As was highlighted in this space on Sunday, US President George W. Bush displayed a critical understanding of the real obstacle to peace when he stressed last week that an agreement "must establish Palestine as a homeland for the Palestinian people, just as Israel is a homeland for the Jewish people." This language is the clearest US rejection to date of the Palestinian demand of "return," which is a backdoor method of denying Israel's right to exist. It is difficult to overstate the importance of repeating this formula and, even better, explaining what is behind it, namely that mutual recognition is a non-negotiable prerequisite for any serious talks on the two-state vision. After all, Israel could not come to the table without recognizing that the Palestinians have a right to a state. Similarly, the Palestinians need to accept Jewish national rights as a basis for, not a conclusion to, negotiation over a two-state framework. That said, something else Bush said about this needs to be addressed. Later on in his summary statement on January 10, he stated: "I believe we need to look to the establishment of a Palestinian state and new international mechanisms, including compensation, to resolve the refugee issue." Here, too, the main thrust of the statement is constructive and important, since it reinforces the requirement for the new Palestinian state, not Israel, to constitute the address for Palestinian refugees. The reference to compensation can be understood as a workable alternative to the unacceptable and asymmetrical Palestinian demand to flood Israel with "refugees" (most of whom where born after their parents or grandparents actually left Israel). But the reference to compensation is also problematic. First, though Bush did not mention Israel in this context, the mention of compensation could be construed as implying central Israeli culpability for the Palestinian refugee problem. This is historically unjust and incorrect, since the genesis of the Palestinian refugee problem was the Arab rejection of the 1947 UN Partition Plan, and the subsequent attempt to wipe Israel off the map by five Arab armies in the War of Independence. It is true that some of the Palestinian Arabs fled the area at the urging of Arab leaders, while others were driven out by Israel during the war. But none of them would have had to leave had the Arab states not initiated aggression against Israel. Furthermore, it is these same Arab states, not Israel, that decided to cynically maintain the Palestinians as refugees down the decades, rather than use a fraction of their resources to resettle them, as Israel resettled the Jews who fled Arab countries. As the Foreign Ministry's web site explains, "Israel does not bear responsibility for the creation or the perpetuation of the Palestinian refugee problem. Thus it cannot declare, even as a gesture, responsibility for the problem." Our diplomats and leaders need to hammer this point home, and also stress that if there is to be compensation, that the Jewish refugees of this period not be forgotten. The establishment of Israel afforded Arab tyrants the pretext to engage in massive ethnic cleansing against their own Jewish inhabitants. In effect a population exchange transpired in this region, with Jewish refugees from Arab countries outnumbering those Arabs who left Israel (about one million Jews compared to 600,000 Arabs). The Jews, though, were never compensated for the property they were forced to relinquish. If compensation mechanisms are to be set up, then by right they ought to include reimbursement for Jews as well, especially as these Jews did not initiate aggression against anyone and in many cases resided in the various Arab countries centuries before Arabs or Islam appeared there. The Jewish refugees' cause was first raised forcefully in the Knesset in 1975 by then-MK (later Israel Prize laureate) Mordechai Ben-Porat, who founded the World Organization of Jews from Arab Countries (WOJAC) to document property and assets left behind by Jews in Arab countries. In 2003, the government officially authorized WOJAC to list all that was confiscated from Jews by Arab governments. Jewish lands were wrested from Jews by order of Arab regimes, as were Jews' bank accounts and even jewelry. This wasn't only limited to the time of Israel's establishment. Egypt stripped its Jews of all they had in 1956. Occasionally there are murmured allusions to these facts from official Israel, such as from Menachem Begin in the first Camp David process and Ehud Barak in his 2000 Camp David talks. But the issue has not been pursued in earnest. It should be.