Rosa Molcho, 78, is still haunted by a terrible memory from her childhood. "At noon I heard a noise," she says in a video clip posted on a special YouTube channel. "I looked out the window ... I saw a fireball and I ran. I shouted 'Mama! Mama!' I'll never forget the sight of the dead people on the floor ... When they took Mama's body, [people] yelled, 'Why are you burying the dirty Jew?' ... These were pogroms ... I left Egypt in December 1949 ... I am Rosa Molcho, and I, too, am a refugee."

Molcho's story, along with similar video clips by Jews driven from Egypt, Iraq, Algeria and other Arab countries, are part of a public relations campaign mounted by Deputy Foreign Minister Danny Ayalon. Behind it lies a decision by the Prime Minister's Office and the Foreign Ministry, based on a recommendation from the National Security Council, that from now on, the Jewish refugees will be considered a core issue in all final-status negotiations with the Palestinians. Without solutions for the Jewish refugees, Jerusalem has decided, there will be no end to the conflict.

For decades, Israel has refrained from raising the issue of the Jewish refugees. Ayalon, whose father came from Algeria, said that in the state's early years, the idea of Jewish refugees "didn't suit the ethos" Israeli leaders "were trying to create." According to that ethos, said Ayalon, "Jews came to Israel from the Arab world out of Zionist motives and were well integrated into society. Refugees, in this view, were only Jews from Europe," so refugees from Arab lands "didn't even make it into school curricula."

The current government took up the issue in mid-2009. After paying his first official visit to Washington in May of that year, and giving a speech a month later in which he - for the first time - agreed in principle to two states for two peoples, Prime Minister Benjamin Netanyahu ordered Uzi Arad, then head of the NSC, to start preparing for negotiations with the Palestinians.

In his previous role as a senior researcher at the Interdisciplinary Center in Herzliya, Arad had coordinated a team of researchers that explored legal and diplomatic aspects of the Jewish refugee issue. Now, as national security advisor, he decided to set up a task force comprised of government officials and academics to formulate an official Israeli position on the issue of Jewish refugees from Arab states.

Netanyahu approved, and Arad appointed Lt. Col. (res. ) Orna Mizrahi to head the group. It was made up of representatives from the Foreign, Justice, Finance and Pensioner Affairs Ministries. Others on the task force were historians, economists and representatives of Jewish organizations such as the World Jewish Congress and Justice for Jews from Arab Countries.

Inseparable issues

On May 24, 2011, the panel submitted its conclusions to Netanyahu and other senior officials. The document, reported here for the first time, recommended that the issue of compensating the Jewish refugees be raised in negotiations with the Palestinians as an inseparable part of discussions on the Palestinian refugees. While Israel should acknowledge the differences between the two groups, it said, Jews who left Arab countries do meet the legal definition of refugees.

The document defines the Jewish refugees as Jews who left the Arab world between November 1947, when the United Nations adopted its partition plan, and 1968, the year following the Six-Day War. By this definition, it counts some 800,000 Jewish refugees, compared to 600,000 to 700,000 Palestinian refugees. Most of the latter left between 1947-49; others fled the West Bank for Jordan when Israel captured the West Bank in June 1967.

It is in Israel's interest to create a connection between the issues of the Jewish and Palestinian refugees, the document said, so Israel should present them as a single issue in all negotiations. "It's necessary to instill the duality of the term refugee into international discourse. Linking these issues will serve Israel in the negotiations."

Specifically, it said, such linkage would deter excessive claims on behalf of the Palestinian refugees, or at least moderate them.

The panel consulted former senior officials who were involved in talks with the Palestinians in 2000, under former Prime Minister Ehud Barak, and in 2007-08, under former Prime Minister Ehud Olmert. The issue of the Jewish refugees, it concluded, was raised only on the margins of these talks, in a "preliminary and limited" fashion.

Moreover, it wrote, during these talks, Israel merely responded to Palestinian demands. It never made demands of its own.

"The Palestinians prepared the ground for negotiations well by inculcating the narrative about the disaster of the Palestinian refugees in international discourse," the document said. "They were smart enough to obtain broad international recognition of the need for a suitable solution for the Palestinian refugees, and even a willingness to help fund this solution."

But one former senior official told Haaretz that the Jewish refugee issue actually was discussed seriously in 2000. Israel's position then, he said, was that "the issue of Jews expelled from Arab lands, or forced to leave due to the 1948 War [of Independence] or the Israeli-Arab conflict, must not be neglected." Israel even raised this issue with then-U.S. President Bill Clinton, he said, and Clinton proposed setting up a fund to compensate Palestinian and Jewish refugees alike.

In 2007-08, then-Foreign Minister Tzipi Livni also raised this issue. According to a source who participated in those talks, the Palestinians didn't reject the idea of compensating Jewish refugees, but said this had to be negotiated with the Arab states. The Palestinians aren't a party to the issue, they said, so it shouldn't be linked to that of the Palestinian refugees.

"No one neglected the problem of the Jewish refugees; we worked on it quietly," added a person involved in both sets of talks. "It's very easy to launch a public relations campaign and scream to the media about justice, but that won't advance a solution, and may even put more spokes in the wheels."

'Blame Arabs all around'

The NSC document proposed that Israel blame both halves of the "double refugee" problem on the Arab League and Arab states. They are responsible for the Jewish refugees, it said, because their leaders "either encouraged or didn't prevent the severe violence" that drove the Jews out, and because they forced the Jews to leave without their property. They are responsible for the Palestinian refugees because they rejected the UN partition plan and instead went to war against Israel, and because all, except Jordan, have perpetuated the Palestinians' refugee status by barring them from integrating into the states where they now reside.

Therefore, it said, Israel should propose that the double-refugee problem not be discussed in bilateral Israeli-Palestinian talks, but in multilateral talks that would include the Arab states as well as countries likely to contribute to a compensation fund. While Arab participation shouldn't be a non-negotiable condition, lest this thwart the goal of finding a solution, "any agreement that doesn't provide an answer to the Jewish refugees shouldn't be seen by Israel's leadership or people as ending the conflict," it stressed.

Israel, it added, should demand that both sets of refugees waive a "right of return" to their former homes, and should also insist that only first-generation refugees be compensated, and not their descendents. Otherwise, half of all Israeli Jews would be refugees, and millions more overseas.

Moreover, Israel should not only propose establishing an international fund to compensate the refugees personally, but should also demand that Israel be compensated for its outlays on absorbing Jewish refugees in the 1950s and 1960s. It should support a similar demand by Jordan for its absorption of Palestinian refugees.

Finally, Israel should demand higher compensation for the Jews, in a 3:2 ratio, due to both their greater numbers and their greater financial losses. According to the NSC, the Palestinian refugees lost property worth $450 million ($3.9 billion in today's terms ), while the Jews lost property worth $700 million ($6 billion today ).

Israeli diplomats worldwide have been instructed to raise the issue of the Jewish refugees with their host countries. In another two weeks, the Foreign Ministry and the World Jewish Congress are sponsoring a conference on the issue in New York to coincide with the UN General Assembly.