But there are two sides to every coin. Between the years 1944 and 1964, some 700,000 Jews moved in the opposite direction, from Arab countries to Israel – and they too were dispossessed of nearly their entire property.
'Better life than in Eastern Europe'
Jews have been living in the Middle East since the Babylonian captivity and in North Africa since the Roman era. During the Arab occupation, the majority of world Jews lived in this area.
Since then, the center of the Jewish world moved the Eastern Europe due to immigration, and Jews' conversion to Islam in Arab countries and to Christianity in Europe. In 1940, there were some 16 million Jews in the world, and only 5% of them – 800,000 – lived in Arab countries, mostly in Morocco, Algeria, Tunisia, Iraq and Egypt.
Yemeni Jews' aliyah. Property looted
The Jews' situation in Arab countries varied as times changed and depending on the countries they lived in: In some places they integrated into society and were even part of the upper class, in other places they were subject to restrictions, and from time to time they suffered from riots and persecution.
In general, the Muslims treated the Jews much better than in Europe and their economic situation was excellent.
"The average Jew lived much better than the average Muslims, and in fact – much better than the Jews in Eastern Europe" says Yaakov Hajaj, director of the Institute for the Research and Study of Libyan Jewry.
"They could work in whatever they wanted to. Most of them worked in certain fields, some of which were basically under their control: As tailors, shoemakers, goldsmiths, imprinters, spice merchants, grocery store owners, peddlers and even international traders."
"Most Jews and Christians worked in industries that the Muslims banned themselves from working in," says Dr. Zvi Yehuda, director of the Research Institute of Babylonian Jewry.
"The Muslims were strict about not engaging in loan with interest, which included any dealing with silver and gold, and most goldsmiths were Jews. Most seamstresses were Jewish, and so were most tailors later on. As opposed to Europe, the Muslims did not hate the Jews because they dealt with money, and even admired them for that.
'Jews took less of a bribe'
The Middle East and North Africa – excluding Iran and Morocco – became part of the Turkish Ottoman Empire in the 16th century. The Ottoman regime, as opposed to the preceding Arab regime, absorbed Jews into its governmental organizations.
"Many government workers, judges and tax collectors were Jewish, way beyond their percentage in the population," notes Hajaj. "They were considered reliable people who took less of a bribe. A Jew could not afford to get into trouble for 40 dinars, for fear of harming the entire community."
A small part of the Jews, mainly in Yemen and Morocco, lived in villages. But most lived in their own neighborhoods in the cities, in big and spacious houses.
"There was a 'street of Jews' or a 'Jewish quarter' in nearly every city, but it wasn't a ghetto," says Hajaj. "There was no wall and the Jews were there out of their own free will, in order to keep kosher and observe Shabbat and stop different vagabonds from coming in and harassing them.
"The typical family lived in a complex of several houses, a house for each brother, around an internal courtyard. It was completely different than the cabins of the Muslim peasants and the huts in Jewish towns in Europe."
In the 19th century, the Arab world was subject to colonization: Britain took over Egypt, France took over Tunisia, Algeria and Morocco, and Italy took over Libya.
Iraq, Syria and the Land of Israel remained under the Ottoman Empire, but it collapsed and was gradually taken over by Western powers, until its occupation in World War I. The situation changed in favor of the Jews.
"The Jews became mediators between Europe and the Arabs," says Hajaj. "They wandered in the world, got to know countries and languages, had ties in Europe, and everyone trusted them.
"They sold the Europeans cloths, threads and Arab agricultural produce, as well as exotic goods like ostrich feathers from Africa and imported clothes and industrial products from Europe. They gave the peasants advanced payments and made sure that they supplied the goods. Many became rich, particularly in cities off the Mediterranean Coast and in Iraq. Some got a European citizenship and adopted European customs."
How did the Muslims react?
