PRESIDENT CARTER seems to have given new life to an old Middle East idea, compensation for the victims of the region's travails. He dropped it in such a garbled form, suggesting - inaccurately - that a United Nations Security Council resolution had authorized compensation for displaced Palestinians, that some observers surmised he had picked it up from his most recent Mideast visitor, Saudi Arabian Prince Fahd. The Israeli ambassador in Washington promptly reminded the State Department that Israel has its own claims for compensation for losses suffered by Jews formerly resident in Arab lands. Egypt's President Sadat then chipped in with a demand for billions of dollars in compensation for losses incurred while the Suez Canal and the Sinai oil fields were in Israeli hands.
Given Mr. Carter's record of moving on from verbal miscues to policy pronouncements, it could be a mistake to dismiss what he said about compensation. It's not a way-out idea. On the contrary, the reason it's been around for so longs its that it's a good idea. Paying off some number of aggrieved Palestinians, rather than having them continue to agitate to go back where they lived before Israel was established in 1948, has always seemed one possible alternative. If in fact Prince Fahd broached it to President Carter, that's evidence of sorts that the Saudis are serious about a settlement.
Who will be paid? Who will pay? It's conceivable that Arab and Israeli compensation claims will pretty much cancel each other out; that's the simplest solution. In fact, it's very hard to see any money's changing hands at all if compensation is presented as tantamount to confession of historical wrongdoing. That approach would seem to effectively preclude payment by Israelis to Arabs or vice versa. If payment is presented as part of a diplomatic bargain or a development package, however, that's another matter. The Saudis and other Arab oil states have plenty of money, and the United States and other Western countries have funds available. Any new Palestinian "homeland," whatever its political form, will need economic help.
Until now, demands for compensation have been only propaganda. But a serious quest for peace would have to be one part diplomatic conference and one part bazaar, and in that context economic considerations would have a central role. Although it is not entirely clear from what Mr. Carter said the other day, that's apparently what he had in mind.