The Work of an International Negotiator in Restitution Cases and the Legacy of World War II

May 6, 2003

Introduction

JEFF OLICK: Lili Cole and I are co-chairs of the Columbia University Seminar on History and Memory, and this is our final session for what has been a successful year of interesting speakers, and what better way to cap it off than with Ambassador Eizenstat, who I hope will address some of the questions that we have been developing all year.

May I just remind you that the seminar is an ongoing proposition. We will be back next year, and we look forward to your input as we make plans for speakers and themes.

I am just going to turn it over to Lili. I want to thank her and the Carnegie Council for their hospitality in having us today.

LILI COLE: Thanks, Jeff.

As some of the people here know, the Columbia University Seminar Beyond History and Memory has been trying to look at the question of history and memory and the difference or not between them through different disciplinary lenses.

I think this is the first time that we have had a practitioner here, as opposed to someone whose focus is mostly academic, and we are very honored to have such a distinguished practitioner join us tonight. It is difficult to introduce Ambassador Stuart Eizenstat because he has had so many distinguished positions.

He is currently taking time out to join us tonight from his work in law with Covington & Burling in Washington, D.C. His background was for many years in politics. He was President Jimmy Carter’s Chief Domestic Policy Advisor, an Executive Director of the White House Domestic Policy Staff, was Deputy Treasury Secretary, and Under Secretary of State for Economic, Business, and Agricultural Affairs, and Under Secretary of Commerce for International Trade.

Although he has also done negotiating in many other parts of the world and many other areas, including the Kyoto Protocol and the Framework for U.S. relations with the EU, what brings him here tonight is his very famous work negotiating Holocaust-era issues, the ones that lasted and could be said to have turned out to be the most thorny ones. There are different issues that come out in different periods following a conflict. The ones that lingered longest, the last and most difficult ones, were the ones that Ambassador Eizenstat worked on.

He was the Special Representative of the President and Secretary of State in negotiations with the Swiss, Germans, Austrians, and French in a number of issues related to dormant bank accounts, to looted art, to insurance policies, a very complex set of issues with many different actors.

Ambassador Eizenstat’s memoir, Imperfect Justice, which we will have copies of here tonight, sets out in fascinating detail the complexity involved in these issues, the number of actors, and the number of moral and ethical considerations that have to be juggled in negotiating them.

I would like to turn the floor over to the Ambassador. We will have about twenty-to-thirty minutes of presentation on his experiences and then we’ll open the floor for questions.

Remarks

STUART EIZENSTAT: Thank you very much, Jeff and Lili. I think the program you are creating is a very important one, and I think that my work, as well as my book, are one facet of this. But I want to challenge everyone, even with respect to a post-war Iraq, to think about reconciliation models, and indeed whether my model was a reconciliation model at all.

My book is an improbable story of how, fifty years after the end of World War II, justice was finally provided to long-forgotten victims of the greatest theft in history, as well as its greatest genocide: those who had placed their assets in the safest banking system in Europe, in Switzerland, to keep them out of Hitler’s clutches and never had them returned after the war; those who were never compensated for their coerced labor at the hands of German and Austrian slave labor companies; those whose artwork and property were looted and never returned; those whose insurance policies were never paid; and more broadly, those whose culture was stolen root and branch.

It’s a story of how some of the world’s largest corporations were held accountable for their participation in some of these wrongs. It’s a tale of political intrigue, of international diplomacy at the highest levels of state, of threats of sanctions, of conflict, and with a colorful cast of characters that would be worthy of a Shakespearean play.

It started for me on a typically wet, dreary Brussels January day in 1995 when I was Ambassador to the European Union. Completely out of the blue, I got a call from Richard Holbrooke—who was then Assistant Secretary of State, later our UN Ambassador—and he asked if I would undertake a dual mission in addition to being our EU Ambassador. That was to be a special envoy to deal with property restitution in Eastern Europe from the former East Bloc countries that were now new democracies, and to encourage those new democracies to return to the re-emerging religious communities—Protestant, Catholic, and in particular Jewish communities, which were having the most difficulty getting their property back—everything from churches and synagogues, to schools, community centers, and even cemeteries, so they could rebuild their shattered lives and their shattered communities which had endured the twin tragedies of both Naziism and Communism.

I frankly did not accept immediately. My staff in Brussels was strongly against my taking the position because they said that it would divert my energies from already significant responsibilities dealing with European-U.S. differences. When I checked with my fellow ambassadors throughout Europe, particularly in Eastern Europe where I would be working, they were, to say the least, unenthusiastic about my intruding on their turf on an unpopular issue.

Nevertheless, I disregarded the advice, and I did so for two reasons. First, because I think if you are in public service—and I have spent a good deal of my life in public service, and I would have spent more if my party had gotten their presidential candidates elected more often—that when you are in public life you owe it to your country to do what you are asked to do. It’s just that plain and simple. If it’s an additional burden, you’re not getting paid by the hour anyway, and you should do it.

But there was a more personal reason, and for that just a little bit of background. I grew up in Atlanta, Georgia, at a time when the burning issue in the 1950s had nothing to do with the Holocaust and everything to do with civil rights and desegregation. It’s an early experience with injustice, which I utterly failed when I was a teen-ager. I was unwilling to break with convention and give an elderly black lady my seat on the white section of an Atlanta bus.

Even though my home was a very traditional Jewish home and my father and both uncles had served in World War II and both sets of grandparents had come from Eastern Europe, I can say that I never heard a discussion of the Holocaust, not once. I never met a survivor, nor did I ever study a course on the Holocaust, because in the 1960s when I was going to college, there were none available, zero; it was not considered a suitable topic for academic study.

So given my background, why would I have been drawn to accept Holbrooke’s offer when so many people were against my doing it? For that I had sort of two epiphanies.

One occurred in 1968 in the Hubert Humphrey presidential campaign. I was the then-Vice President’s research director in the Richard Nixon campaign. I chanced to meet a fellow campaign worker, named Arthur Morse, who had just published a path-breaking book, called While Six Million Died, which laid out in great detail the really shocking story of F.D.R.’s acquiescence, and that of his top staff, in the genocide of the Jews and other victims with the certain knowledge that Arthur’s book disclosed he had had about it. I said to myself, having both talked to him and studied the book, that if I ever had a chance to be in public life, I hoped there would be some way in which I could rectify this cloud over U.S. history.

