Mr. Chairman and Members of the Committee:
Thank you for giving me the opportunity to share with you the Clinton Administration's views on
Holocaust assets issues and to continue the dialogue we have enjoyed with this Committee on
these important and painful issues.
Let me commend the Chairman once again for his leadership in this area, including his
sponsorship of legislation together with members of both parties in both houses of Congress
establishing the U.S. Holocaust Assets Historical Commission. President Clinton signed the bill
last month, and he will appoint the chair and private citizen members of this presidential
commission shortly. The Commission will become the major vehicle for addressing the fate of
Holocaust assets in this country. Its creation symbolizes, and its work will demonstrate, the
determination of both the Clinton Administration and the Congress to leave no stone untumed in
our efforts to bring justice to Holocaust victims, survivors and heirs.
Today, I want to address two sets of issues: first, our view of the situation in Switzerland;
second, several other key dimensions of our diplomatic efforts to bring justice to Holocaust
survivors. Let me note, though, Mr. Chairman that early last month we released our second
interagency historical report on U.S. wartime policy toward and postwar negotiations with the
European neutral countries -- Portugal, Spain, Sweden, and Turkey -- as well as Argentina.
While our first interagency report focused largely on Nazi-looted gold and its movement to and
through Switzerland in particular, our second report focused on the uses to which that looted gold
was put -- especially its use in financing the wartime trade in critical supplies conducted by many
of the European neutrals with Germany. I presented these key findings at a press conference in
the State Department on June 2 and to Chairman Leach and the House Banking Committee two
days later. Mr. Chairman, I will not present the new report at today's hearing, instead I will
briefly summarize the findings of our first report with respect to the 1946 Washington Accord
The Washington Accord
Mr. Chairman, you very pointedly and purposefully included the reopening of the 1946
Washington Accord within the scope of today's hearing. The Washington Accord of May 1946
between the Allies and Switzerland has become a focus of controversy over the past year or two
in light of its historic role as the foundation agreement for the recovery and disposition of gold
and other assets looted by the Nazis during World War 11. Debate has arisen particularly with
respect to the efficacy of the agreement and its relevance to current relations with Switzerland:
could or should the Allies have negotiated more favorable terms with the Swiss for the return of
monetary gold looted by Nazi Germany that passed to and through Switzerland during the War?
Could or should the Allies have obtained a larger share of German assets in Switzerland that
were subject to the Washington Accord?
Two studies completed in the last 18 months have shed considerable light on these issues. Our
preliminary interagency study released in May 1997 focused on American efforts to recover Nazi
looted gold and other assets, based largely on U.S. records. In May 1998 the Swiss Independent
Commission of Experts headed by Professor Bergier released an Interim Report based largely on
Swiss records. These two studies together give us a comprehensive view of the flow of looted
gold to and through Switzerland during the War and the postwar negotiations between the Allies
and Switzerland that culminated in the 1946 Washington Accord.
Mr. Chairman, I would like to submit for the record an annex to my written testimony -- taken from our interagency report released last month -- that the negotiating history of the 1946 Washington Agreement.
There is little doubt that with the hindsight of history the 1946 Allied-Swiss Accord was an
unsatisfactory one in terms of the return to the Allies of only a small percentage of the looted
gold and other German assets in Switzerland. It is clear that the Washington Accord was neither
adequate in its commitments or in its implementation by the Government of Switzerland. Let me
try to distill very briefly why this result occurred:
Mr. Chairman, I just had the benefit very recently of discussing this negotiating history of the
1946 Accord with our deputy negotiator of the time, Seymour Rubin, who is present here this
morning. Mr. Rubin gave distinguished service to our country across a halfcentury career in and
out of governinent. Our report is consistent with his judgment that despite the grave
shortcomings of the Accord, the U.S. simply could not do better given - the combination of
intransigent Swiss attitudes and the limits of our negotiating position.
