the situation had since deteriorated. The peace process now faced serious obstacles and the socio-economic conditions of the Palestinian people had declined to unprecedented
low levels. That decline had been the result of Israeli practices, particularly the closure of the Palestinian territory, which had also impacted adversely on the Agency's ability to function.

He expressed appreciation to the host countries for their efforts and contributions in carrying the burden of the Palestine refugees, and to those who had contributed to the Agency's budget. He appealed for continuing and augmented contributions.

ROBERT FOWLER (Canada) said the UNRWA was providing precious services for the refugees. The international community had a duty to ensure that the gains in the Middle East peace process were preserved, and to ensure that existing agreements and obligations were fulfilled.

The UNRWA had been making efforts to deal with its budgetary problems, he continued. At the extraordinary meeting, sufficient funds had been pledged to allow the Agency to overcome its financial situation for the year. He welcomed the Commissioner-General's efforts to address the structural problems faced by the Agency. The Agency must be flexible in its methods of delivering services. The international donor base must be expanded to serve the needs of the refugees and to demonstrate the international community's commitment to permanently resolving the refugee question.

He said that when he visited the Palestine refugees he had witnessed particularly horrific conditions in Lebanon. It was intolerable that successive generations of refugees suffered under such conditions. In the interests of peace, he urged Israel to address its security concerns in ways that did not have such severe consequences for the economic situation in the occupied territories and which did not impede the work of UNRWA
staff. The Agency played a vital role in regard to the refugee question, and it deserved the support of all members of the international community interested in peace in the Middle East.

HASAN ABU-NIMAH (Jordan) said that solving the difficulties of the Palestine refugees, which included resolving their right to return or to compensation, was the main pillar for achieving a lasting Middle East peace. The treaty between Jordan and Israel had reaffirmed those rights, which was also the reason the Agency had been created in 1948. It was vitally important that the UNRWA continue its mission. To do so, the Agency required broad support from the international community, so that shortfalls would not create a vacuum in which despair would dwell.

He said his country was intimately involved in the Palestinian issue. It hosted about 40 per cent of refugees registered with the Agency, and was the second largest provider of humanitarian services, second only to the Agency itself. He called on the international community to support Jordan's and the Agency's efforts to allow the Palestine refugees to live in at least a minimal degree of decency.

He said that the transfer of the Agency's office to Gaza had improved its performance in the five regions where it operated. Host countries and donors should increase their contributions to keep pace with the 5 per cent increase in the number of refugees. If that were not done, financial problems could affect services and the dignity of the refugees. A solution should be based on international law and already existing resolutions. He reiterated his country's support for the noble mission of Mr. Hansen and his staff, who were fulfilling their mission under very harsh conditions.

BABUR HIZLAN (Turkey) said it was obvious that the deficit facing the UNRWA had continued to increase. It had now reached a critical point that endangered the Agency's existence. All possible reductions had been made. Further reductions would involve services already being maintained at the bare minimum necessary. The Agency provided food, health, and education. Who among the delegates would decide which of those would be reduced? he asked. A special effort by donors and potential donors at the pledging conference on 5 December would be welcome.

He expressed deep dismay at the setbacks in the peace process. His country ardently supported that process. The ordeal of the Palestine refugees could only be ended by a peaceful settlement. He was prepared to work with all parties committed to a just solution based on Security Council resolutions 242 (1967) and 338 (1973).

TOSHIHIRO TAKAHASHI (Japan) said he appreciated the vital support the UNRWA provided for the more than 3 million Palestine refugees, especially its efforts during the closure of the West Bank and Gaza Strip. He welcomed the transfer of the UNRWA office to its area of operations. His country actively supported international efforts to achieve a lasting settlement. He expressed concern that recent rising tension between Israel and the Palestinians was jeopardizing the peace process.

