Lebanon’s 12 Palestinian refugee camps are breeding grounds for extremist groups and constitute a “time bomb” that needs urgent attention, the International Crisis Group think tank said Thursday.

Successive Lebanese governments were largely to blame for a “catastrophic” situation in the camps which were set up after the creation of Israel in 1948, the Brussels-based ICG said in a report.

“Marginalised, deprived of basic political and economic rights, trapped in the camps, bereft of realistic prospects, heavily armed and standing amid multiple fault lines... the refugee population constitutes a time bomb,” it warned.

According to the UN agency for Palestinian refugees (UNRWA), there are between 350,000 and 400,000 Palestinian refugees in Lebanon - a country of more than four million inhabitants - most of them living in 12 camps.

Other estimates put the number of refugees at 200,000 to 250,000 as UNRWA does not strike off its lists the names of those who emigrate.

“Over the years, virtually nothing has been done to genuinely address the Palestinian problem,” Sahar Atrache, the ICG’s Lebanon analyst told AFP.

“Even though the current government has made steps to tackle the issue, it has adopted a piecemeal rather than a global approach.” Atrache said that the problem was compounded by the unstable political situation in Lebanon as well as the region as a whole.

Many in Lebanon fear that by granting the Palestinians more basic rights, this would lead to their permanent settlement in the country and alter the demographic map.

“Palestinians are overwhelmingly Sunni Muslims and, as the prospect of any significant return of refugees to Israel diminishes, fear has revived their permanent settlement or naturalisation in Lebanon, which would affect the confessional balance,” the report said.

According to observers such concerns are true among the Christian leadership and the Shiite group Hizbollah, which has been engaged in a political tug of war with the Sunni-led majority in parliament.

“Given the domestic political situation, everyone prefers to maintain the status quo but it is specifically this kind of attitude that is creating more problems,” Atrache said.

“By granting a Palestinian the right to purchase a house, it does not mean he is being naturalised.” Palestinian refugees in Lebanon have no legal status and unlike Lebanese citizens, they do not enjoy free medical care or social security benefits even if employed.

They are also barred from several professions and are not allowed to purchase real estate or form associations. The unemployment rate among camp residents exceeds 60 per cent, according to UNRWA.

The explosive situation in the camps was starkly brought to light in 2007 during deadly confrontations at the Nahr Al Bared camp in northern Lebanon between the army and Fateh Al Islam, an Al Qaeda-inspired group.

The fighting left 400 people dead and led to the Lebanese army entering a Palestinian camp, for the first time since the country’s 1975-1990 civil war.

The ICG report - “Nurturing Instability: Lebanon’s Palestinian Refugee Camps” - said that three critical steps should be addressed by all parties to improve the lot of the refugees and avoid a repeat of Nahr Al Bared.

Lebanon should grant the refugees fundamental rights, except for the right to acquire citizenship or to vote, and should review the approach to camp security.

Coordination between the state and Palestinian factions must also be strengthened, it said.

“The camps are a tinder box blend of socio-economic deprivation, political marginalisation, mistrust of the state, ineffective security, radicalisation, weapons and divided leadership,” said ICG Middle East programme director Robert Malley.

“The Gaza conflict did not spark a conflagration,” he said. “But the next match, domestic or regional, is likely to be struck soon.”