But whether this conclusion can or should lead to a renegotiation of the Agreement is another
issue. However well-intentioned, those who would seek to reopen the Washington Accord at this
time would harden positions further-probably irreversibly in the current climate -- and would
only add to the downward spiral of threats and distrust which now unhappily prevails. Frankly, I
fear that reopening the Accord now would likely prove to be a diversion that could delay not by
months- but by years-the resolution of these issues which people of good will on both sides of the
Atlantic fervently seek. Ultimately, such proposals will undermine the progress that has already
been made -- progress which, however belated, is finally moving toward our shared goals of
justice and closure. What we need now to right the mistakes of the past are today's answers, not
Mr. Chairman, let me be clear. We are not ruling in or out the ultimate option of seeking such a
reopening of the Accord. We believe that a far more productive way of dealing with this
problem now remains through the dialogue and cooperation. This will prove to be a more speedy
route at this time than seeking to renegotiate the agreement. I hope that the Swiss will recognize
their interest in sustaining and even accelerating that cooperation and the progress made to date.
Positive Steps by the Swiss
Since I last testified before this Committee in May of last year, there have been many positive,
although incomplete, steps taken by the Swiss -- although these positive developments have not
always in my view received the recognition they have merited. Switzerland has made concrete,
continuing progress in four key areas in particular:
The Volcker Process. Mr. Chairman, there is no question that private Swiss bankers took a
legalistic and at times even callous approach to those seeking information about their dormant
accounts or those of their relatives, apparently believing that, regardless of the unique dimensions
of the Holocaust, they should not have to adjust their procedures and bank secrecy to
accommodate the victims, the survivors, or their heirs. Under considerable pressure, the Swiss
commercial banks finally established the Volcker process in 1996 to redress past injustices.
The Independent Committee of Eminent Persons under the direction of Paul Volcker has
announced that it intends to complete the major elements of its investigation of Swiss Bank
records relating to dormant accounts by the end of this year.
The Volcker process is an enormous and unprecedented undertaking. It is chaired by a person
whose integrity and probity is beyond reproach. It is a process which is moving forward toward
completion of the audits by the end of this year -- and of the entire process by early next year.
Finally, it is a process that will lead to the return -- plus appropriate interest -- of dormant bank
accounts to their rightful owners.
Special Fund for Holocaust Survivors. This $200 million fund has been making direct payments to survivors. It has received contributions from the major Swiss banks and from other Swiss private sector companies, as well as a $70 million contribution from the Swiss National Bank.
It appears that the earlier delays in making distributions from the Holocaust Fund have been
resolved in the United States. Whatever the cause, it is critical that these issues are . resolved
now so that the Fund's intended beneficiaries can be helped without further delay.
Bergier Historical Commission. No country is undertaking more comprehensive research on the
history of its relationship with Nazi Germany than Switzerland. The Bergier Commission is
charged with examining thoroughly and objectively Switzerland's political, economic and
financial dealings with Germany prior to and during the Second World War. The Commission's
second interim report released on May 25, "Switzerland and Gold Transactions in the Second
World War" (to which I referred earlier in connection with the Washington Accord), was
rigorous, bold, and extraordinarily candid.
The importance of the Bergier Commission's efforts should not be underestimated: it is a process
which the Swiss themselves have established, of which they can be proud and which the Swiss
people should assess and absorb in their own way.
Solidarity Foundation. Finally, the Swiss Government remains committed to the establishment
of a Solidarity Foundation, using up to seven billion francs ($4.7 billion) in gold transfer-red
from the Swiss National Bank.
This Foundation will be a forward-looking humanitarian effort addressing a wide range of issues.
There have been questions raised about the Swiss Government's commitment to assure Holocaust
survivors benefit from the Solidarity foundation. I understand from Swiss political leaders that
the Foundation can indeed benefit Holocaust survivors, as well as other victims of poverty,
hardship and violence.
In a statement last month, the Swiss Federal Council explicitly included Holocaust survivors
among the recipients of the Foundation. The statement declared that in the course of attempting
to mitigate poverty, hardship, and violence, it "expects the Foundation to support projects
relating to the ongoing effects of the Holocaust/Shoa." - Such possible projects would include
programs to help survivors deal with their traumatic experiences, but also education for successor
generations and research projects connected with the Holocaust.