He said it was necessary to maintain such practices as safe passage between the West Bank and the Gaza Strip and Israel. The continuing closure of the West Bank and Gaza Strip were imposing great economic difficulty. "While it is necessary for Israel to ensure national security, it must not do so by placing unreasonable burdens on the Palestine people", he said. He hoped that Israel would take immediate measures to lift the closure.

In light of the current problems, his country had recently provided, through the UNRWA, $7.3 million worth of emergency food aid to the Gaza Strip and West Bank. Japan had, since 1993, disbursed about $230 million to Palestine refugees through the UNRWA. The financial deficit facing the Agency should be addressed with the greatest urgency. Supporting the refugees was an important means for expressing support for the Middle East peace process. While he welcomed the efforts to reduce expenses, the root cause of the Agency's problem demanded expansion of its donor base and enhancing transparency in its regular budget.

HE YAFEI (China) welcomed the move of UNRWA's headquarters from Vienna to Gaza. The move expressed UNRWA's commitment to the peace and development of Palestine, and was a symbol of confidence in the Government of the Palestinian Authority.

The refugee problem in the Middle East remained unsolved after a long period of time, he continued. The situation was now more complex and volatile than before, which further worsened the situation of the refugees. He hoped all concerned parties would strengthen their cooperation with the Agency and engage in political negotiations to enable the Palestinian people to enjoy peace.

He said his country favoured the reform of the UNRWA to increase its capacity to serve the refugees. The recently held extraordinary meeting was a useful attempt to strengthen the Agency's cooperation with concerned parties. His Government had supported the Agency's work for many years, and would continue to do so in 1997. He hoped that through joint efforts, the UNRWA would overcome its financial difficulties and expand its important

HOSSAM ZAKI (Egypt) said that until recently the peace process had consistently made progress. That fact had given the international community hope that the matter of the Palestine refugees would eventually be settled. However, such hope was now threatened with extinction. The Israeli Government's recent actions had damaged the hope of the Palestinian people that they would be able to establish their own State on their own land, with a corresponding return of refugees.

The services of the UNRWA to the refugees had been critical over the years, he said. He hoped moving the headquarters to Gaza would allow it to assume an even greater role in that regard. On the Agency's critical financial situation, he said donor and pledging States had continually failed to pay their contributions. The peace process was not over yet. The Palestinian people faced continuing problems. The international community must not abandon the Palestinian people, nor leave them alone in a difficult financial, social and political situation. Health institutions and other services must be established through voluntary contributions. The UNRWA was foremost among service agencies in dealing with the Palestinian reality.

The closure of the Palestinian territories by the Israeli Government had resulted in numerous adverse effects, he continued. Closure also affected the Agency adversely. The policy must be halted and closure lifted unconditionally. His country strongly supported UNRWA's work and had recently decided to double its contributions to the Agency. He called on other States and donors to assist the Palestinian people in achieving their full rights.

YAKUBU ABDULAI (Ghana) said the Agency had been founded to prevent starvation and distress among Palestine refugees and to further peace and stability. Supported by voluntary contributions, the Agency provided education, training, health, relief and other services. The Working Group on the Financing of the UNRWA had been in effect since the Agency's formation, which clearly indicated that its fiscal situation was a continuing problem. The Peace Implementation Programme (PIP) had been introduced to make the results of the peace process felt at a social level. Under PIP, an investment programme was to be undertaken to develop infrastructure, improve living conditions, and create employment opportunities in refugee communities. Despite dwindling resources, the Agency had been called upon to implement the Programme. He hoped that the Agency's move to Gaza would help it pursue its mandate in a more cost-effective fashion.

He said it was essential to save the Agency from bankruptcy by replenishing the General Fund through additional support. He hoped that the situation described in the reports before the Committee would inspire all countries to contribute generously. Support for the UNRWA during a crucial period in the Middle East peace process was also support for the advancement of peace.