I didn’t have an opportunity in 1968. It was one of my many losing campaigns for the presidency. Several years later, when I was in Washington, I met a fellow named Jan Karski. Jan Karski, whom many of you may know, was a great man. He was then already in his late-seventies, early-eighties. He died only a couple of years ago. He had been a leader in the free Polish government in exile in London and had twice risked his life going into the hell of the Warsaw ghetto—if any of you saw the recent Roman Polanski film “The Pianist”—so he could bear witness and report to the West what he saw.

Jan told me that he saw F.D.R. personally in the Oval Office and recounted his story of what he had seen. F.D.R. listened impassively and said, “I want you to see my confidante, Justice Frankfurter, and I’ll follow his advice.”

So he repeated the story to the great jurist. Karski said to me that Frankfurter paused, turned his back, and then turned forward and said, “Sir, I’m not suggesting you’re lying, but I simply choose not to believe you.”

That was really the attitude of the government during the war. And it got little better after the war. Refugees drifted aimlessly into displaced persons camps. The British kept 50,000 in camps in Cyprus and didn’t allow them into Palestine. Those who had the temerity to try to go back and reclaim their property were driven off. And even today, in Poland this is still a very big and very touchy issue.

The post-war negotiations with the neutral countries were very unsatisfactory. They produced very little in the way of recuperation of German assets, particularly those with the Swiss, but also with the Swedish, Turkish, Portuguese, and Spanish governments.

Then the Cold War intruded, and any effort, any emotional commitment, to try to help refugees evaporated, as the U.S. spent all of its energy trying to get the former neutrals, the Western allies during the war, and indeed those countries who had been part of the Axis Bloc, into NATO to combat the Soviet threat. It appeared, therefore, that justice for victims would fade into the mists of history, perhaps forever.

In terms of carrying my own thread, having had this Karski and Morse experiences, when I came into the Carter White House, I recommended in 1978 the creation of a presidential commission, headed by Elie Wiesel—who, not coincidentally, did the foreword to my book—and asked that presidential commission to recommend a permanent memorial to Holocaust victims in Washington, what has now become the U.S. Historical Museum, and I think a real masterpiece beyond anything I could have possibly imagined.

In 1979, a year later, as we’re all now transfixed by Iraq and al-Qaeda and Islamic fundamentalism, the first Islamic revolution occurred, when Ayatollah Khomeni came out of exile in Paris, went back to Tehran, and the Shah abdicated his throne. There were at that time 100,000 Jews and several thousand Baha’i and Christian believers who were fearful for their lives. The Jewish community had lived in what had been Persia for literally 2,500 consecutive years. It was the oldest continuous Jewish community in the world, dating back to the construction of the First Temple. They, like the Baha’i and Christian believers, feared for their life. They streamed out by the tens of thousands to our consulates in Europe and they were turned back—no appropriate visa status, you’re not a visitor, you don’t have a business, you don’t have a green card, you’re not a student.

When this came to my attention, all the lightbulbs went on and off, based on what I had learned about World War II and the same fate which had befallen refugees trying to get into the United States. So I was able to get President Carter to issue special visitor visas that would expire only when the Shah was returned to his throne, which hasn’t happened yet. There were 50,000 who came in. About 30,000 live in L.A., about 12,000-15,000 in the New York area.

But much more than this personal experience was necessary to get back on the world’s agenda an issue which had really passed out of history for fifty years. There were really three events which occurred in the 1990s that created a context in which my work became possible.

One was simply the fact that victims were reaching the end of their natural life cycle. They wanted justice. They were beginning to tell their story. Any of you who know Holocaust victims know that many of them, even for their own families and children, had great difficulty telling their stories, often didn’t tell them, and now, toward the end of their life, there was a great urgency. There is the Shoah Foundation Project, and people began talking more about it, and trying to reconnect with their lost property.

Second, just as the Cold War had quashed any impetus to help the victims after [World War II], the end of the Cold War had just the opposite effect: it freed up resources and it lowered barriers to travel, so people behind the former Iron Curtain could now travel and try to reconnect with their assets; archives became open that the Communist governments had closed.

And third, there were a series of World War II fiftieth anniversary celebrations—D-Day, the Battle of the Bulge, and the end of the war in Europe itself. These led to retrospectives, to look back at what I call in the subtitle of the book “the unfinished business of World War II.”

One of those who looked back was Peter Gumbel, a Wall Street Journal reporter, who wrote a story on the front page of The Wall Street Journal in the summer of 1995 about something no one had known about, certainly not myself, and I think very few others, called dormant Swiss bank accounts, accounts that had been created by victims trying to shield their assets from Hitler’s clutches and having had difficulty getting those assets back.

And Gumbel gave a human face to his story: Greta Beer, an elderly, elegant lady who now lives in Boston and who is one of our heroines in our work and in the book, had spent four decades trying to reconnect with her property. There are others, like Ellen Sapir, who had done the same. They had been told by the Swiss banks, “Where’s your father’s death certificate?”—which Auschwitz did not conveniently provide.

This was really a quite remarkable story. I read it and I called Holbrooke up. I said, “Gee, this seems like it’s related in some way to the property restitution issues. How about if I explore it?” He agreed.

At the same time, the story was read by Edgar Bronfman, the head of the World Jewish Congress, who was a chief political and financial backer of Bill Clinton. And he was also at the same time a major constituent in this city of what had been your very colorful, populist, conservative Republican Senator, Alphonse D’Amato, who was then the Chairman of the Senate Banking Committee; at the time, coincidentally, D’Amato was the chief opponent of Bill Clinton because he was engaged in Whitewater hearings, trying to pin the Whitewater savings and loan scandal on the President and First Lady. Bronfman was able to get both of them to work together.

For D’Amato this was a political godsend. It was like manna from heaven. He was facing a tough reelection two years hence. He had the largest Holocaust survivor population in the United States, one of the largest in the world. He was mired in these Whitewater hearings, which every day he held the hearings was making him less popular and the President more popular in New York. So, like any good politician, he pivoted 180 degrees: out went Whitewater, in came the Swiss banks, celebrated hearings at which Bronfman, Greta Beer, and myself testified, and the harsh spotlight of history was suddenly shined on Switzerland.

