On December 8, 1949, the General Assembly of the United Nations approved the raising of a fund of $54,900,000 to finance the Agency mentioned above. This sum is to be raised through voluntary contributions from governments

2. General Kennedy,⁷⁹ the newly appointed Director of this Agency, has urgently requested "an early and generous contribution by the Canadian Government", for the funds of the Agency are now near exhaustion and the borrowing capacity of the Agency has reached its limits.

3. The refugee problem remains one of the most serious obstacles to peace and stability in the Near East. Some 940,000 displaced Arabs are unable to return to their homes in territory now controlled by Israel. The great majority are destitute. They constitute a heavy drain on the economic resources of the Arab States which, themselves, are in grave financial difficulties and cannot deal with the problem unaided. Israel, committed to receiving and absorbing a steady flow of Jewish immigrants, feels that it cannot, at this time take back large numbers of former Arab residents. While this problem continues the number of people who are susceptible to Soviet propaganda increases, both among the displaced Arabs and in the communities which shelter them. Reports from the Middle East reflect the growing influence of communist organizers among these displaced persons and in the communities disrupted by their arrival.

4. The Middle East occupies a pivotal position in the strategic planning of both the Soviet Union and the Western powers. It is an area where international rivalry is acute and where the Soviet Union will use any psychological advantage to undermine the influence and the strength of the West. For these reasons, therefore, it is suggested that Canadian support be given to constructive international action which should enable the refugees to improve their lot by their own efforts.

5. To continue handling the refugee problem as it has been in the past (by providing direct relief alone) would perpetuate a dangerous situation.

6. The programme approved by the Assembly is intended to break the back of the refugee problem by providing paid employment for refugees in place of direct relief. The equivalent of approximately $33,700,000 will be required for both relief and works programmes for the period January 1 to December 31, 1950. From January 1, 1951 to June 30, 1951 the remainder, approximately $21,200,000 will be applied to works projects alone.

7. During the first period, it is expected that the majority of the refugees will gradually cease to draw direct relief and will be put to work. The cost of relief will be reduced and the Near Eastern countries may be able, without further United Nations assistance, to assume the remaining burden of direct relief by January 1, 1951.

8. At the same time, the works programme will add to the productive capacity of the countries where the refugees are located. In the process, some of the refugees will no doubt be absorbed permanently in their present environment. The programme therefore offers a means of reducing the number of refugees to a point where the problem can be solved through repatriation to Israel and permanent resettlement in the Arab countries.

9. Since August 1948, Canada has contributed supplies valued at $1,040,616 for the relief of refugees from the Palestine area. The United States has contributed $13,377,930.

10. On January 30, 1950, the President of the United States sent a message to Congress proposing that the United States contribute half of the required amount of $54,900,000 ($27,450,000). This sum has been authorized by both Houses of Congress and it is expected that it will be approved in the appropriations stage.

11. It is expected that the United Kingdom will contribute the equivalent of $9,000,000 although this sum will include an interest free loan of one million pounds which has been made to the Hashemite Kingdom of the Jordan. France and the Arab States are expected to contribute the equivalents of $4,000,000 and $6,000,000 respectively.

12. There are many countries with closer and more immediate interests in the Middle East than Canada. Therefore Canada cannot be expected to contribute as much, even on a proportionate basis, as those countries. On the other hand, in view of Canada's general interest in the area, it is desirable to make a fair sized contribution. This is the more desirable if that contribution is spent on Canadian commodities that are readily available.

13. The following Canadian commodities are needed at once by the Relief and Works Agency: flour, butter (or margarine), handtools, pumps, steel piping and lumber. Most of these commodities are readily available in Canada and could be supplied to the Agency, so that the Canadian contribution could be spent in this country.

14. In the light of these consideration, it is recommended that:

(a) an initial contribution in Canadian dollars of $750,000 be authorized for the United Nations Relief and Works Agency for Palestine Refugees in the Near East;

(b) that the Director of the Relief and Works Agency be requested to consult with the appropriate Canadian authorities about the use of this sum and, for this purpose, to draw up a programme of purchases in Canada;

(c) that the Director of the Agency be informed that if the initial sum of $750,000 has been fully used up or earmarked for programmed purchases in Canada by December 31, 1950, and if he requires more funds, the Canadian Government would give sympathetic consideration to a request for a further sum of $750,000;

(d) that none of the moneys approved under (a) and (c) above be transferred into foreign currencies without the specific approval of the proper Canadian authorities.⁸⁰

[L.B. PEARSON]

⁷⁹Le major général Howard Kennedy (Canada), directeur de l'Office de secours et de travaux des Nations Unies pour les réfugiés de Palestine dans le Proche Orient.
Major General Howard Kennedy (Canada), Director of United Nations Relief and Works Agency for Palestine Refugees in the Near East.

⁸⁰Approuvé par le Cabinet, le 12 juin 1950./Approved by Cabinet, June 12, 1950.