HUSNI ALMUDIR (Libya) condemned the closing of the West Bank and Gaza Strip by Israeli authorities. The right of return for the Palestine refugees was the normal right of any person expelled from his country. There were no people in the world today that had suffered more than the Palestinian people. He said statements in the report of the Commissioner-General maintained that Libya, in August 1995, had stated that Palestine refugees should leave. There was no evidence to support the claim that Libya had expelled or forced those refugees to leave. His country supported their right to return to their homeland and hoped the Agency would facilitate that right.

Calling for an end to the establishment and promotion of Israeli settlements in occupied territory, he said that practice constituted a "time bomb in the region". He called for a halt to those efforts, and urged the Government of Israel not to encourage them. Attracting zealots to those settlements would only create an obstacle to the return of the Palestine refugees to their land. The establishment of a democratic Palestinian State, whose capital would be Jerusalem, would put an end to the bloody wall that had been erected between Muslims and Jews.

ABDULSALAM KASSIM AL-AWADHI (Yemen) said the Palestinian people had been denied the right to return to their homes, despite the agreements that had been reached between Israel and the PLO. He hoped the Government of Israel would honour its commitments. He urged the international community to aid the Agency, but it also had to help the refugees return, as well as save an entire people from famine, disease and hunger.

He said his country was pleased with the success of the work of the Agency. He welcomed the transfer of its headquarters to the Gaza Strip. The Agency's provision of necessary services for the refugees must be ensured. He said the University of Jerusalem "Al-Quds" should be established. Further, he warned of the very serious repercussions that could result from the blockade that had been imposed on the West Bank by Israel.

FAROUK AL-ATTAR (Syria) said the Palestine refugees had faced an economic embargo, the demolition of their houses, and the closing of their schools. At the same time, the UNRWA faced financial restriction in performing its work. On the international level, that reflected the failure of the donor States to adequately support the Agency, which was endangering all that had been accomplished in the five years since the Madrid conference.

The Commissioner-General's report focused on the financial crisis of the Agency and its effect on the Palestine refugees, he said. Services would be curtailed or eliminated and the Commissioner- General warned that any further reductions would be perceived as the phasing out of the Agency. General Assembly resolutions provided the right of Palestine refugees to return to the homes from which they were expelled. Any measures that curtailed the Agency's work in returning the refugees to their homes would not further peace and security in the region.

He said that the transfer of the Agency's headquarters to the Gaza Strip should not be construed by the international community as a partial disengagement of support for the Agency, which in turn would place more responsibility for the support of the Palestine refugees on the host countries. He opposed the Agency's having halted its distribution of certain Russian items. His concern in that regard was that it, too, might be a harbinger of a reduced role for the Agency. Some steps being taken suggested that there was a plan to curtail the work of the Agency. It had already adopted austerity measures, which had been increased this year. They had caused a deterioration in the bare minimum of services needed by the Palestine refugees, which was incompatible with the humanitarian objectives for which the Agency was founded.

NGO QUANG XUAN (Viet Nam) said an immediate and comprehensive solution must be found for the financial difficulties and the structural deficit the Agency faced. The prolonged closures imposed by Israeli authorities had affected the Agency's operations in a number of ways. He demanded that the closures be lifted.

The issue of Palestine refugees, he said, could only be tackled when the root of the issue was addressed. He noted with great concern the slow pace of developments in the peace process, and the failure to establish comprehensive peace in the region. A political solution alone would not bring an end to the refugee situation -- it must go hand in hand with sustainable and socio- economic development.

He said the Interim Agreement of September 1995 and the Declaration of Principles of September 1993 must be fully implemented. He welcomed the resumption of negotiations between the PLO and Israel. If all parties were truly committed to implementing the agreements, the peace process could continue. He welcomed international assistance in all forms to support the noble cause of the Palestinian people. While donor fatigue had appeared, the final victory was close at hand. The international community should continue its indispensable support for the legitimate cause of the Palestinian people.