"At first it was convenient. They trusted the Jews more than they trusted each other. Their trust collapsed in the 20th century, upon the creation of Arab patriotism and Zionism."
'Baghdad market closed on Shabbat'
The extent of the Jewish success varied from country to country. "People who visited Iraq in the 19th century wrote that the Jews control the economy," says Yehuda. "The markets were closed on Shabbat. Jews were part of the government. When professions like advocacy were created, Jews were prominent in them too.
"In Syria the Muslims were tougher and restricted the Jews, while in Kurdistan the economy was stuck on exchange trade, like in the Middle Ages: The Muslim gave the Jews knitting wool and the Jews gave them back clothes."
There were differences within the communities as well: There were poor people everywhere who needed charity organizations, alongside families like Daniel in Iraq and Arbiv, Halfon and Nahum in North Africa, that became regional "Rothschilds" and had capital, real estate and factories.
"In the East there were no billionaires like Baron Hirsch," Yehuda notes. "But whoever had 1,000 pounds and 10 houses was considered very rich. On the other hand, most of the goldsmiths lived from hand to mouth and in harsh competition with big companies, some of which belonged to rich Jews."
The Middle East is the cradle of science and education in the world. The first university in the world was opened in the 9th century in Qayrawan, Tunisia – and its first class had Jewish students too. However, the education revolution Europe underwent in the 18th century skipped Arab countries, including the Jews.
"In North Africa there were hardly any universities," says Hajaj. "In all of Libya there were 14 PhDs. But many of the Jews were self-educated and studied geography, languages and history while travelling the world.
"Iraq's Jews were exceptional: All young people there had a high school education and some even had university degrees."
'A Jew shouldn't control Muslims'
The Jews' situation began deteriorating with the Arab national awakening, before the State of Israel's establishment. "From a British mandate, Iraq turned into an autonomic state in 1932 and immediately began disinheriting the Jews," says Yehuda.
"They weren't accepted to schools and universities and were dismissed from jobs with all sorts of claims."
Who led the restrictions?
"The Arab nationalists and the militant Muslims. The establishment was not happy with the situation but was dragged into it, and most of the population was ambivalent: In day-to-day life they had friendly relations with the Jews, but when a Jew was appointed as a judge or government worker it bothered them, because according to their perception, a Jew is not supposed to control Muslims."
Upon the establishment of the State of Israel, the Arab world was flooded with violent riots, massacres and plunder against the Jews. Some of the Arab governments defended the Jews, while others – mainly in Iraq and Yemen – inflamed the riots and looting.
"The Iraqi government confiscated property, as if to compensate the Palestinian refugees," says Yehuda. "Government workers would arrive at a business and ask the Jewish owner how much he would like to 'donate' to the refugees. If he wouldn't – that was the end of the business. Most of the property reached people with ties to the government."
In 1951, the Iraqi government quietly agreed to let Jews immigrate to Israel, and almost all of them did. At the same time, it enacted a law stating that the entire Jewish property – houses, factories, goods, jewelry and bank accounts – would be nationalized.
Egyptian leader Gamal Abdel Nasser enacted similar laws after the Lavon Affair and the Sinai war. Libya's Jews were expelled and their property was nationalized in the 1960s. "(Libya leader Muammar) Gaddafi promised to return everything within 30 years," notes Hajaj, "but at the moment he's busy with other stuff."
Syria, Tunisia and Algeria did not nationalize property, but the Jews fled those countries when they gained independence (1946, 1959 and 1962, respectively), and the Muslims looted the remaining property. That is what happened to the property of Yemeni Jews who made aliyah in Operation Magic Carpet as well.
"Some of Morocco's Jews 'got off easy': They immigrated with the money and property and 'only' left the homes," says Hajaj. "Jews from other countries immigrated with nothing but the clothes they were wearing. My father was one of Libya's biggest billionaires and immigrated with a suitcase weighing 20 kilos."
$4 or 200 billion?