What happened then is typical, and we need to talk about this in terms of reconciliation models. It’s sort of typical of what happens in our country with our wonderful judicial system, because anytime there’s controversy, there are going to be lawsuits; and any time there are going to be lawsuits, there are going to be special categories of lawsuits, called class action suits, which allow a few people to represent, at least allegedly, tens of thousands of others.

And in came a discordant group of class action lawyers who filed massive suits against three major Swiss banks. I became the mediator of those and the unintended ringmaster of a three-ring circus. This brought the whole Holocaust restitution issue front and center in ways that the work I was doing in Eastern Europe, property by property, would never have done.

Events then unfolded like peeling back the layers of an onion: one discovery leading to another, one set of lawsuits to another, one negotiation to another. Issues long suppressed, like art and insurance, suddenly came to the fore. We moved from Swiss banks to German and Austrian slave labor companies, and in the end to French banks.

The book is really an account of how all this happened and the inside negotiations. I’ll talk about the foreign policy implications of this in a minute because there were severe foreign policy implications, in particular the fact that state and local governments had a major role in settling these suits, against our own wishes.

That is because in all of the cases, but in particular the Swiss and German cases, your then-Comptroller Alan Hevesi created an 800-person committee across the country of public finance officials, state and local officials, who controlled literally billions of dollars of pension funds and hundreds of millions of dollars of underwriting business. Hevesi’s group threatened to pull out these pension fund investments from Swiss banks, from German slave labor companies, unless they settled their cases. They tried to block the UBS/SBC bank merger; they tried to block the Deutsche Bank/Bankers Trust merger.

I was really caught in between because I called myself the “sanctions meister” of the Clinton Administration; I’m the one who dealt with the Helms-Burton Act, the Iran-Libya Sanctions Act, the Religious Persecution Act. They were trying to sanction European companies, to avoid those sanctions. I am the one that got to the Supreme Court the Massachusetts v. Burma case, in which Massachusetts tried to bar companies from doing business with the state if they invested in Burma. So it was my lot to strongly oppose these efforts. And yet, I knew at the same time that they were having an unintended effect of getting the attention of these companies and raising the level of their offers for my own mediation.

I have often said that my mediation was very unusual. A mediator is supposed to be neutral and have no interests on either side. I was hardly neutral. The U.S. government was hardly neutral. We were, on the one hand, trying to help Holocaust survivors, Jewish and non-Jewish survivors of World War II, who were U.S. citizens, as well as hundreds of thousands who weren’t; and at the same time, preserve our economic and political and diplomatic relations with valued friends, Switzerland, Austria, Germany, France. So what I have said is we weren’t neutral, we had mutually conflicting interests. But we were invited into these mediations.

At the end of a six-year period, rather than the couple of months that Holbrooke had first promised, I looked back on a sort of wildly implausible set of accomplishments.

We have returned thousands of pieces of religious communal property to the newly reawakened religious communities in Eastern Europe.

In terms of the Swiss bank accounts, when I went to Basel, Switzerland, and met with the Swiss Bankers Association in early 1996, after reading Peter Gumbel’s story and getting authorization, I asked them about the story. I even handed them a clipping. I said, “Tell me about these dormant bank accounts. Is this a true story?”

“Yes. We’ve had our own ombudsman look into this and there are 775 bank accounts and we’re going to return every nickel.”

Four years later, a commission headed by Paul Volcker, that charged the Swiss banks $200 million in audit fees, found not 775 but over 20,000 that have now been published.

We got $8 billion in class action settlements against private Swiss, German, Austrian, and French companies and their governments, the first time in the annals of warfare that private companies have been held accountable for wrongs committed in warfare.

Bank profits were disgorged from the Aryanization of property, property returned. Insurance policies were being paid at ten times their face value to take into account the passage of time.

We negotiated with forty countries the Washington Principles on Art. The Germans stole over 600,000 paintings, the greatest theft of art in history, and of those 600,000, 100,000 are still unaccounted for. Many of them are in major museums around the world, including in the United States. France has posted a Web site which posts about 2,000 looted artworks that were in their possession in the Louvre and the Jeu de Paume. The National Gallery has recently returned paintings. The Met here has found 393 of doubtful provenance; that doesn’t mean they were all looted, but they had gaps in their ownership, where they went through known Nazi art dealers. We have reconnected families to their art in very interesting ways.

Each of the major negotiations we did—and I think this also gets to the whole issue of reconciliation—spoke volumes about the capacity of the countries with whom we were dealing to come to terms with their past. That is what made the first of these negotiations with the Swiss so difficult, because the Swiss had taught themselves, and I think the world, that they were the pristine neutrals during World War II, and indeed they played a very useful role. They were officially neutral. They had been neutral since 1815. They were a listening post for the OSS. They took some American POWs.

But their government—at the same time their people were virulently anti-German, anti-Nazi, manning tunnels in the Alps—their government was playing a very different role. It was their government that invented the “J” stamp on visas for refugees coming out of Germany so that they could exclude and close their borders to Jewish refugees.

It was their central bank which became in effect the banker for the way in which the Germans financed a significant part of their war effort. The Germans had a basically worthless currency, and so they came upon the notion of stealing from the central banks of the governments they occupied. They stole the gold bars in those central banks and gold from the victims themselves, had it smelted down into disguised gold bars, and then in effect laundered those gold bars through the Swiss National Bank, which according to Switzerland’s own historical commission knew as early as 1941 that they were dealing in looted gold. They ignored repeated warnings throughout the war, even to the very last days when there was no danger of invasion, and continued to convert these looted gold bars into the hard currency that the Germans used to purchase from other neutrals the raw materials to sustain their war effort. And then, after the war, they refused to return, after six years of negotiation, all but a very small fraction of that.

The Swiss Government is the only government that did not actively participate in our negotiations. The German, French, and Austrian governments did. All the burden of these class action settlements fell on three, and ultimately two after the merger, of the banks and they bore the burden of a $1.25 billion settlement.

When we moved to Germany, we faced a very different historical context. Germany was, of course, the perpetrator of the Holocaust itself. It had long since come to terms with the Holocaust. It had paid $60 billion in reparations, and continues to pay those every day.

What we learned about our mediation in the German slave and enforced labor cases was the way in which the Germans manned the war effort. I often wondered: for a country of 70 million, how could they almost successfully have fought a two-front war? They had 13 million men in arms for a country of 70 million. Almost one out of every man between sixteen and forty-five were in military uniform. They did it because, just as they took the gold from the countries they occupied, they took the people. Up to 10 million people were moved onto German farms and factories to run the war effort and free Germans up for the war front. This had never been compensated for.

