During the June 1967 War, about 1.1 million Palestinian Arabs living in the West Bank, Gaza Strip, and East Jerusalem came under Israeli rule. Immediately after the war, East Jerusalem was occupied and reunited with the rest of Israel's capital. Its Arab inhabitants--about 67,000 after the war--became citizens of Israel with the same rights as other Israeli Arabs. The West Bank, ruled by Jordan since 1948, was economically underdeveloped but possessed a relatively efficient administrative infrastructure. Its 750,000 people consisted of a settled population and refugees from Israel who had led during the 1948 War. Both the refugees and the settled population were Jordanian citizens, free to work in Jordan. Most of the leading urban families and virtually all the rural clans had cooperated with Hussein. The Gaza Strip, on the other hand, was seething with discontent when Israeli forces arrived in 1967. Its 1967 population of 350,000--the highest population density in the world at the time--had been under Egyptian rule, but the inhabitants were not accepted as Egyptian citizens or allowed to travel to Egypt proper. As a result they were unable to find work outside the camps and were almost completely dependent on the UN Relief and Works Agency (UNRWA) for Palestine Refugees in the Near East. In the Gaza Strip, Israel implemented harsh security measures to quell widespread unrest and root out the growing resistance movement.

Labor's settlement policy in the occupied territories was based on a plan formaulated during the summer of 1965 by Yigal Allon, deputy prime minister of the Eshkol government. The plan, primarily dictated by security concerns, called for rural and urban settlements to be erected in a sparsely Arab-populated strip twelve to fifteen kilometers wide along the western bank of the Jordan River and the western shores of the Dead Sea. Labor governments sought to interfere as little as possible in the day-to-day lives of the Arab inhabitants. Political and social arrangements were, as much as possible, kept under Jordanian or pro-Jordanian control, the currency remained the Jordanian dinar, the application of Jordanian law continued, and a revised Jordanian curriculum was used in the schools.

Another aspect of Labor's occupation policies was the integration of the territories into the Israeli economy. By the mid-1970s, Arabs from Israel and the territories provided nearly one-quarter of Israel's factory labor and half the workers in construction and service industries. Moreover, the territories became an important market for Israeli domestic production; by 1975 about 16 percent of all Israeli exports were sold in the territories.

The final element of Labor's occupation policies was economic and social modernization. This included the mechanization of agriculture, the spread of television, and vast improvements in education and health care. This led to a marked increase in GNP, which grew by 14.5 percent annually between 1968 and 1973 in the West Bank and 19.4 percent annually in Gaza. As a result, the traditional elites, who had cooperated with Hussein during the years of Jordanian rule, were challenged by a younger, better educated, and more radical elite that was growing increasingly impatient with the Israeli occupation and the older generation's complacency. In the spring of 1976, Minister of Defense Shimon Peres held West Bank municipal elections, hoping to bolster the declining power of the old guard Palestinian leadership. Peres wrongly calculated that the PLO would boycott the elections. Instead, pro-PLO candidates won in every major town except Bethlehem.

Israel's settlement policy in the occupied territories changed in 1977 with the coming to power of Begin. Whereas Labor's policies had been guided primarily by security concerns, Begin espoused a deep ideological attachment to the territories. He viewed the Jewish right of settlement in the occupied territories as fulfilling biblical prophecy and therefore not a matter for either the Arabs or the international community to accept or reject. Begin's messianic designs on the territories were supported by the rapid growth of religious nationalist groups, such as Gush Emunim, which established settlements in heavily populated Arab areas.

The increase in Jewish settlements and the radicalization of the settlers created an explosive situation. When in May 1980 six students of a Hebron yeshiva, a Jewish religious school, were killed by Arab gunfire, a chain of violence was set off that included a government crackdown on Hebron and the expulsion of three leaders of the Hebron Arab community. West Bank Jewish settlers increasingly took the law into their own hands; they were widely believed to be responsible for car-bomb attacks on the mayors of Ram Allah and Nabulus.

Begin's policies toward the occupied territories became increasingly annexationist following the Likud victory in the 1981 parliamentary elections. He viewed the Likud's margin of victory, which was larger than in 1977, as a mandate to pursue a more aggressive policy in the territories. After the election, he appointed the hawkish Ariel Sharon as minister of defense, replacing the more moderate Ezer Weizman, who had resigned in protest against Begin's settlement policy. In November 1981, Sharon installed a civilian administration in the West Bank headed by Menachem Milson. Milson immediately set out to stifle rapidly growing Palestinian nationalist sentiments; he deposed pro-PLO mayors, dissolved the mayors' National Guidance Committee, and shut two Arab newspapers and Bir Zeit University.

While Milson was working to quell Palestinian nationalism in the territories, the Begin regime accelerated the pace of settlements by providing low-interest mortgages and other economic benefits to prospective settlers. This action induced a number of secular Jews, who were not part of Gush Emunim, to settle in the territories, further consolidating Israel's hold on the area. Moreover, Israel established large military bases and extensive road, electricity, and water networks in the occupied territories.

In November 1981, Milson established village leagues in the West Bank consisting of pro-Jordanian Palestinians to counter the PLO's growing strength there. The leadership of the village leagues had a limited base of support, however, especially because the growth of Jewish settlements had adversely affected Arab villagers. The failure of the Village League Plan, the escalating violence in the occupied territories, in addition to increased PLO attacks against northern Israeli settlements, and Syria's unwillingness to respond when the Knesset extended Israeli law to the occupied Golan Heights in December 1981 convinced Begin and Sharon of the need to intervene militarily in southern Lebanon.

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Source: U.S. Library of Congress