Commentary Magazine


Holocaust Reparations-A Growing Scandal

Given the depth of the scars inflicted by the Nazis in World War II, it is no surprise that issues of restitution and reparations have refused to go away.1 The only surprise is that they should now, at this late date, be occupying center stage, where they have also become a subject of increasing contention.

The sheer scope of devastation in World War II is impossible to compass. By the time the last shot was fired some five-and-a-half decades ago, a mindnumbing 53 million lives had been extinguished in the concentration camps, in the cities, and on the battlefields of half the world. And no less huge than the toll in human life was the destruction and theft of property; everywhere the Nazis turned, they not only killed but plundered.

The Jews of Europe, singled out for a special fate, were victims on both counts. In most places, they were first forced by the SS to provide a precise inventory of all their property, from silverware to real estate, from stamp collections to stock-exchange holdings, from furniture to insurance policies and bank accounts. All this they were compelled to surrender, after which they were gathered together in ghettos and deprived of sustenance, and then, after a time, taken away to be shot, gassed, or worked to death as slaves.

The bill for this death, destruction, and robbery came due in 1945 with Germany’s surrender. But the prostrate country was hardly in a position to pay. Only by 1951 did the Federal Republic, which constituted one half of the by-now divided country, voluntarily undertake to compensate the few pitiful survivors or the families of the slaughtered and to provide restitution to the holders of the property it had seized. In the 50 years that have elapsed since this historic step, some 4 million claims have been paid and a total of $55 billion has been disbursed both to the state of Israel and to individual victims around the world.

Today, over 100,000 Holocaust survivors, primarily residents of Israel and the United States, continue to receive monthly pensions from the German government. Yet these numbers, significant as they are, by no means indicate that a final reckoning has been made. Indeed, a huge tangle of claims still appears to remain unsettled, and dealing with them has lately become a major enterprise.

Here in the United States, the organs of the federal government, coordinated by the Deputy Secretary of the Treasury Stuart Eizenstat, are engaged in an intense diplomatic thrust to negotiate a resolution to the outstanding issues. They have been propelled forward by the World Jewish Congress (WJC), an umbrella body led by the billionaire tycoon, Edgar M. Bronfman, as well as by two organizations with which the WJC is closely affiliated and that share some of the same key personnel: the World Jewish Restitution Organization and the Conference on Jewish Material Claims Against Germany (known as the Claims Conference). At the same time, a small army of lawyers has filed class-action suits against European corporations said to have profited from the war at the expense of Holocaust victims. Revelations of misdeeds and complicity, and demands for huge sums in recompense, have become daily fare.

Politicians have not been shy about climbing on board. Former Senator Alfonse D’Amato of New York made Holocaust restitution into one of his signature issues, holding widely publicized hearings on the conduct of Swiss banks during and after World War II. Insurance commissioners in California, Florida, and Washington, all with aspirations to higher office, have been generating favorable coverage as they pursue European firms attempting to conduct business in their states. On September 11, at the height of this year’s election season, many of these politicians will come together at a banquet at the Waldorf-Astoria hotel in New York; there, under the sponsorship of Bronfman, they will be draped in the mantle of their good deeds. Among others being honored are D’Amato, Hillary Clinton (now running for the Senate in New York), and Alan Hevesi, the New York City comptroller.

Leaving aside the issues raised by the very idea of a reparations banquet, let alone a number of names of dubious relevance (like Mrs. Clinton’s) on the roster of honorees, the continually expanding list of Holocaust restitution projects begs to be examined on its merits—not least because it has begun to come under fire from a number of different directions.

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Perhaps the first question to be addressed is the one with which I began: why is all this happening only now, after so many decades have passed? The obvious answer has to do with the dissolution of the USSR and its East European empire.

By 1990, almost all the victims of Nazi persecution living in Western Europe and the United States had received a measure of compensation from the German government; but this was hardly true of denizens of the East who fell under Communist rule after the war. The East German authorities, for one, insisted all along that they had no special obligations to the Jews who suffered under Hitler—victims, they asserted, not of Germany per se but of a Nazism that had been eradicated in their own country even as it remained (so they claimed) very much alive in the Western zone. Elsewhere in Eastern Europe and the USSR, postwar regimes vigorously pursued anti-Semitic policies of their own, up to and including judicial murder. And in countries that were busy nationalizing all private property, assets seized by the Nazis were, with rare exception, never returned to private hands.

With the fall of the Iron Curtain in 1989, and largely as a result of pressure by both the U.S. government and Jewish organizations, a variety of new initiatives were set in motion. Reunified Germany moved to establish a fund for impoverished Holocaust survivors from Eastern Europe who had hitherto received minimal or no compensation. Another German fund, officially opened this past July, will provide money to the forced and slave laborers conscripted into German firms. Elsewhere, arrangements have been made to restore confiscated property to its rightful owners or their heirs or, where heirs cannot be found, to designate any proceeds from the sale of such property to Holocaust education or to social services for Holocaust survivors around the world. And so forth, in virtually every country of Eastern Europe.

