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Copyright 2002 The Chronicle Publishing Co.  The San Francisco Chronicle JULY 
8, 2002

 Intel chip plant located on disputed Israeli land;
 Intel could face political, legal problems with chip plant in Israel 
Henry Norr 

Just how diligent was Intel's due diligence when it chose to build a 
multibillion-dollar chip plant in Qiryat Gat, Israel? Will choosing that 
location eventually come back to haunt the company, or at least drag it into 
some pesky, embarrassing and costly legal entanglements? These questions are 
on my mind after checking out the history of the site -- not only on several 
Web sites dedicated to the Palestinian cause, but also in Israeli government 
and United Nations documents collected by a prominent Israeli historian. 

Whatever your views on the Middle East crisis, the issue deserves some 
scrutiny -- even though it involves a detour into what many now consider 
ancient history. Intel calls the plant Fab 18 ("fab" being chip-industry 
jargon for a facility where the silicon wafers that are eventually turned 
into working chips  are fabricated). The fab, which went into production in 
1999, was the fruit of a $1 billion investment by the Santa Clara company, 
supplemented by a $600 million grant from the Israeli government. Just a year 
after opening, its output had reached up to $3 million a day, and it 
accounted for $1.3 billion of Intel's $2 billion in exports from Israel.  

According to the company's annual report, it's Intel's second-largest
facility outside the United States, after one in County Kildare, Ireland. 
Qiryat (sometimes spelled Kiryat) Gat is close to the geographical center of 
Israel, along a major north-south rail line and the route of the planned 
Trans-Israel Highway. It's on land that would have been part of Arab 
Palestine under the partition plan adopted by the United Nations in 1947, but 
within
the larger Israel that emerged from the 1948 war between that country and its 
neighbors. In other words, it's on land the United States and most of the 
world's governments consider a legitimate part of Israel, not in the 
territories Israel conquered in the 1967 war, from which the United Nations 
has demanded its withdrawal. 

But from a legal and historical point of view, Qiryat Gat happens to be an 
unusual location: It was not taken over by the Israeli military in 1948. 
Instead, it was part of a small enclave, known as the Faluja pocket, that the 
Egyptian army and local Palestinian forces had managed to hold through the 
end of the war. (Among the Egyptian officers was Gamal Abdel Nasser, who 
became his  country's president six years later.) The area was surrounded by 
Israeli forces, however. When Israel and Egypt signed an armistice agreement 
in February 1949, the latter agreed to withdraw its soldiers, but it insisted 
that the agreement explicitly guarantee the
safety and property of the 3,100 or so Arab civilians in the area. 

Israel accepted that demand. In an exchange of letters that were filed with  
the United Nations and became an annex to the main armistice agreement, the 
two  countries agreed that "those of the civilian population who may wish to 
remain in Al-Faluja and Iraq al Manshiya (the two villages within the enclave 
covered by the letters) are to be permitted to do so. . . . All of these 
civilians
shall be fully secure in their persons, abodes, property and personal 
effects." (The fullest account of this episode I've found is "The Birth of 
the Palestinian Refugee Problem, 1947 1949," a scholarly treatise by Benny 
Morris, a prominent Israeli historian, published by Cambridge University 
Press. Born
and reared in Israel and now a professor at Ben Gurion University in 
Beersheba, Morris can hardly be called pro-Palestinian, to judge by articles 
of his published in the June 13 and June 27, 2002, issues of the New York 
Review of Books. Other Israeli historians have produced similar accounts.) 
Within days, the security the agreement had promised residents of the Al 
Faluja pocket proved an illusion. Within weeks, the entire local
population had fled to refugee camps outside of Israel. (Photos of them on 
the road are posted at www.palestineremembered.com/Gaza/al-faluja -- a site 
dedicated to preserving the memories and experiences of Palestinian 
refugees.) Morris presents ample evidence that the people of the Al-Faluja 
area left in response to a campaign of intimidation conducted by the Israeli 
military. He quotes, among other sources, reports filed by Ralph Bunche, the
distinguished black American educator and diplomat who was serving as chief 
U.N. mediator
in the region. Bunche's reports include complaints from U.N. observers on the 
scene that "Arab civilians . . . at Al-Faluja have been beaten and robbed by 
Israeli soldiers," that there were attempted rapes and that the Israelis were
"firing promiscuously" on the Arab population. Even though Bunche won the 
Nobel Peace Prize in 1950 for his efforts, some might be inclined to doubt 
that he understood the whole story of what was happening in the area. But 
even the staunchest supporter of Israel would have a hard time impugning 
Morris' other main source on this episode: Moshe Sharett, Israel's foreign 
minister at the time. Sharett, it turns out, was acutely embarrassed by the 
behavior of his country's military in the area. In a sharply worded memo to 
the army chief
of staff, he noted both overt acts of violence by soldiers in the area and "a 
'whispering propaganda campaign among the Arabs, threatening them with
attacks an and acts of vengeance by the army." "There is no doubt," Sharett 
wrote, "that there is a calculated action aimed at increasing the number of 
those (Arab civilians) going to the Hebron Hills
(in the West Bank, then controlled by Jordan) as if of their own free will, 
and,
if  possible, to bring about the evacuation of the whole civilian population" 
of
the pocket. Sharett's main concern, it appears, was that the campaign in 
Al-Faluja called into question "our sincerity as a party to an international
agreement." Whether he had any moral scruples about the situation isn't 
clear. A few months later, when Arab civilians in other parts of Israel's 
newly conquered territory resisted similar pressures, he wrote, with what 
sounds like
regret, "It is not possible in every place to arrange what some of our boys
engineered in Faluja (where) they chased away the Arabs after we signed an . 
. . international commitment." Nowadays we'd call the Al-Faluja events ethnic 
cleansing. LEGAL RECOURSE? In substance, what happened to the people of 
Al-Faluja and Iraq al Manshiya  isn't very different from what happened to 
the residents of hundreds of
other Palestinian villages. Only a few things make this case unique: the 
legal agreement that was supposed to guarantee the residents' security, the 
Sharett memos recording
what  happened to that guarantee -- and the fact that 40 years later their 
land, having been converted by the Israelis into an industrial park, became 
the
site of an Intel fab. 

