The Truth About
Jewish Assets In Iraq
Yehouda Shenhav of Tel-Aviv University
in Iraq were ex-propriated twice, once by Iraq and then by
Between 1948 and
1951, Israel faced two analogous demands. First, it was implored
to compensate Palestinians who had become refugees as a result
of the War of Independence, and whose property had been nationalised
by the General Trusteeship of the State of Israel. Second,
Iraqi Jews and their representatives in the Israeli government
- Minister of Police Bachor Shitreet was the most prominent
- were pressed for compensation for the assets they had left
behind in Iraq.
My study aimed
to show how Israel established a connection between these
two demands, and then freed itself from both of them.
Ultimately, Israel justified its refusal to compensate the
Palestinians on the grounds that the Iraqi Jews had also suffered
deprivations, and urged the Iraqi Jews to demand restitution
in Iraq began during World War II. But it was only at the
war's conclusion, when the dimensions of the Holocaust became
known, that the Iraqi Jewish community was considered a potential
alternative source for increasing the Jewish population of
The Jewish community
within Iraq was not Zionist-oriented, as the emissaries soon
discovered. As an overwhelmingly bourgeois community, the
Iraqi Jews understood the danger that Zionism posed to their
political, social and economic status. Those Jews who did
leave the country generally settled in Europe, India, Iran
and North America - as well as Palestine.
By 1947, however,
Iraqi Jews found themselves in an increasingly untenable position.
The aggressive activities of the Zionist movement, followed
by the birth of Israel, led many Arabs to associate all Jews
with Zionism. At the same time, nationalism was on the rise
in Iraq, marked by a distinct anti-Zionism.
The question of
the fate of Iraqi Jewry came up repeatedly in meetings of
the Israeli cabinet, most often on ShitreetĖs initiative In
September 1949, for example, Shitreet proposed a "transfer"
of Palestinian refugees and Iraqi Jews. Sharett and Prime
Minister David Ben-Gurion were unwilling to discuss the idea,
and dismissed Shitreet reproachfully.
1949, the Israeli press began reporting that Iraq was willing
to agree to a transfer, and there was evidence that senior
Iraqi officials supported such a move. But Ben-Gurion and
Sharett chose to ignore these signals, and despite Israel's
professed interest in absorbing Iraqi Jews, the two leaders
adopted an intransigent position. Ben-Gurion told the cabinet
that "all this talk about exchange seems very curious to me.
Clearly, if the Iraqi Jews could get out, we would never think
about asking for any type of exchange, whether of persons
or of property!"
Sharett were well aware of the hefty price Iraq would demand
for concluding any concrete agreement. Israel would have to
either repatriate the Palestinian refugees or compensate them.
In March 1950,
the Iraqi government passed a bill allowing Jews to renounce
their Iraqi citizenship, and to leave the country. Known as
the de-nationalisation law, it was to remain in effect for
one year and carried no stipulation about property.
A month after
passage of this bill, Israel made its first attempt to recover
Jewish assets from Iraq. The Government was willing to examine
the possibility of exchanging Arab property in Israel which
has not been abandoned for the property of Jews in Iraq. The
investigation, it was stressed, relates only to Iraq and not
to any other Arab country, and only to property which has
not been abandoned."
The plan proposed
by Ben-Gurion and Sharett called for nothing less than the
deliberate transfer of Israeli Arabs. Lief, the adviser for
land and border affairs at the Prime MinisterĖs Office, had
already begun to implement it. According to Uzi Benziman and
Atallah Mansour, in their book, "subtenants," Leif wrote to
the prime minister, the foreign minister and the treasury
minister that "as a first measure, I would instruct our representatives
in Paris to establish contact with members of the Iraqi Jewish
community in order to convince them to cease selling their
assets at reduced prices, and to signal that there is a chance
they will be able to obtain a higher price on the basis of
All efforts at
mediation failed, however, and the assets of Iraqi Jewry were
never brought to Israel. Nor did anything ever come of the
In 1951, Zionist
activists were hard at work in Iraq. Some 35,000 Jews had
already departed, and another 105,000 were registered to leave.