YAEL RUBINSTEIN (Israel) expressed appreciation for UNRWA's efforts in the past year. She said that former Prime Minister Yitzhak Rabin had become a victim of the very peace he had created. He had paid the ultimate price for his efforts to bring about a better future for all the peoples of the Middle East. Throughout the past year, the enemies of peace had attempted to destroy the foundations of peace which had been building for the better part of the decade. Israel had been rocked by a spate of Islamic fundamentalist suicide bombings carried out in the heart of Israel's cities.

She said that Prime Minister Benjamin Netanyahu had reaffirmed his commitment to continue the pursuit of peace with Israel's neighbours. Yet from its first day in office, the new Government had been prejudged as being against the peace process by the rest of the world. Instead of giving the Government an opportunity to prove its commitment to peace and find its own way to proceed, Israel had been met with attempts to pressure it into making decisions through the use of threats and violence.

Mr. AL-ATTAR (Syria) objected on a point of order. He said the item concerned Palestine refugees and the UNRWA report. The speaker was addressing issues of no relevance to the item. She should limit her discussion to the item in front of the Committee.

Continuing, Ms. Rubinstein said Israel was currently taking extensive measures to ease the closure that was imposed following the suicide bombings. While well aware of the economic hardships of the closure on the Palestinian people, she emphasized that the closure had not been enacted as a form of collective punishment on the Palestinian people. It had been done instead to prevent further terrorist attacks originating in the autonomous areas. It had been done recently after receiving concrete warnings from the Palestinian Authority about potential suicide terrorist acts.

Israel would spare no effort to help strengthen the Palestinian economic infrastructure, she said. Her country was proud of its good working relations with the UNRWA. She expressed displeasure at the fact that consideration of the UNRWA was being used as a political tool against Israel. It was beyond her understanding why the United Nations, instead of passing a consensus resolution praising UNRWA's important humanitarian work, felt compelled to pass not one but six resolutions with strong political connotations irrelevant to the work of the UNRWA. Such
resolutions caused nothing but disagreements between Members States and offered nothing constructive to the resolution of the issue.

She said the number of UNRWA resolutions should be reduced to one, directly related to the Agency's humanitarian tasks. That would be more compatible with the essential need to refrain from any reference to such issues as Jerusalem, refugees and settlements that Israel and the PLO had agreed would be dealt with bilaterally, within the framework of the present status negotiations.

DAG WERNO HOLTER (Norway) said the UNRWA received more than a quarter of his country's total economic assistance to the Palestinian people. The longterm solution to the UNRWA's plight was located outside the current donor group and inside the UNRWA's organization. He called for better burden-sharing among donors to the Agency and appealed to the oil-rich Gulf States to increase their contributions.

Much could and should be done inside the UNRWA to get more out of every dollar, he continued. The peace process could only succeed if it was viewed as yielding positive results on the ground. It was the shared responsibility of the international community to allow the Agency to play its vital role in that regard.

ANWARUL KARIM CHOWDHURY (Bangladesh) said he considered the survival of the Agency to be critical to the survival of the Palestinian people. As indicated in the reports before the Committee, the Agency had extended its activities to new areas. It had helped to support the peace process by assisting in the holding of democratic elections. The Agency's involvement in various services had a powerful effect.

He said that one constructive step had been the establishment of microenterprise credit programmes. His country was a strong supporter of that approach for the developing countries. He urged streamlining the process of institutional reform. It was disquieting to learn that inadequate financial support had hampered the work of the Agency, as had the effects of Israeli policies. The so-called security needs of a particular country should not compromise the needs of the Palestine refugees.

AHMAD OMRAN AL-OMRAN (United Arab Emirates) said that at the same time the Agency was trying to improve its services, the Israeli authorities were trying to obstruct its activities. He noted with satisfaction the Agency's work and its coordination with the Palestinian Authority to provide educational, medical, and other services. The chronic budget deficit was a concern. The problem of the refugees was one of the main Gordian knots on the international agenda. A just and lasting solution would be to put an end to the status of the Palestinians as refugees, by allowing them to return to their homes, or providing just compensation.