Here there was I think a very heroic figure, Gerhard Schröder, who at a time he was cutting 30 billion Deutschmarks from his budget in popular social programs, rallied his private sector and matched their contribution and came up with a 10 billion Deutschmark ($5 billion) settlement. This underscored once more, I think, Germany’s capacity and willingness to face its past.

When we moved to Austria, we faced a very different context. Austria also had been an employer through its companies of slave and forced labor. It had failed to return property that had been confiscated, and it lived with the myth that they were, as they called themselves, the first victims, rather than the willing accomplices, of the Third Reich. There is a joke that one hears in Vienna coffeehouses that Austria is the only country that has convinced itself that Beethoven is an Austrian and Hitler is a German.

And yet, Chancellor Wolfgang Schuessel very courageously, even though he was in a very difficult coalition government with a far right party was able to rally his private sector and make contributions from his treasury and reach a billion-dollar settlement, and in the process write a new and happier chapter in Austrian history.

Last were the French. I call my French chapter “The French Exception,” because France was exceptional. It was the only country, the only Western democracy, that actively collaborated with the Germans in deporting its own citizens to their death through the Vichy Government, and then for fifty years, from President DeGaulle to President Mitterand, denied that there was any responsibility for post-war France for the actions of the Vichy Government.

Here again there was, although he may be seen in a very different light in the prism of Iraq, another very courageous leader, Jacques Chirac, who on the forty-third anniversary of the deportation of the Jews in Paris, during our work, declared that indeed Vichy was France, that France was responsible for Vichy’s actions, and that created a context in which we could successfully settle the suits against French companies.

Let me get now to the sort of broader issues. That is, was this worth six years of effort, a unique intervention? And I’d like you to ask yourselves, as I have to ask myself about it every day, was it even appropriate for the U.S. government to intervene as a mediator in purely private lawsuits? There were with no government sued in this. The Swiss government, Austrian government, French government, etc., were never sued; they couldn’t be because of sovereign immunity.

So was it worth it, first of all? Well, I think it was worth it to the victims—not because any of them got a king’s ransom. Eight billion dollars sounds like a lot of money, but when you divide it among 1.25-1.50 million still surviving slave and forced laborers, and you have to pay for property and bank accounts and the like, it’s not that much money. And indeed, the slave laborers got $7,500, and the forced laborers, who lived under somewhat less harsh conditions, $2,500—hardly a king’s ransom. But they all have the knowledge that someone at the end of the day was held accountable, and this to me—and this is what they tell me—is more important than those small amounts of money.

But I like to think that our work goes beyond monetary recovery, and here I come to the issue of reconciliation and models for reconciliation.

The first, I think, long-term lesson is simply the emergence of truth—that is, how the war was financed, how it was manned, the dimensions of the theft, the injustice to the victims for fifty years after the war. We tried to put some flesh on the bones of this concept of truth in the following ways.

First, we got the presidents of Austria and Germany to publicly apologize for their companies’ misuse of slave labor in their countries in public press conferences, and those apologies are included in every envelope with every check going to every slave laborer.

Second, we held four international conferences with forty countries and the Vatican, encouraging them to open their archives, to look at their past—in effect, to come clean.

We had encouraged them as well to create their own historical commissions, which is a reconciliation model that I will talk about in my conclusion. And twenty-one of those countries did, from Argentina, which harbored Nazis during and after the war, to Lithuania, which actually actively participated in the Holocaust itself. These historical commissions have been at work. Some are better than others. Quite frankly, the two best, including the United States, are the French Mattioli Commission and the Swiss Bergier Commission. They are the most searching, the most honest, the most candid, the most self-analytic.

We also created a sixteen-country Holocaust Education Task Force, which will be meeting again next week—countries from Sweden to Poland, from France to Germany—to promote Holocaust education in the school systems, not as a way of looking back at all of the gruesome details but to try to teach young kids and future generations what happens when intolerance goes unchecked and good countries and good people stand on the sidelines.

The second long-term implication of our work is advancing the cause of human rights by holding private companies accountable civilly. In some respects, this is sort of the civil equivalent of Nuremberg’s criminal responsibility. I hope that this will act as a sort of shot across the bow for multinational companies who invest in countries with difficult and repressive regimes. And by the way, I have no opposition to that; quite the contrary, I think they can improve conditions there. But when they do, I think our lessons are you need to avoid appearing to aid and abet those regimes or you could fall into the same vortex that the companies we were dealing with did as well.

Third is the process of a new style of foreign policy with a new set of actors. I negotiated, as Lili mentioned, the Kyoto Protocol, as well as many other agreements. I came into direct contact with environmental groups that were all over us, every day, every hour, of the practically twenty-four-hour days we were spending negotiating the Kyoto Protocol, which was then dismissed in two minutes by the Bush Administration—not a very good cost/benefit ratio of my time, I must say.

The environmental groups seemed to know my next offer before I made it. But this was different. We are used to interest groups now getting engaged in foreign policy decisions, but here we had NGOs and class action lawyers and the state and local officials threatening sanctions who were actually sitting in a sense at the bargaining table. We weren’t just negotiating with governments; we were even negotiating again with private parties.

This is a sort of democratization of foreign policy. It makes it more messy, more complex than it already is, but again more open, more permeable.

If anyone thinks that our suits were sort of sui generic, as we say in the law—that is, things unto themselves—let me suggest that since our work the following has happened, just in the last year and a half or two, in which we have class action suits touching on foreign policy.

There is a wonderful article about this in, I think it was, the October 2000 edition of Foreign Affairs, by Anne-Marie Slaughter and David Bosco, called “The Plaintiff’s Diplomacy.” But let me just tick these off and you’ll get a sense of how this new style of foreign policy, often conducted through the courts, may end up again bringing the U.S. Government from the sidelines.