Delays in the operation were caused not by Iraq but by Israel,
and specifically by the quota system then applied by the Jewish
Agency. On March 10 of that year, Iraq's prime minister proposed
a bill at freezing the assets of all Jews who had renounced
their citizenship. In order to prevent last-minute transactions,
the Iraqi treasury ordered the banks to close in the three
days before the law took effect. Jewish homes were searched,
their stores were closed and their cars and property impounded.
his fellow cabinet members to consider Israel's response to
the Iraqi actions. "The question arises as to what, exactly,
we can do. Appeals can be sent to Britain and the United States,
of course ..... I assume that they will refuse to intercede
..... They can say "you took the property of the Arabs
who left Israel, you gave the property to the Trusteeship.
The Iraqis are doing the same thing..."
In the same discussion,
Sharett reported that some Iraqi Jews in Israel were calling
on the government to impound Arab assets in Israel and distribute
them to the Iraqi Jews. The majority of the cabinet agreed
that the transfer of Arab assets to Iraqi Jews was not feasible.
In its place,
Sharett proposed an alternative. "We declare that the entire
subject of Iraqi Jewish assets will be taken into consideration
in the final settlement, in determining compensation for the
Palestinians," he explained. "Since we have yet to abandon
the principle of paying compensation, we will now say that
the value of the Iraqi assets will be deducted from them."
Inventive as it
was, Sharett's idea did not satisfy Shitreet. He continued
to press for a tangible measure to ease the Iraqis' plight.
"The Iraqi Jews will come to the Foreign Ministry and ....
they will not be content with empty words," he told Sharett.
"There can be no doubt that their claim to Arab assets is
well-founded. Their situation is the direct result of the
creation of the state of Israel, and we have to consider a
way of compensating them from the Arab assets.
that by the same token, it might be said that Israel should
compensate every individual who comes here. Poland takes the
Jews' money as well..."
The Knesset ultimately
approved the government's position on the Iraqi situation,
so that linkage between Iraqi Jewish property and Palestinian
compensation became Israeli policy.
the assets of tens of thousands of Jews who immigrated to
Israel," Sharett said in a speech before the Knesset on March
19, "the Iraqi government has incurred a debt to the state
of Israel. Such a debt already exists between Israel and the
Arab world, and that is the debt of compensation to those
Arabs who left Israeli territory and abandoned their property.....
The action now taken by the Iraqi kingdom..... compels us
to link the two debts .... The value of the Iraqi Jewish assets
that were expropriated will be taken into consideration when
calculating the compensation we committed to pay Arabs who
abandoned their property in Israel."
to link the two "debts" treats Iraqi Jewish capital as a national
rather than a personal possession. In essence, that capital
was expropriated twice, once by Iraq and then by Israel. In
a memorandum sent to the UN Palestine Conciliation Commission,
the Foreign Ministry reaffirmed its commitment to compensating
the Palestinians, but added that "we cannot fulfil this commitment
if, in addition to bearing the burden of immigrant absorption,
Israel must provide for the restitution of 100,000 Iraqi Jews.
"In other words, had the Iraqi government not impounded Iraqi
Jewish assets, Israel could have compensated the Palestinians.
During the debate
that followed Sharett's speech, Knesset members took turns
denouncing Baghdad's action. Many representatives likened
it to steps taken by the Nazis. Meir Argov of Mapai said that
"Israel had been willing to do its share for the refugees,
but now, after this robbery of Iraqi Jews, Israel is released
from its obligation."
served to satisfy Iraqi Jews' demands for a concrete response
to Baghdad, and kindled hopes for a speedy restitution. In
a telegram to Israel, Zionist activists in Iraq wrote, "the
Jews now believe that they have something to depend on...
Jews whose assets have been frozen have approached us asking
whether they will have to show proof of those assets once
they arrive in Israel and, if so, how might such proof be
conveyed. "Naim Sofer, chairman of the organisation "Movement
of Iraqi and Eastern Jews in Israel," called on Israel to
implement its decision immediately. His initiative clearly
demonstrates the degree to which Iraqi Jews believed they
would receive compensation from Arab assets held by the Trusteeship.
served as a warning for the Foreign Ministry. While lower-level
officials assured Sofer that "the fate of Iraqi Jewish assets
is a constant concern for the government of Israel," the ministry's
upper echelons were already acting to avert a catastrophe.