Researchers and organizations are at odds over the scope of the lost property.
Economist Sidney Zabludoff, a former American government worker, estimated that the property totaled some $700 million in the 1950s and reached some $6 billion in 2007. The Pensioner Affairs Ministry puts the sum at about 2 billion pounds. One organization says $30 billion and another says $100 billion in Iraq alone.
Will the Jews be compensated for the looted property? And can it, and should it, be deducted from the property Israel took from the Palestinians?
The scope of the Palestinian property is also a matter of controversy. Economist John Barncastle evaluated the Palestinian property the 1950s at some $450 million. Zabludoff said it stood at some $4 billion today. The Camp David peace talks discussed $20 billion, while Arab organizations spoke of some $200 billion.
The disagreement stems from the reevaluation method. The number of people who escaped on both sides was similar: About 730,000 Palestinians and about 700,000 Jews (excluding those who immigrated to France). Most of them lived in their own homes.
The Jews, in general, were much richer and possessed many assets in addition to the houses. But real estate is the main thing, and it is customary to add to the original value the rising prices in the places the refugees lived in. Israeli housing prices, as we all know, have gone up much more.
Israel earned a lot from the Jewish property looted in Europe and used the funds to help Holocaust survivors, although insufficiently. But until recently, the State ignored the Jewish property in Arab countries.
"Until recently, there was a lot of fear," says Yehuda. "During the peace talks, Egypt's Jews demanded that (then-Israeli Prime Minister) Menachem Begin include a clause requiring compensation, but he wouldn't listen. I think the government was afraid that it would have to pay the Palestinians more.
"They changed their mind when (former US President) Bill Clinton stated that an international fund would be established to compensate both sides. Since then, they are hoping that the arrangement won't be at their expense."
The property in Israel is worth more thanks to the Jews' knowledge and capital. Why should it increase the compensation to the Palestinians?
"These things are not determined according to logic. Here's something even more absurd: Rich Jews from Iraq bought lands in Israel in the 1930s and 1940s before immigrating. Whoever bought lands within the Green Line received them. But some bought lands in Judea and Samaria, and the Jordanians nationalized them.
"After the Six-Day War, the Jews demanded their lands back and the military government said, 'We are acting in accordance to Jordanian law, and therefore they aren't yours.' But settlements of other Jews were established on those same lands."
Americans demanded compensation first
The United States recognized Jews' right for compensation from Arab countries in the 1990s. Former Justice Minister Meir Sheetrit stated in 2006 that Israel would demand compensation.
In 2010, the Knesset enacted the "law for compensating Jewish refugees from Arab countries," which obligates the government to demand compensation as part of any future peace negotiations.
How will Arab countries respond to the Israeli demand? In the past, London-based Arabic-language newspaper al-Sharq al-Awsat quoted an Iraqi lawyer named Hasem Muhammad Ali as saying he supports compensation. But the Iraqi government, according to the newspaper, is against it, claiming that the Jews left out of their own free will and could get their property back if they returned.
The public discourse in Israel focuses on the distress of Oriental Jews. Most books and articles, speeches and protests dealt with the discrimination and injustice they suffered in Israel by the Ashkenazi establishment, and only few dealt with the robbery they suffered in their homelands.
"I think our situation would have been better had we remained in Libya," says Hajaj. "But I don't know if the only one to blame is Israel, which took care of our livelihood and provided education, or the countries which robbed us and sent us away stark naked."
Some 700,000 Jews of Arab countries and 100,000 immigrants from Turkey and Iran were met in Israel by 550,000 Jews who had already settled in, and some 700,000 Holocaust survivors who suffered greatly but received financial compensation and integrated into the Israeli economy.
All three populations have become richer since then, but the gaps between them continue to burden the State to this very day. Israel has regained its title as the center of the Jewish people, but most of the Jewish money has gone to the US, where secure and convenient Jewish life has prospered for the first time in thousands of years.
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