  • Japanese “comfort women” [sex slaves during World War II], forced into prostitution, have sued the Japanese in U.S. court.
  • American POWs, who never thought of suing for their slave labor at the hands of the Japanese, have done so in U.S. court.
  • Anti-apartheid victims from South Africa have sued scores of U.S. companies in U.S. court for their alleged—and I underscore alleged—participation in facilitating apartheid.
  • Several oil companies, like Unocal and Exxon Mobil, have been sued for their investments in Burma and Indonesia and for their alleged cooperation with the militaries there in the suppression of human rights around their pipelines and their investment.
  • Quite recently, a leading class action lawyer sued the Saudi royal family, alleging that they financed terrorist activities which took American lives.
  • And even closer to home, using similar theories, and indeed similar lawyers to the ones that I dealt with, are the African-Americans suing for reparations for slavery 150 years ago.

Now, quite frankly, many of these cases are on very shaky legal ground. But so were ours. Two federal judges, Judges Greenaway and Debevoise in New Jersey, dismissed the German slave labor cases. Judge Korman, who had the Swiss bank cases, made it very clear that the only one of the claims he thought had any sound legal basis—and he has since reaffirmed that in the interview I had with him, which I have in the book—was simply the claim to actual bank accounts, not some of the other claims, like slavery and taking looted assets and so forth, which he thought really could not be sustained in a court of law.

Our cases were won in the court of public opinion, not in a court of law. These other cases will stand or fall on their ability to be able to muster similar support.

I call the book Imperfect Justice because the justice was imperfect. It didn’t help those who were killed during the war, it didn’t help those who died between the end of the war and our involvement in the mid-1990s, and even for those who did benefit the amounts can hardly do justice to their suffering.

Let me take from this and go right into your discussion about models of reconciliation.

One, in effect, is the model which we used with some additional pieces to it, and that is what I would call the restitution/reparations model. Now, without belaboring what I have already said, let me suggest that there are other precedents, somewhat similar but not done through the court system, for this first type of reconciliation, which again would be sort of helping the victims through reparation and restitution.

That is, in 1988 the U.S. Congress passed a law which provided $20,000 to each of the Japanese-Americans who were interned. I will add one other piece to that in a minute.

We have a whole host of current situations where this particular issue of restitution/reparations may come in as a model.

The Israeli-Palestinian conflict: in the middle of our German negotiations, Madelyn Albright called me from Camp David and said, “Arafat has just put the right of return on the agenda, the Palestinians claiming their property was taken. You’ve been doing all this property restitution for Jews in Eastern Europe. What have you got to say about it?”

Well, after gulping a couple of times and explaining that the history was different and so forth, what I recommended, and what I think will be the model, for that piece, which I think will be the last piece, along with Jerusalem, to come into place if there is a solution, and what Clinton put on the table at Camp David, was his willingness to create a multi-billion-dollar fund for those who are in the refugee camps. Now, the Palestinians can call that compensation for their houses, the Israelis and others can call that humanitarian, but it’s the concept that will be important.

We see right now Kurds pushing out Arabs in northern Iraq from homes that they say the Arabs took from them.

And this whole issue of reparations. President Bush just three weeks ago froze about $1.8 billion in Iraqi assets, and then, not well recognized, set aside $300 million to pay three sets of victims who had won class action lawsuits against Iraq for their families who been victimized and tortured, and in some cases killed, by Saddam Hussein, and that was for cases where there is already an outstanding judgment. What about the slew of cases that will potentially be brought that could eat up all of that $1.8 billion that otherwise could be used to reconstruct the country? So this is another example of how class action suits can drive foreign policy, and the U.S. government is going to have to get to do that in some way.

A second model beside restitution and reparations is what I would call, frankly, apologies. I mentioned the apologies that we got from the German and Austrian presidents. Apologies can matter. They can mean a lot to people. I am told again by some victims that that apology in their checks means a lot more than the checks themselves. Let me suggest again that there are models for apologies.

In the 1988 legislation I mentioned about Japanese-Americans, they not only paid $20,000 per victim, per internee, there was a formal Congressional apology in the legislation, signed by the President of the United States, apologizing for this treatment. By the way, we have never apologized for slavery.

Again, I ask the question with respect to Japan and then Iraq. Japan, in my estimation—I have spent a great deal of time there, I’ve had representation of Japanese companies, I have a very close relationship with the Japanese Government in my public and private careers—the Japanese Government has never apologized; they have never come to terms with their past. I mean, every so often a minister gets dismissed because he denies the Rape of Nanking.

Ironically in terms of the reparations model, the suits that I mentioned by the American POWs have been thrown out of court because of the U.S.-Japan Treaty of 1951, which quite clearly says on its face “no more suits against Japan or its nationals for any damages.” And yet, there has been no effort, politically or otherwise, on a moral basis to get Japan to pay their now 6,000 surviving American POWs.

The third model is the truth commissions. This is I think an important reconciliation model. I mentioned that we encouraged twenty-one countries to create their historical commissions.

The best-known Truth Commission is of course the South Africa Commission. May I say that I think it is one of the great things that a great man, Nelson Mandela, did, to avoid what could have been a bloodbath of retribution against the white minority after the transfer of power. It lasted almost ten years. Victims were encouraged to come and tell their stories.

It was not a heavy reparations issue, although they are now talking about creating a reparations fund. The whole basis was reconciliation ¾ tell your story. And indeed, even the perpetrators would get amnesty if they came in and declared what they did.

Now, F.W. de Klerk, the last apartheid-era President of South Africa, said—and maybe it was disingenuous—that he hadn’t realized the dimensions of what apartheid had really done. But whether he did or not, the fact is that it helped the white community understand, and the black community there also, the dimensions of what had happened. I think again it is a very important reconciliation model.

I think Iraq would be a perfect place for the creation of such a commission. It could look into Saddam’s crimes and catalog them so that future generations of Iraqis and others would know, not just from a New York Times story here and there, the true dimensions of what happened.

A fourth model of how to deal with post-war conflict is the creation of war crimes tribunals. This is a sort of deterrence/retribution model. It was, of course, Nuremberg where for the first time the concept of crimes against humanity came, but this has been followed more recently by UN Tribunals on the Balkans and on Rwanda. Again, it seems to me that Iraq is a very good model for using a war crimes tribunal. The International Criminal Court, which I wish we had not withdrawn from—Iraq would have been a great first case for the International Criminal Court to take.

And last, and maybe most controversial, and this may surprise you, is military force itself—yes, military force as a model to deal with human rights violations. For example, had military force been used in perhaps a different way, had there been more warnings during the war, perhaps the full dimensions of the Holocaust and genocide could have been at least partially avoided.