Not entirely by coincidence, shortly after the question of restitution became unfrozen in the East, two issues involving Switzerland came dramatically to the fore. The first was that country’s role as a neutral power in the war. In this role it not only enforced an exclusionary policy against Jews seeking refuge behind its borders but also provided assistance to Nazi Germany in laundering gold, consisting of some $4 billion (in today’s dollars) looted from the treasuries of conquered Europe and an additional $1.2 billion taken from victims of the Holocaust; this last included not only wedding rings but dental crowns extracted from corpses in the various death camps and melted down into ingots. Secondly, attention focused on the Swiss bank accounts established by many European Jews in the 1920’s and 30’s, thought by those who opened them to be exceedingly secure. Indeed, so secure were they—and so wrapped in the secrecy that is the selling point of the Swiss banking system—that in the years following the war they became for all practical purposes another windfall for Swiss bankers on top of the one offered by Nazi gold.

This state of affairs was hardly unknown or even forgotten in the West in the postwar era, but it took until the 1990’s before the World Jewish Congress and the U.S. government embarked on a concerted effort to resolve it. Coming under great pressure, the Swiss government and major Swiss banks rushed to create a “Fund for Needy Victims of the Holocaust” along with a “Solidarity Fund” for other victims of oppression. In the face of a slew of American-based lawsuits, Swiss banks also agreed last year to a $1.25-billion settlement aimed at resolving all outstanding claims and averting sanctions on their U.S. operations.

While the Swiss banking controversy has not been fully defused, a different set of claims has also been making headlines around the world. These involve the various kinds of insurance policies issued to Jews and others in the 1920’s and 30’s, which, for one reason or another—including the death of the purchaser in the Holocaust and the destruction of documents in the war—were never paid. To deal with this exceedingly complex matter, still another commission was established in the late 1990’s, this one headed by the veteran diplomat Lawrence Eagleburger and comprising German and Italian insurance companies, representatives of the state of Israel and of world Jewry, and European and American insurance regulators.

In the wake of a series of tempestuous meetings, some progress has been made toward a settlement in this area as well. At the same time, however, a number of multibillion-dollar suits have been filed against the companies. Several states in the U.S. have also passed laws forcing European insurance companies doing business within their borders to disclose Holocaust-era records, and have commenced actions to recover unpaid insurance proceeds. The issue remains highly charged, with allegations of bad faith and betrayal on all sides.

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The various disputes now unfolding are not entirely unprecedented, with respect either to the basic issues they raise or to the intensity with which they are being fought. Indeed, in the early 1950’s, the debate in Israel over whether to accept money from Germany was, if anything, far more acrimonious than the debate in Germany about whether to pay it. Menachem Begin, then the young leader of the right-wing Herut party, held street demonstrations to denounce the government for accepting German “blood money.” It was only as the 50’s wore on and the funds began to flow that the debate in Israel over this subject essentially died out.

In the United States, by contrast, a rather different pattern has prevailed. Though in the past decades the Holocaust has emerged as the central preoccupation of American Jewry, until virtually yesterday there has been remarkably little discussion, let alone disputation, over the proliferating initiatives, commissions, negotiations, funds, and lawsuits designed, ostensibly, to aid the surviving victims of the Holocaust and to return to the Jewish community that which was stolen from it.

In large part, this silence undoubtedly indicates concurrence with the idea that, in the face of a crime so immense, every last ounce of justice must be done; history’s greatest villains must be punished and punished again while those who suffered deserve every last measure of recompense. But other factors are at work as well.

One of these is easily enough comprehended. The anti-Semitic pseudohistorians who deny that the Holocaust happened have battened on the issue of reparations and pressed it into the service of their “counternarrative,” as an example of how predacious Jews are profiting from their invented tale of suffering. One finds this kind of thing, for instance, in the Journal of Historical Review, the principal publication of Holocaust deniers in the United States, in articles with titles like “Jewish Blackmail Against Switzerland” and “No End in Sight: Germany Has Paid Out More Than $61.8 Billion in Third Reich Reparations.” Meanwhile, on the far Left, a version of this same thesis has been put into play by some of the anti-Zionist followers of Noam Chomsky, as in a recent tract purporting to demonstrate that Jewish organizations have engaged in a ruthless campaign to maximize their own wealth and influence by manufacturing non-existent Holocaust survivors.2

In the face of this portrait of avaricious Jews exploiting the Holocaust for pecuniary gain—a portrait that draws upon time-honored anti-Semitic images—it is hardly unnatural that a general (if silent) consensus should reign within the Jewish community on the rightness of pressing restitution claims. But there have also been one or two notable dissenters. The syndicated columnist Charles Krauthammer, for example, has worried aloud about what he terms a “grotesque scramble for money,” a scramble whose only certain result is the “revival of Shylockian stereotypes.” Abraham Foxman, chairman of the Anti-Defamation League, has voiced a related concern: thanks to the continuing demands for reparations, he has said, people around the world may be led to believe “that the Jews died [not] because they were Jews, but because they had bank accounts, gold, art, and property.”

