After looking at alternatives, the UN proposed terminating the Mandate and partitioning Palestine into two independent States, one Palestinian Arab and the other Jewish, with Jerusalem internationalized (Resolution 181 (II) of 1947). One of the two envisaged States proclaimed its independence as Israel and in the 1948 war involving neighbouring Arab States expanded to 77 percent of the territory of mandate Palestine, including the larger part of Jerusalem. Over half of the Palestinian Arab population fled or were expelled. Jordan and Egypt controlled the rest of the territory assigned by resolution 181 to the Arab State. In the 1967 war, Israel occupied these territories (Gaza Strip and the West Bank) including East Jerusalem, which was subsequently annexed by Israel. The war brought about a second exodus of Palestinians, estimated at half a million. The Security Council in resolution 242 formulated the principles of a just and lasting peace, including an Israeli withdrawal from territories occupied in the conflict, a just settlement of the refugee problem, and the termination of all claims or states of belligerency. The 1973 hostilities were followed by Security Council resolution 338, which inter alia called for peace negotiations between the parties concerned. In 1974 the General Assembly reaffirmed the inalienable rights of the Palestinian people to self-determination, national independence, sovereignty, and to return. The following year, the General Assembly established the Committee on the Exercise of the Inalienable Rights of the Palestinian People and conferred on the PLO the status of observer in the Assembly and in UN conferences.