Second, President Clinton had said to me, and he has said publicly, that he thinks his most serious policy failure as President was the failure to use military force in Rwanda to end the tribal warfare that took somewhere over a million lives.

In Kosovo and Bosnia, after unsuccessfully going to the UN Security Council, because the Russians blocked any Security Council action with a threat of veto because of their relationship with the Serbs, NATO in effect used military force to prevent further human rights violations. That’s what Bosnia and Kosovo were all about. There were already, unfortunately, 200,000 people who had been killed, but this was to prevent another ethnic cleansing from occurring.

Again, Iraq—I’ll leave it to you to decide whether the intervention in Iraq is justified on a very different ground that its initial intervention—which was supposed to be for WMD, weapons of mass destruction, not human rights—but now, retrospectively, people are saying, “Gee, maybe this was a good thing because we prevented more human rights violations.”

Okay. Enough, I think, food for thought. These are all different models, and they are not mutually exclusive. Some could be used to prevent conflicts—for example, the fact that Milosevic is being tried in the Hague, maybe the next dictator will be less willing to engage in human rights violations because he or she may know that they will be called before an international court. Maybe restitution and reparations can be a deterrent as well as a post-conflict way of solving problems.

I will be glad to take your questions and your comments.

Question & Answer

QUESTION: You’ve raised a number of very interesting questions. Perhaps the most important question you raised is the question that there are limits as to time, limits as to venue. There are also specific limits sometimes as to the nature of restitution. I wonder if you could address this.

STUART EIZENSTAT: Yes. I think it’s a very, very important issue. It’s really, if I may say so, not just a political and diplomatic issue; it’s a moral, ethical, and almost religious issue. Indeed, if you look in the Bible, you will find absolutely no help, because the Bible says on the one hand, as we all know, that “the sins of the father should not be visited on the sons”; and it says on the other hand “remember the sins of the Malachites into the fourth and fifth generation.” So you can take your pick on that.

But we did have to deal with this issue very concretely. And may I say it is also an issue in the American slavery cases. The question is again: how long are future generations responsible for the wrongs of their predecessors which they did not participate in?

Now, this came into sharpest relief in the German slave labor negotiations because the question was: should heirs and descendents of deceased slave laborers have the right to recover? I mean, why not? Why should it only be those who were fortunate enough, after fifty years, to survive? If there were 10 million forced laborers and 1.25 million survivors, how about the other 9 million?

We made the very difficult decision—I say “we”, I mean it was not a dictate, it was a negotiation agreement with even the class action lawyers—that it was simply impractical after that passage of time to try to locate descendants, to find out what the estate laws in different countries and different states were, who was eligible, link them to their deceased—and plus, we could have been talking, if we had 10 million slave laborers, about 20-30-40 million people. It would have taken unbelievable amounts of time, and it would have ultimately been, I think, very unsuccessful. So we limited the payment only to those who survivors who were still living.

And I think that is what one would do in the American slavery cases. There are no survivors. Therefore, you would say, although there are other ways to deal with slavery as a reconciliation matter, this is not the way to deal with it.

If I can again mention the 1988 law with the Japanese-Americans, but in a different context in answering your question, the law was very specific: $20,000 per person per survivor. No heirs, only those who were actually interned.

Now, what that would suggest is the following sort of model in terms of time limits: that in terms of actions in which a particular person was done a wrong—torture, assassination, slavery, whether it’s South Africa or American slavery or World War II—that there ought to be a time limit in terms of their individual opportunity to recover, limited to their actual survival.

But with respect to other forms of real property—art, insurance, real property like businesses or homes, apartments in Austria, bank accounts in Switzerland and in France—there it seems to me there is a less compelling case, indeed, no compelling case, for saying only the survivors, because property laws create a clear sense of succession: you know, somebody steals your father’s property and he’s not alive, you should have a right; under the law it would pass to you. So there you can carry it on.

Now, how long? I mean, does this go for 150 years or something? Well, it’s not an issue, obviously, in American slavery because there was no property; slaves were themselves considered property. I don’t think it’s appropriate for the Louvre or the National Gallery to argue, “Fifty years have passed; we bought this painting in good faith,” when there is a family that can establish a clear linkage. So there the time limit should be really basically unlimited, as long as there are clear survivors with a clear line of title to that particular property.

But again, with respect to more personal things, I think that it would pass with the passing of the person himself or herself.

QUESTION: You talked about reconciliation, but much of the discussion has really focused on justice. The question I want to ask you is—I can see why the victims would have been reconciled by some of this, although you haven’t actually said that they were—I am curious about the impact of this on the companies and the countries which wind up paying. Do you in fact think this has led to reconciliation between these two communities?

STUART EIZENSTAT: First of all, I mentioned at the beginning that I wanted you to judge whether our model was a reconciliation model at all, as opposed to one doing justice for victims. I think that the results vary greatly. I think in some countries this has helped and will help with reconciliation by simply understanding their own history, but in other countries it will not. A lot depends on what those countries and companies do to perpetuate this.

Now, you will see in my book that a couple of the German slave labor companies and a couple of the Swiss banks railed against what they considered “blackmail.” That was a word used by the Swiss President in 1997. So there was a lot of resentment about bringing up these unhappy facts, and the feeling that they had been unjustly threatened with sanctions and so forth. One would hardly call that a reconciliation model.

And yet, I have to say to you that I think the single most important thing in terms of reconciliation is these historical commissions. If the Mattioli Commission in France and the Bergier Commission in Switzerland and the commission that’s now concluding its work in Lithuania actually make their way into the school systems, I do think that these will ultimately be reconciliation measures, even though right now the tensions may be very severe and the emotions very harsh.

So I think it remains to be seen. A lot depends on whether the lessons of what we did are actually taught and applied.

QUESTION: You suggest that in the case of reparations for the Jews the satisfaction from the receivers’ point of view came not so much from the money that they received but from the feeling that there was justice, that somebody recognized responsibility. I would like to suggest that money matters, not because $25,000 is anything to satisfy anyone, but because they had the satisfaction of forcing the German government to hand over the money. In this sense, satisfaction comes from—it’s a relationship, so you have to have the other side suffer a little bit. So in that sense money matters. And if this is true, then President Clinton’s proposal at Camp David could not have been successful. I mean, the Palestinians would not have bought that because for them nobody suffers if it is the Americans who pay.

STUART EIZENSTAT: Let me respond in a couple of ways.

