Unlike its demands for Holocaust reparations, Israel's compensation claims for properties that Jews left behind in the Arab world have aimed not to provide individual financial reparations, but rather to counter and offset Palestinian refugees' claims for restitution and the right of return. In U.S.-sponsored negotiations in 2000, Israel announced it would drop its counterclaim policy and agreed with the Palestinians that individual compensation would be paid out to all sides from an international fund. More recently, however, a new counterclaim strategy has emerged, based not on financial reparations, but rather on an argument that a fair population and property exchange occurred in 1948. By pursuing this strategy, Israel and international Jewish organizations risk exacerbating tensions between European Jews who have received Holocaust reparations, and Arab Jews angry that their claims are held hostage to diplomatic expediency.

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