Two days following this statement, the upper house of the Swiss parliament voted to require the
Solidarity Foundation and the existing Humanitarian Fund have separate boards and
administrations. This non-binding vote does nothing to alter the Foundation's mandate. The
Swiss government always intended that the two ftinction separately.
I understand that the Swiss Government remains committed to this course despite some
opposition at home to this Foundation. The continued leadership of the Swiss Government will
be essential in building a public consensus in support of the Foundation prior to a referendum
that is expected to take place in 1999.
Despite all this progress, Mr. Chairman, there have also been serious setbacks, most notably the
fact that the talks to settle the class-action lawsuits against the-then three, now two, large
commercial banks have not resulted in an agreement. This development precipitated the
unfortunate decision on the part of state and local entities to lift the moratorium on sanctions
against Swiss banks and Swiss companies beginning September 1, a subject to which I will
return later in my testimony.
Class Action Lawsuit. Let me be clear about what these suits were about. They were brought by Holocaust survivors and their heirs, many of them U.S. citizens, against thethen three major
private Swiss banks. Neither the Government of Switzerland nor the Swiss National Bank was a
party. At the request of both parties, we initially sought an out-of-court settlement on these class
action suits against the defendant private Swiss banks rather than broader closure on all the
Holocaust assets issues pertaining to Switzerland.
This distinction became bluffed late last month when, at the request of the plaintiffs, and with the
knowledge of the representatives of the three private banks, I made an approach to both the Swiss
Government and the Swiss National Bank to see if they could help narrow the gap between the
parties to the class action suit in the hope of achieving a settlement. It became quickly apparent
that the leaders of those institutions were unwilling to go against the grain of public opinion in
However it is important to point out with our help, the parties made significant progress in several key areas:
Nonetheless, despite painstaking efforts, the parties have not been able to bridge their remaining differences.
Mr. Chairman, no one is more disappointed than my U.S. Government colleagues and I that the
parties were not able to reach an agreement given the amount of time, effort and energy all of us,
including the parties, have put into this, and far more significantly, the profound matters at stake
in this litigation. I appreciated the opportunity of working since December 1997 in trying to
facilitate these settlement discussions. We fully understand the legitimacy and urgency of the
issues raised in these cases by the plaintiffs, many of whom are U.S. citizens. These talks
presented an historic opportunity for resolving this matter -- an opportunity that may not come
again soon. In my view, the alternative of lengthy and contentious litigation serves no one's
interests: not the interests of the plaintiffs or the banks; not the interests of Switzerland or the
On June 30, the plaintiffs informed the Court that the settlement negotiations under my auspices had concluded without a resolution. I wrote the Court on July 8 to inform it that the settlement talks had made significant progress but had not been able to bridge the gap. I therefore consider my role in this phase of the matter closed. At the same time, the U.S. Government continues to have important interests in seeing this matter resolved both in order to obtain prompt justice for aging Holocaust survivors and in order to maintain positive relations with Switzerland. I will continue to take appropriate steps to advance those interests in whatever way is appropriate. In doing so, I will of course adhere to the terms of the confidentiality stipulation and order.
The present suspension of the talks reinforces the importance of a thorough and prompt
conclusion to the Volcker process of reviewing dormant accounts in Switzerland that may have
belonged to Holocaust victims. This is an objective to which Chairman Volcker and his
Committee are committed.
Sanctions. The U.S. Government favors ajust and prompt resolution of these issues at stake with the major Swiss banks and other Swiss institutions. Sanctions -- however well-intentioned or
carefully calibrated -- will not make it easier to achieve closure in this complex and sensitive
matter. They will have precisely the opposite effect. We continue to believe that state and local
sanctions in this matter are wrong both in principle and practice: wrong in principle because they
are unwarranted and because our nation should speak with one voice in matters of foreign policy
and international commerce; wrong in practice because they are counter-productive and fail to
advance the goal of a prompt and just settlement. Punitive measures by either side will only slow
down the efforts to achieve promptly a negotiated settlement of the class action lawsuit.