First—and I should have mentioned this at the beginning—the majority of the money we have gotten has gone to non-Jews. The majority of the money we got went to forced laborers in Eastern Europe. There are only about 130,000-140,000 Jewish slave laborers still surviving. Now, it’s true in the Swiss case almost all the money has gone to Jews, although Jehovah’s Witnesses and gypsies and so forth have gotten some.

In the German case, there are only about 130,000 surviving Jewish slave laborers. The balance of the 1.25 million are non-Jewish slave and forced laborers who have gotten basically nothing from the Germans over time.

Second, on the issue of money mattering, I’m glad you put it this way. We have been criticized—by the way, by Jewish and non-Jewish critics, one of whom has called this “a Holocaust industry with class action lawyers and so forth”—for monetizing the Holocaust. Abe Foxman, a very dear friend of mine, the head of the ADL [www.adl.org], said he was fearful that this would simply contribute to the stereotype of Jews seeking money and that the last memory of the Holocaust would be money instead of the broader lessons.

I suppose my response to that is perhaps what you’re alluding to. Let’s take one simple situation and then 9/11.

A simple situation: you go out and a car hits you as you cross East 64th Street. How do we monetize that wrong? We accept in civilized society that instead of shooting each other or going into a back alley, we monetize that. That’s the way in which civilized societies deal with wrongs. If that is the case with a simple tort or a breach of contract, why shouldn’t it be for people who were subject to the most massive violations of their rights in world history? So that’s one piece of this.

The second piece is the 9/11 situation. Is it wrong for those families to demand compensation? And from whom are they getting the compensation? Well, they have two choices. They can go into court and try to sue the U.S. airlines or the designer of the World Trade Center for not designing a fireproof building; or they can take money out of the U.S. Treasury, not from al-Qaeda, and be in effect compensated at a rate that Ken Feinberg has set. That’s a quantitative model. At one level, there is some reconciliation in that. It wouldn’t be as good as if they could get the al-Qaeda money and collect it, but at least it’s something.

So I think that money can make a difference. I didn’t mean to belittle the money. I think the money, particularly in Eastern Europe, the amount of money that the forced laborers get is an average of one-to-two years’ of per capita income in those countries, and it can help people in their declining years.

When I go to south Florida, you cannot believe the number of destitute Holocaust survivors who cannot afford prescription drugs, they have trouble with assisted housing, and if this provides them some benefit, then I think all the better.

So I guess I would say to you it’s better to be able to recover from the actual wrongdoer, but second best is to recover from somebody.

QUESTION: I’d like to ask about the class action suits and ask whether—in some ways, it seems unprecedented, but I don’t really know if it is—which is to have individuals or individuals in a class action suit suing for redress and compensation, and usually apology as well, from a foreign government. In other words, individuals in civil suits sue a foreign government. What’s the history to this?

STUART EIZENSTAT: Well, the fact is that these cases and our intervention was unprecedented. There has never been a situation in which the U.S. government has intervened—and it is very important to put an asterisk beside that, has intervened in private lawsuits—but it is also important to recognize that the governments were not sued. The private individuals sued private companies, private Swiss banks, private German companies.

QUESTIONER: Not the former “comfort women”. They are suing the Japanese government. Is that unprecedented, to have that kind of a suit?

STUART EIZENSTAT: It’s unprecedented. It’s being thrown out because of the sovereign immunity issue.

But I’m suggesting also that it was unprecedented for us to have been involved in purely private lawsuits. This is why I want to put an asterisk next to intervention, because it makes it appear that we just sort of walked in and assigned ourselves the role of mediator. No. In each of the cases we were asked by both sides to mediate. That was my condition. I wasn’t going to get involved—it was tough enough as it was—just coming in and saying, “These seem like interesting lawsuits and we’d like to help settle them because the courts of law are very sympathetic to Holocaust victims.” We were asked by the governments to intervene, or by the private companies, or both.

In the German, French, and Austrian cases, we were directly asked by the governments—although the governments weren’t being sued—because the companies being sued were icons for their own countries, and they feared that it would create a sort of cloud over their own ability to do business and their own reputation, not just the companies but the countries themselves, if they didn’t find a way to settle these. And they couldn’t find a way to settle it without the U.S. Government getting involved, so they asked us to get involved.

QUESTION: You were mentioning in one of your earlier responses that this is one way that we deal with wrongs that are committed. I was struck by that because I don’t really know the way this is handled in other countries, but my sense is that the United States is known for being very litigious, litigating justice, more than most other countries in the world, and whether that translates very well.

I guess the other question that goes along with that is whether taking the route of litigation might in some ways have effects on the possibility of taking other routes.

STUART EIZENSTAT: Sure. That’s a very good question. Let me answer it in a couple of ways.

The first is that we have a unique, for better or for worse, class action system. We are the only country in the world to my knowledge that has an active class action system, where people who become members of the class, without even knowing the suit has been brought, if they fall into the same category as the few individuals who bring the case. We can debate endlessly whether that’s a good or a bad model, but it’s a unique model.

I have to tell you that it drove the foreign corporations with whom we were dealing nuts. They couldn’t understand it. How could they be paying hundreds of thousands of people who weren’t actually directly suing them?

The second thing was we developed a new and different model for the German, Austrian and French cases. (Not for the Swiss bank cases, which in the end were settled with the very direct help of Judge Korman—not coincidentally, it then took three bloody years from the time we settled the case in August of 1998 to get the first nickel.) In the German, Austrian, and French cases, we created a German foundation, an Austrian foundation and a French foundation, to pay claims under what we called “rough justice.”

Now, let me explain what rough justice meant, because I think again it can have important antecedents in terms of 9/11 and other mass tragedies. Even if, which is not at all clear, a slave laborer could have recovered against a German or an Austrian company, which would have been highly doubtful because they didn’t know who they worked for. You know, they didn’t get W-2 forms; they were building a ditch one day, they were building a V2 rocket, and a pit the next day. Even if they could, the only people who could have recovered are the few thousand who could have matched their work to one of the sixteen companies that the class action lawyers sued. So we were talking about a universe of, a few thousand people, even if they had proof somehow. We benefited 1.25 million by rough justice.

