Throughout the years of the Oslo peace process between Israel and the PLO, the Palestinian refugee problem was apparently the most sensitive issue at the negotiation table. This thesis explores the role of the Palestinian exodus in the formation of Palestinian and Israeli national identities in an attempt to understand the inextricability of the refugee problem in the negotiations. The negotiation process is treated as a two-level game involving the Israeli government and the PLO leadership with special attention to the impact of national mythology and narratives as factors determining and limiting the legitimacy of concessions at the respective domestic scenes.
The negotiations on the refugees are investigated in light of the three elements of national identity, legitimacy of concessions and the negotiation conduct of the political leadership. The findings of the analysis suggest that first; the Palestinian exodus of 1948 has constituted a fundamental element not only in Palestinian but also in Israeli identity formation. Second; the two conflicting narratives of the 1948 War define the national interests and values of the two sides to such an extent that they also determine the domestic legitimacy of concessions both by defining the mandate of the negotiator through formal legislation at the one hand and by limiting the political flexibility of the Palestinian and the Israeli domestic constituencies at the other. Third, the main strategy of the Israeli and the Palestinian leadership to face the contradiction between domestic demands and the requirements of the counterpart was secret negotiations and issue linkage between the refugee question and the territorial aspects of the Israeli-Palestinian conflict. The linkage strategy opened up for flexibility on the practical aspects of the refugee issue, including on the question of compensation on the Israeli part and on physical repatriation on the Palestinian side while both parties rejected to compromise on the symbolic identity-related issues. The consistent rejection of symbolic concessions on both sides emphasizes clearly the centrality of national identity and narratives as a source of legitimacy that cannot be ignored by the leadership.