Far from compelling the banks to do more, threats of imposing sanctions together with . various
other allegations over the past several months have led to an opposite reaction in Switzerland.
Unintentionally but predictably, the lifting of the moratorium on sanctions by the Hevesi
Committee has already reinforced an unfortunate climate of inflexibility in Switzerland.
Imposing sanctions now would delay still further the resolution of these issues by making it more
difficult for all Swiss institutions -- private and public -- to take the necessary steps to achieve
Let me cite a sad indication of how the public mood in Switzerland has soured toward the United
States. The Swiss grocery chain, Denner, has just announced and is advertising the fact that it
will no longer carry four American products that it normally has in its inventory: canned sweet
corn; California wine; and two brands of whiskey, Jack Daniels and Four Roses. What is
significant is not that this particular action has an important impact on our export sales; that is
certainly not the case, although you may be surprised to learn that Switzerland is our seventh
leading trading partner. Rather, the significance of the Denner action is that it is indicative of the
hardening of opinion in Switzerland and the obstacle that sanctions create for a prompt
settlement of the class action lawsuit. Parliamentarians who were most instrumental in
establishing the process and institutions now beginning to bring some measure of justice and
facts to light are isolated.
Mr. Chairman, I get paid to make judgments about how our actions affect foreign countries. I
can assure you that far from helping Holocaust survivors achieve a just and fair settlement,
sanctions will delay and retard the process -- making it more difficult for us to get a measure of
justice for Holocaust survivors.
At the same time, I can understand how this criticism, fiustration and distrust have arisen in the
United States. It is critical that we break out of this cycle of recrimination and work
constructively to resolve these issues and bring justice to the remaining survivors while they are
Moreover, Mr. Chairman, we also have a responsibility to safeguard the preeminence of the
United States as the most open financial market in the world. By imposing sanctions such as
those under consideration, New York City and other jurisdictions would risk endangering their
own competitiveness in attracting and retaining world-class firms, the income they generate and
the jobs they support. They would also, I fear, call into question the openness and attractiveness
of all American financial markets.
For all these reasons, I strongly urge state and local entities around the country to refrain from
imposing sanctions. While I respect the good intentions of those who would act, I remain
convinced that sanctions would be totally counter-productive because they would delay - not
advance - resolution of the issues at stake.
A. Time for Brief Reflection... and Renewed Action
Mr. Chairman, no one has a greater sense of urgency about resolving this matter than I do or this
Administration does. American citizens, most old and having suffered greatly . during their
lifetimes, are our most important concern. Nevertheless, I believe that in the wake of these
recent setbacks, we must find ways to break out of the cycle of attack and counter-attack. The
next month or two should be a period of calm and reflection, followed by action.
I urge the parties to reflect on the consequences of protracted litigation: to recognize that it means
a delay in achieving a measure of justice for the unique class of aging and frail Holocaust
survivors who would most benefit from a just and prompt settlement; and it represents a missed
opportunity for a major step toward closure of a difficult chapter for Switzerland -- both for the
parties to the class action suit, and for Swiss institutions beyond the two banks, as well as on the
part of the Swiss people.
I urge a brief pause -- a breathing space -- to allow all sides to rebuild the mutual confidence and
trust that is necessary to facilitate a more rapid solution.
I urge both parties to the lawsuit to reconsider whether their interests are not better served by
returning to the negotiating table very soon - and to do so with a willingness to demonstrate
greater flexibility. The class actions are a legitimate effort by American citizens to seek redress
under the judicial system. Only the judicial system can ultimately decide upon the legal merits of
the case. I have been a litigator in private life and have great respect for the legal process in our
country, but I worry about the time it will take to work through issues of this complexity in the
court. It cannot be in the interests of the diminishing class of survivors, the Swiss banks, or the
Swiss Government for that matter to allow these issues to be worked out over several years in the
lower and appeals courts. It is certainly not in the U.S. Government's interest to allow these
matters to fester in ways which delay a measure ofjustice for certain survivors, undermine our
diplomatic and trade relations with Switzerland, and threaten the continued participation of
foreign firms in this country.