Now Palestinians in the United States and elsewhere are starting to organize 
around this case. A Connecticut organization called the Palestine Right to 
Return Coalition (www.Al-Awda.org) is encouraging Palestinians and their 
supporters to write to the media about the case. (A version of the story 
appeared earlier, in somewhat garbled form, in The Register, a British Web
site  covering technology). 

The group is calling on Intel to, among other things, divest from Israel. 
It's also tracking down the original Arab villagers and their descendants -- 
now almost 15,000 people in all, including people living in Texas, Louisiana 
and New York. While the group hasn't announced any plans for legal action, 
some Palestinian lawyers are looking for ways to pursue their cause in the
courts. At least some experts think the residents of Al-Faluja and Iraq al 
Manshiya
could make a strong case. For example, Francis Boyle, a professor of 
international law at the University of Illinois at Urbana-Champaign, said he 
wasn't familiar with the details of the situation. But based on my summary of 
the history, he said that the original inhabitants and their heirs could take 
Intel to a U.S. court in
a type of suit known as an in rem proceeding or under similar doctrines in
many other countries and seek to attach Fab 18's assets. "Intel and its 
lawyers and bankers had better be very careful here," he said, noting that a 
similar legal strategy was used in cases involving the former British colony 
of Rhodesia -- and by Jewish survivors of the
Holocaust. Boyle is a longtime supporter of the Palestinian cause, so I 
talked to a lawyer at the opposite end of the political spectrum: Abraham 
Sofaer, George
P.  Shultz Distinguished Scholar and Senior Fellow at the Hoover Institution 
at Stanford University, a former federal judge who served as legal adviser to
the State Department from 1985 to 1990. 

Not surprisingly, Sofaer was less sanguine about the prospects for any such  
lawsuit, but he also said he wasn't familiar with the facts of the case. The 
main obstacle, he said, is the absence of a treaty resolving the conflict 
between the Israelis and the Palestinians and legal structures for settling 
property claims. "Without that," Sofaer said, "the courts are going to be 
very reluctant to get involved" in such cases. But if peace ever comes, he 
said, "I'd be very happy to represent the Palestinians." 

Noting that native Americans won compensation in several major cases once 
Congress adopted procedures for dealing with such claims, he said, "It sounds 
as if there's potential in the long run for recovery here." LAND OWNERSHIP 
Several weeks ago, I asked Intel spokesman Chuck Mulloy about the history of 
the land where Fab 18 sits. He said the company had acquired rights to it in 
a deal that was legal under the laws of a recognized sovereign state. "We
don't think it's appropriate for us now to question the Israeli government. 
"We cannot insert ourselves into the middle of what is really a political 
issue" between Israel and the Palestinians, he said. 

Those arguments are understandable, though I'm sure they won't placate the 
Palestinians, and I wonder how they'll stand up if the case ever gets to
court.  Mulloy also said the fab is not actually in the area that made up the 
Al-Faluja pocket in 1948. "These claims didn't come up until after we built
the  fab -- there were no Web sites and no campaigns about it when we did our 
due diligence" in the mid-1990s, he said. When I went back to my sources, 
those arguments didn't check out. The maps I examined seem to confirm the 
Palestinians' claim that Fab 18 is on land that
was part of the village of Iraq al Manshiya. As for when the issue arose, I
checked  and found that Morris' book was first published in 1987 and widely 
debated
in Israel. I left Mulloy several follow-up messages reporting what I'd found, 
but he didn't respond. I also called the Israeli consulate in San Francisco 
to get its perspective, but the first official I spoke to there said he 
didn't believe the story,
and the press spokesman he referred me to hasn't called back.