"The frozen Iraqi Jewish assets may be registered," reported
one Foreign Ministry memorandum to the Prime MinisterĖs Office,
"but their sole purpose will be to deduct the value of those
assets from the amount of compensation to be paid for the
abandoned Arab assets." The memorandum added that the government
could not compensate the Iraqi Jews "without opening the gates
to a flood of private requests from tens of thousands of Arab
refugees who once owned assets of one kind or another in Israel."
had always opposed the notion of transfer, the freezing of
Iraqi Jewish assets offered him a golden opportunity to free
Israel from Palestinian claims for compensation. And indeed,
almost as soon as the 120,000 Iraqi Jews arrived in Israel,
the government turned its back on them. The Foreign Ministry
objected to the creation of a special office to oversee the
registration of claims against Iraq for assets left behind.
According to historian Moshe Gat, Sharett insisted that "the
value of the Jewish assets impounded by Iraq would be tallied
when the question of compensation comes up for discussion.
That has yet to happen, and there is no telling when it will.
The issue remains hypothetical."
it was, the policy of linkage was twice put to the test. In
1955, a public committee was set up to register the claims
of Iraqi Jewish immigrants. The committee completed its work
in December 1956, and submitted its final report to the Foreign
Ministry. There it remained, unattended. The reason for the
ministry's inaction again was rooted in the linkage policy,
as indicated by documents relating to the committee. As one
internal memorandum advised, "It is recommended that we refrain,
at least for the time being, from declaring that the purpose
of the claims registration is to deduct the amount from that
of the compensation for abandoned Arab assets."
The second test
of the policy came in 1979, during peace talks between Israel
and Egypt. Addressing the Knesset, Shlomo Hillel asked Prime
Minister Menachem Begin about compensation for Iraqi Jews.
"The problem of Jewish property that was stolen by Arab countries
- and not just one Arab country - was raised and will be raised
in all our discussions, "Hillel quotes Begin as saying. "It
was raised and will be raised in all our discussions with
Egypt. That is why we agreed to create a committee to consider
the claims of all parties. When the right day comes, we will
submit our claims for assets seized illegally."
The peace treaty
with Egypt was signed, but no action was ever taken on the
Iraqi assets. Though it had linked the two claims, Israel
never offered compensation to either the Palestinians or the
Iraqi Jews. The linkage policy represents an historic milestone
for Israel and its attitude towards both the Palestinian refugees
and the Iraqi Jewish community. After their expropriation
by the Iraqi government, Jewish assets were then nationalised
by the state of Israel. Proof of that nationalisation can
be found in the Israel State Archives, in the files labelled
"Defence of Israeli Assets." Once it had claimed those assets
as its own, Israel could put them to any use - rhetorical
symbolic, or legal - it chose.
During the 1948
war, many Arab assets were either abandoned or seized. The
value of these assets has never been determined, but is probably
in excess of $5 billion. Israel, however, remains opposed
to paying that compensation as long as Jewish claims against
Arab states remain unsettled. The linkage policy stands unchallenged.
The linkage between
Palestinian and Iraqi Jewish claims grew out of the cynical
Israeli belief that Arab and Jewish interests are inherently
irreconcilable. In looking for the roots of the antipathy
between the Arabs and the Jews from Muslim countries - an
immense topic that lies outside the scope of this article
- one cannot ignore the way in which the Zionist movement
and later the Israeli government helped spawn those tensions.
Magazine. April 10, 1998
The Israeli Government has explained its position concerning
Jewish assets in Iraq, of not compensating Iraqi Jews out
of the frozen Palestinian assets, by saying that the State
of Israel spent billions in resettling Iraqi immigrants in
Israel. WOJAC was just a camouflage.
What about the
assets of Iraqi Jews who did not go to Israel?
you would like to make any comments or contribute to The
Scribe please contact