Based on my discussions with Swiss officials in the government and the Swiss National Bank, I
regret to say there is no realistic short-term prospect of a broad settlement of the kind that would
be broad enough to bring these issues to closure not only for Holocaust survivors but also for all
Swiss institutions, public and private alike. But in the short tenn, it may be possible in the
coming months to achieve a more limited private sectorbased solution. In this context, we
should give the Swiss a chance to follow their best instincts without a coercive and antagonistic
At the same time, the U.S. Government will continue to advance our dual interests which have
been at stake in these issues from the outset: supporting prompt and appropriate justice for
survivors while maintaining our important diplomatic and commercial relationship with
Switzerland. And we remain determined to uphold these interests in the face of pressure from all
Mr. Chairman, I have often said that the most important test for any country today in dealing with
these issues is not so much what it did -- or did not do -- half a century ago, - but what this
generation is doing now to offer a moral and material accounting of the past in ways which are
true and just. We should not hold this generation of Swiss responsible for their country's actions
-- positive and negative, understandable and inexplicable- in the complex wartime period.
Instead, the Swiss and the people of every other country facing these difficult issues should hold
themselves responsible for their willingness to address the past openly and honestly now, in the
present. The Bergier Report, the Swiss Government's own report, offers the factual basis upon
which to act.
Facing the past honestly will be to Switzerland's everlasting credit -- and in its best interests,
heeding what Thomas Jefferson called "A decent respect to the opinions of mankind." Its failure
to do so would subject it to the harshest sanction, not blunt and counter-productive economic
sanctions, but to the judgment of world opinion and of history. There still is time -- time to do
the right thing in ways that will keep faith with Switzerland's proud democratic and humanitarian
traditions and do justice to Holocaust survivors for whom there is no time left. But the Swiss
should have the opportunity to write this last chapter, free from intimidation, in light of the
promising start they have made in writing their initial chapter of their recent efforts to come to
terms with the past. Switzerland is a democratic nation with a long tradition of self-government
and popular initiatives. The Swiss people are capable of drawing the right conclusions.
There is a perception among many Swiss -- a perception which I sincerely hope has not hardened
into an irreversible conviction -- that no matter what or how much they do, it will never be
enough to satisfy their critics. It is true that the Swiss have taken the comprehensive set of
positive steps, and that they have received too little credit for pursuing this course. But it is
important both that the Swiss not view themselves as the victims and that those in authority in
our federal, state and local governments not give them reason to see themselves as victims. Let
me be clear: the only victims here are the victims of the Holocaust.
People of good will on both sides of the Atlantic share an urgent interest in resolving these traumatic issues in ways that prompt justice is done to the victims and positive relations are maintained between the United States and Switzerland. All stakeholders have an important role to play in the critical weeks and months ahead. If we are to achieve these objectives:
Let me elaborate, Mr. Chairman, on the important role I think the Government of Switzerland
can play. Just as the Government of Switzerland has called upon us for assistance in dealing
with the threat of sanctions, so too we hope that the Swiss govenu-nent will now show
leadership. The Swiss Government is capable of this kind of leadership -- leadership of the
character that it demonstrated at an earlier phase when it launched the Bergier Commission,
supported the creation of the Volcker Commission, helped establish the Special Humanitarian
Fund and proposed the Solidarity Foundation.
Let me make several specific suggestions, among others we have recommended through diplomatic channels:
Once again I understand well that the spotlight of the world, the sting of threatened sanctions,
and the anger at receiving little credit for their own actions of the past two years -- all make it
difficult for Swiss institutions to continue down the same positive path that they have been on, let
alone to do even more. But we hope they will do both.
