U.S., German Leaders Near Pact on Holocaust Claims

U.S. and German leaders will attempt to wrap up a $5-billion agreement in Washington today to settle Holocaust-era legal claims, but the two countries are still divided on several key points that may make it impossible to hold a signing ceremony when President Clinton visits Germany in early June.

German officials believe that language in the pact is inadequate to give German companies legal protection in the future, a top German official said from Berlin before leaving for the United States.

“We will not accept improper answers to our questions only because of the situation that Mr. Clinton is visiting Germany,” said Wolfgang Gibowski, spokesman for the German corporations that would fund the settlement along with the German government.

The proposal to settle claims stemming from World War II-era atrocities is the product of 15 months of negotiations. The initiative was launched by German companies including Daimler Chrysler, Siemens, Deutsche Bank and Allianz--the German parent of Fireman’s Fund--in an effort to secure “legal peace” protecting them from current and future lawsuits by Holocaust survivors and the heirs of people killed in the Holocaust.

Under the pact, a German foundation would be created that would make payments covering slave labor, forced labor, unpaid insurance policies, looted property and other assets that were unlawfully seized--”Aryanized”--during Adolf Hitler’s reign.

The agreement could have a significant impact in California, which last year enacted a law, presented by state Sen. Tom Hayden (D-Los Angeles), extending until 2010 the statute of limitations for individuals to file suits stemming from their being forced into slave labor during World War II.

Early last week, aides to Stuart E. Eizenstat, the deputy treasury secretary who is the administration’s point man on Holocaust issues, expressed confidence that there would be a signing ceremony when Clinton arrives in Germany on June 1 to receive the Charlemagne Award. But in an interview Friday, Eizenstat said: “It’s just not certain that it will happen.”

Sounding weary and somewhat exasperated, Eizenstat said it was time to wrap up the negotiations.

“Survivors are dying every day,” he said. “We are niggling about issues that, in the great scope of things, are inconsequential. It is time to reach an agreement and start paying people.”

During World War II, about 12 million people were forced, under severe conditions and without compensation, to produce materials for companies in the service of Hitler’s regime. Ultimately, many were exterminated in Nazi gas chambers.

A key sticking point in the current negotiations involves a “statement of interest” that the U.S. government would file in a U.S. court any time a Holocaust-related suit was lodged in the future against a German company. The statements would ask that the case be dismissed in the interest of U.S. foreign policy. As a general rule, American courts give considerable deference when the federal government files papers stating that a lawsuit could have a negative impact on U.S. relations with another nation.

The current language proposed by the Justice Department is “politically very nice” but “it should have more legal substance,” said Gibowski, spokesman for the German companies’ Foundation for Remembrance, Responsibility and the Future. “We have to make sure it will survive a judge in the U.S. Sitting around the [negotiating] table, it’s fine but you have to make sure that a year or two or five years later somebody else will understand it the way we understand it now.”

Eizenstat has been striving to assure the Germans that the language is sufficient to protect their interests. On Friday, he said that the United States had faxed “a new set of ideas on ‘legal closure,’ ” to Germany. Eizenstat is set to discuss that issue and others today with Count Otto Graf Lambsdorff, Germany’s special envoy on Holocaust matters, and Manfred Gentz, chief financial officer of Daimler Chrysler, who heads the German foundation.

The legal closure issue is a difficult one, Eizenstat said, in part because the Germans “opted for a nontraditional form of settling cases.” Instead of the typical class action settlement, which would be approved by a U.S. judge, the Germans insisted on two conditions. First, lawyers for the plaintiffs would dismiss the pending Holocaust cases against German companies; and second, if any future cases are filed, the Justice Department would send an official letter to the court taking the position that the German foundation is the “exclusive remedy” for resolving such claims.

“This is really very new ground to plow,” Eizenstat said. “We are willing to do it because we think it is important” and because it may lead to quicker resolution of claims, he said. He stressed that although U.S. plaintiffs settled Holocaust-related claims against Swiss banks 21 months ago, no funds have been distributed.

The proposed agreement takes the United States “into uncharted territory,” said Michael Bazyler, an international law professor at Whittier Law School. Bazyler said he was unaware of any other situation in which the U.S. government “has made a deal with a foreign country” which would have the likely effect of voiding future lawsuits and instead forcing claimants to seek relief through a foreign entity--in this case, the German foundation, which is not even a court.

“I know there are Holocaust survivors in California who think that the terms of the deal are inadequate [it provides for about $7,500 for survivors who were slave laborers] and want to be able to go to court,” said Bazyler, currently scholar in residence at the Holocaust Educational Trust in London.

In addition to the “legal closure” matter, Holocaust advocates and Justice Department lawyers maintain that the proposed structure of the new foundation’s board is overloaded with German government representatives and does not adequately represent victims.

Survivor advocates, such as New York attorney Melvyn I. Weiss, also contend that the criteria for an individual to be eligible for compensation are too narrow.

In addition, some Jewish leaders are concerned that in pending German legislation to fund the pact, the definition of a “German company” would create the possibility that non-German corporations, including insurance firms, that own part of a German company could be let off the hook.

On the other hand, Gibowski said it was imperative that there be “legal closure” for American companies such as Ford and General Motors, which had subsidiaries that operated in Germany during the Nazi era. “Otherwise, the closure for their German subsidiaries would have no value,” Gibowski said.

In mid-September, two federal judges in New Jersey dismissed suits filed by surviving slave laborers. The judges held that they should not adjudicate the merits of the cases but rather defer to the State Department’s ability to enforce victims’ claims through diplomacy and the power of German courts to grant relief.

A federal appeals court has scheduled a June hearing to review that decision.

Last November, Sens. Charles E. Schumer (D-N.Y.) and Robert Torricelli (D-N.J.) introduced legislation designed to override that court decision. The measure, similar to the California law, would allow survivors to sue companies that profited at their expense until 2010.

Former “slave laborers”--those the Nazi regime sought to work to death--are believed to number about 240,000. Under the proposed settlement, they would be paid about $7,500 each--roughly three times as much as the 1.5 million surviving “forced laborers,” mostly eastern Europeans.

About 80% of the $5 billion is allocated to slave and forced laborers, 10% to “property claims,” including insurance, and the remaining 10% for administration and a “Remembrance and Future Fund” to be used to support projects to “keep alive the memory of the threat posed by totalitarian, unlawful regimes and tyranny.”

So far, the $2.5-billion corporate portion of the $5-billion settlement is only 60% funded, Gibowski said.