DOUGLAS KEENE (United States) confirmed his country's continuing support for the UNRWA. As the Agency's largest single donor, he noted that there had been progress towards closer cooperation with major donors on budgetary issues. While the Agency now had funds for the current year, it needed support. However, most of the resolutions submitted had not been as supportive of the peace process as they should be. Efforts to create the conditions for a just and lasting peace should be redoubled. The UNRWA's tasks would evolve as peace progressed. Its work was a key element in moving the peace process forward.

He said, "No government is more aware than my own of the importance of direct negotiations between the parties to solve outstanding issues." As delegations considered the resolutions before the Committee, they should ask whether they wanted positive, forward-looking support for a comprehensive and lasting peace, or whether they wanted to look backwards in an effort to apportion blame.

NIALL HOLOHAN (Ireland), on behalf of the European Union, and Bulgaria, Cyprus, Czech Republic, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia, said that UNRWA's performance had been remarkable. It had supplied sustenance and the essentials of life, and also managed a significant proportion of the infrastructure available to the Palestinian people. The adverse political climate complicated the conditions in which the Agency must operate. Despite all the obstacles, the Agency had over the years improved the social and economic conditions for the refugees. The Agency's recent move to the Gaza Strip would have beneficial effects and, in itself, constituted a tangible demonstration of faith in the peace process.

He then turned to the matter of the Agency's financial difficulties. Rising prices and increasing numbers of registered refugees had not been met with correspondingly increasing contributions, he said. He urged all Member States, particularly the wealthier States in the region, to contribute generously. The European Union had committed to paying the UNRWA $130 million for 1996-1998, in addition to contributions by individual member States of the Union. The Union as a whole was the largest donor to the UNRWA, accounting for 43 per cent of total contributions last year.

Few would have predicted, he continued, that the Agency would still be in operation a full 50 years after its establishment. It had been intended as a temporary measure, not a substitute for a political solution to the refugee problem. The UNRWA was a vital element in the mortar which held the fragile structure of the Middle East peace process in place. He called on the international community to give it full political and financial support.

ETIENNE THEVOZ, Observer for Switzerland, said the current political and regional conditions did not inspire optimism for the peace process. The UNRWA now faced new tasks, including how to meet increased humanitarian needs under difficult operational conditions, within the context of severe budgetary constraints. The UNRWA was doing remarkable work and fulfilment of its programme must be placed in its political context. The UNRWA was moving in a positive direction on structuring its financial management. Budgetary and political questions required better decision-making methods. The UNRWA was an institution on which millions of Palestine refugees relied. His country supported the Agency and welcomed its efforts towards structural reform.

RENATO R. MARTINO, Observer for the Holy See, said the efforts to bring peace and security to the Middle East were to be commended. He expressed concern that the political will for bringing peace to the Israeli and Palestinian peoples had deteriorated. Violence and the breakdown of the dialogue prevented successful resolution of the differences of those people. Events seemed to be moving away from peace, mutual esteem and cooperation. The closure of the West Bank had contributed to massive unemployment and underemployment and had adversely affected access to health care, sometimes with fatal results.

He said that the same problem affected freedom of worship. Although religious shrines in Jerusalem were open, local Palestinians were unable to attend religious services in the Holy City of Jerusalem. Jerusalem would always be a city belonging to two peoples and three religions. It was regarded as equally sacred by the three great monotheistic religions - Judaism, Christianity and Islam. The larger question of Israeli settlements in the West Bank and Gaza must also be addressed. The confiscation of land in the name of security could become an invitation to injustice.

He said it had been stated that the settlements and controlled access to them was a significant cause of the fragmentation of the Palestinian polity. It had to be addressed in negotiations. He emphasized the necessity of intense and continued negotiations to bring about peace with justice, and condemned gestures of provocation and the use of terrorism and violence. However, any successful conclusion to the egotiations would be in vain if adequate funds were not made available to the struggling communities of Palestinians in the Gaza Strip and the West Bank.

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