Washington Conference on Holocaust-Era Assets
In order to build on the landmark London Nazi Gold Conference held last December, and
continue the international search for truth, the Department of State and the U.S. Holocaust
Memorial Museum will co-host from November 30 to December 3 the Washington Conference
on Holocaust-Era Assets. The objective will be to review our . progress on the gold issue, to
share research on other assets (especially artworks and insurance), and to renew the drive to open
As at London, the Washington Conference will not be a forum for governmental decision-making. But we plan to use the Conference and our preparations to work with a wide range of
governments and nongovernmental organizations to help shape a nonbinding international
consensus on principles and processes for redressing injustices in these categories of assets. We
hope that this consensus can give new impetus to the encouraging initiatives already underway in
many countries and that this intergoverm-nental forum can be a catalyst for many other related
efforts to address this great unfinished business of the twentieth century. To help shape the
agenda for November, I hosted a day-long preparatory meeting in Washington on June 30,
attended by 38 countries and 11 NGO's.
The U.S. Government has a great interest in seeing issues related to Nazi-confiscated artwork
addressed fairly and expeditiously. We want the international art market to be open, stable, and
free of uncertainty that it might be trading in works whose history is tainted by Nazi
depredations. And we also have a great responsibility to Holocaust survivors, and their heirs and
families, to shed light on these issues and to encourage appropriate means of addressing them.
Similarly, on insurance, there is also a grave responsibility to see justice done, and there is
legislation, either passed or under consideration, in several states which reflects widespread
concern with this issue in the United States. In response to such concern, the National
Association of Insurance Commissioners (NAIQ has formed a task force, which will represent all
fifty states, to address Holocaust-era claims. The NAIC has been working with European
insurance companies, the World Jewish Congress, and the Conference on Jewish Material
Claims to establish a process for doing so. Negotiations on a formal Memorandum of
Understanding are ongoing. While the NAIC's work is separate from what we are doing to
prepare for the Conference, we support their efforts and will continue to be as helpful to them as
We also used the June 30 seminar to highlight the progress on gold issues which the international
community has made since the London Conference. I am pleased to report that we have
concluded the work of the Tripartite Gold Commission, established an international Nazi
Persecutees' Relief Fund, agreed with most of the countries which had gold on deposit with the
TGC that they would donate their shares to the Fund, obtained further pledges for contributions
from other countries, and are now arranging for transfer to the Fund of the first portion - $4
million - of a total U.S. contribution of $25 million. Fourteen countries have now made
commitments totalling $57 million to the Fund with more likely to come. I want to commend
our international partners and especially thank the U.S. Congress for its support in this endeavor.
Mr. Chairman, my own involvement in issues of Holocaust-era assets began with matters of
property restitution, which remain highly important today and on which I continue to work. In
early 1995, while I was serving in Brussels as U.S. Ambassador to the European Union, I also
became the State Department's Special Envoy for restitution issues, looking at such points as
local laws in Central and Eastern Europe; previous restitution and compensation programs or the
lack thereof-, and the current and urgent needs of Holocaust survivors and heirs. In the last
several years, I have made a number of trips to Central and Eastern Europe to work on these
matters with the governments of the region. There has been some progress, but much more
needs to be done. I remain personally deeply committed to this effort.
I returned just last week from a trip to Europe, during which I had meetings on this subject in Vilnius, Lithuania, and Warsaw, Poland:
My conclusion from this trip, despite this inevitably uneven picture, is that both of these
democratic governments are making progress coming to terms with this agonizing legacy, but
much more needs to be done.
Mr. Chairman, the examination of the complicated issues of Holocaust-era assets is a difficult
undertaking. While archival research and international conferences have provided the framework
for achieving a greater understanding of the fate of Holocaust assets, these issues have naturally
had a vast public political impact beyond the academic and diplomatic arenas. They have come
to command the attention of the world and touch the conscience of humanity.
Mr. Chairman, you and the Committee play an important part in this historic effort.
Thank you very much for your consideration and I will be happy to take your questions.
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