Now, what do we mean by rough justice? We mean that through these administrative processes that were created abroad, you sign an affidavit saying that “I was in a concentration camp that’s on the Red Cross list”—you list the concentration camp—“or in a labor camp.” We assume that you were a slave laborer or a forced laborer from that affidavit. Now, of course some people could falsify, but then there are others who just don’t want the money to begin with because it’s tainted money and they say, “The hell with the money, I haven’t taken it for fifty years, I’m not going to take it now.” Those who signed get their check for $7,500 or for $2,500. It’s rough justice.

Why is it rough? It’s rough because the standard of proof that any court would demand isn’t there. It’s rough because we pay them quickly and surely, but a certain amount of money. And it’s rough because in any court of law anywhere in the world you try to match up the damage to the amount paid; the more you are damaged—obviously, in the car incident, for example, if somebody nicks your arm you get a lot less than if they break every bone in your body.

Here we paid the slave and forced laborers the same thing, the same exact amount to 1.25 million people, whether they worked for a day, a month, a year, or the whole war. We’re dealing with people who were eighty years old. I mean, we couldn’t have an individual trial for 1.25 million people on what their precise damage was—was there long-term healthcare damage, did they recover and live healthy lives? You know, we couldn’t do that.

I have to say I’m completely schizophrenic on this whole class action thing because it’s clear that without the suits it wouldn’t have gotten the attention of the companies, but the suits themselves did not stand on very firm ground. It’s not at all clear—in fact, I think the likelihood is they would not have been successful if in the end they were taken all the way.

QUESTION: There were articles in the paper about lawyers who got huge sums of money for litigating the cases, I mean just out of proportion.

STUART EIZENSTAT: Incorrect. Now, I am going to put some dollar figures on it that will seem like a lot. And believe me, I am not a defender of the class action lawyers. I took flak from them, more than you can possibly imagine. I have more scars from them than I do from any of the other people that I dealt with.

Number one, in the Swiss case the two most prominent class action lawyers, Mel Weiss from New York and Michael Hausfeld from Washington, worked pro bono.

Number two, in the cases that I was able to settle outside the court system—Germany, Austria, France—we capped legal fees at 1 percent. In one case, it was between 1 and 1.25 percent, basically at 1 percent. Now, compare that to a normal class action recovery in the tobacco cases or Dalkon shield cases or any kind of mass injury case, where they get 33 percent. In the tobacco cases, there’s a law firm in Mississippi, Trent Lott’s brother-in-law, that got $1 billion in legal fees. That’s really obscene. So we did not allow that because we felt it would be taking money out of the pockets of very needy people.

But where you read those stories when you divide 1 percent of $8 billion even among fifty different lawyers who are all clamoring for it, some of the firms got $5-6 million out of the German settlement. But compared to the time and value, that’s really a very small amount, and certainly very small compared to the $8 billion that we got.

That’s the way The New York Times played the thing. It made it look like they got a lot. They really didn’t.

QUESTION: I work with Seeds of Peace. This is very important work that was done. But there’s so much suffering going on right now in the world, people who are suffering as much as anyone. My next-door neighbor is a Holocaust survivor who has this phrase “get over it” kind of thing. She was in a death march. No one has better credentials for what her life was like.

But I just wonder about, you know, with limited resources, why aren’t we dealing with the Palestinian/Israeli issue or with what’s going on in Africa and other places? What’s your thought, as someone who wants to make a difference in the world, about so much time and resources going into something that should have happened forty years ago, when right now we know that horrible things are happening to people every day?

STUART EIZENSTAT: I think, first of all, it’s quite clear that people have not absorbed the lessons of the Holocaust even now. You can look at the killing fields in Cambodia, you can look at Rwanda, you can look at Kosovo, at Bosnia, and so forth, you can look at what Gambia is doing. There are more than enough violations of human rights to go around the world several times.

The question is: what does it take to get intervention in those situations? This is a very difficult question to answer because, quite frankly, it takes political will, it takes embarrassment of political leaders because the situation is so bad that the press will report it and make it graphic for people to understand, it takes political pressure.

My presentation makes it very clear that it was the political pressure, initially from Bronfman and others, that activated this. When you don’t have a political lobby, you don’t get attention.

The American POW cases involving Japan, for example: even though the treaty is absolutely clear, I can tell you that during six years of work on this whole set of issues, I got one letter from one Senator, Senator Hatch, about the American POWs. They never organized, they never put political pressure on. It’s an incredibly empathetic case, but unless somebody brings it to the attention of governments—I mean, I’ve spent a large part of my life, as I mentioned, in government. You’ve got thousands of issues. You can’t imagine how you’re bombarded every day with problems and complaints and so forth. The squeaky wheel gets the oil, it really does. So somebody has to put political pressure.

Now, on the Palestinian/Israeli situation which you’re dealing with (and by the way, one of my very, very dear friends, John Wallach, set up Seeds of Peace, so I have a great affection for the organization): the Middle East process is one that makes me extremely frustrated because every president up to this one has made the effort to get a Middle East peace settlement a major issue. Clinton was blamed by George Bush during the election campaign for having spent too much time on the issue and come away with nothing, and the Bush administration became determined—and they did a very good job of it—to ignore the issue for two years. It created a vacuum under which a lot more suffering and violence occurred.

Now, because of post-Iraq political pressure and Tony Blair, with the roadmap to peace, maybe there will be something more done, but I wouldn’t bet my life on it.

So it really just depends on political pressure, putting something out on the agenda, trying to get the press interested, and embarrassing people or forcing politicians to get into action. It’s just that difficult and that simple.

QUESTION: I am professionally involved with helping Holocaust survivors obtain German social security payments. The complaint that I hear time and time again from the people I have contact with is they were poorly or not at all represented during the negotiations. There were no Holocaust survivors sitting in on the negotiations and they are very upset about that.

STUART EIZENSTAT: Not so. There were Holocaust survivors. I mention them in my book in some detail. People like Roman Kent, Ben Mead, and others were very much in the negotiations.

The Claims Conference, which is the official body representing survivors since the early 1950s in Germany, was the key NGO in the negotiations, in the room during all the major negotiations. The money is going through the International Organization on Migration and the Claims Conference for the survivors. So it’s just not so.

Now, it’s so that some of the survivor community, particularly in south Florida and others, feel that the Claims Conference is not adequately representing their interests. We couldn’t include every survivor or every survivor group. We felt the Claims Council was the official recognized body and that’s who we should deal with.

Thank you very much. I thank you very much for coming.

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