In Europe, what Krauthammer and Foxman fear has in fact happened, at least to some extent. Among the Swiss, the controversy surrounding Nazi gold and dormant bank accounts unleashed, at its height, a tide of anti-Semitic feeling unseen since the pre-World War II era, complete with hate mail and death threats directed at officials of Jewish organizations and physical harassment of Orthodox Jews on city streets. In Austria, the ascension of Jörg Haider’s Freedom party rested in part on widespread indignation at the bills being presented for that country’s complicity in crimes against the Jews. In Germany, the New York Times reports, there has been “a nationalist and right-wing intellectual awakening” that reflects “weariness, even anger, at what is seen as Germany’s eternal victimization” for the Holocaust. A vivid sign of this was on display in June when Germany’s most prestigious literary award was bestowed on the revisionist historian Ernest Nolte: tellingly, Nolte used his acceptance speech to denounce the “collective accusation” continuously leveled at Germany since the war.

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Unsettling though this European mood may be, it is by no means clear that it should have a decisive bearing on the pursuit of Holocaust claims. If such claims are legitimate, it would be a double injustice to forgo them out of fear of arousing anti-Semitism. Besides, as the Washington Post columnist Richard Cohen has pointed out, if the demands of Jewish organizations have exacerbated anti-Semitism in places like Switzerland, then perhaps it is the Swiss who “ought to look to their own values and not the Jews to theirs.” But are the claims legitimate? And are they being pursued in a legitimate manner? In attempting to answer these questions, we unavoidably enter upon treacherous terrain.

Within the broad categories of restitution—slave labor, stolen artwork, confiscated personal property and real estate, dormant accounts, stock-exchange holdings, insurance polices—there are, of course, countless individual cases, each of which must inevitably stand or fall on its own merits. But after the passage of so many years, assessing the merits of any one case can itself be highly problematic.

The 1920’s and 30’s, the period in which many of the insurance policies and bank accounts now under dispute came into being, were decades of unremitting turbulence, with hyperinflation and depression roiling economies worldwide and the governments of Western and Eastern Europe responding with currency controls, devaluations, and other forms of intervention that left few instruments of worth untouched. This highly unstable era was followed by a war that created displacement on a global scale, with monetary, border, and regime changes, and widespread destruction of documents. After the war, Communism came to a great swath of Europe and the state assumed custody of all private assets and records. Even if private corporations were today consistently proceeding with the best will in the world, many claims would remain exceedingly difficult to sort out.

Consider a single case. Jack Brauns, formerly Jakob Braunsas, is currently suing the Italian insurance company, Assicurazioni Generali, in California courts for failing to make payment on a life-insurance policy on which he is a named beneficiary.

According to the set of facts presented by Generali, in 1930 Moisejus Braunsas, a resident of Lithuania, purchased a U.S.-dollar-denominated policy in the amount of $2,000 from Rigaer Union, a Latvian company in which Generali had an ownership interest and for which it was providing reinsurance, i.e., acting as a backer of last resort if Rigaer Union for some reason could not pay. In 1936, well before the Nazis appeared on the scene in Latvia, the policy’s value was reduced to $800 for nonpayment of premiums, which also, under Latvian law, voided Generali’s reinsurance guarantee. At approximately the same time that the premiums ceased being paid, the Latvian government enacted a monetary reform that forcibly converted all dollar-denominated insurance policies into lats-denominated ones, greatly reducing whatever residual value Braunsas’s policy may have had. In January 1939, not long before the war came to Latvia, Rigaer Union was forcibly liquidated for failing to comply with a new law governing capital requirements for joint-stock companies; its policies were taken over by Droπiba, a far larger Latvian insurer with which Generali had no reinsurance tie.

Then came the war. First, Droπiba fell under Soviet rule when Latvia was annexed by the USSR in 1940. Then it was administered by the Nazis after they conquered Latvia in 1941. Finally, it fell once again under Soviet rule after Latvia was reconquered in late 1944. At that point, all private firms were absorbed by the state. Some 50 years later, after the USSR dissolved and Latvia again achieved independence, Droπiba resurfaced as a private firm.

Under the circumstances, Generali contends that it has no contractual obligations to Jack Brauns, and that if indeed he has a valid claim at all, he should apply in the first place to Droπiba. For his own part, needless to say, Jack Brauns adheres to a very different and highly compelling version of this same murky history.

Nor is this an atypical example of the ambiguities and difficulties inherent to the process of sorting things out—ambiguities and difficulties that perforce raise a question about the tactics that have been employed to compel settlements. If the issues were all cut and dried, not only would most claims have been settled long ago, but it would be entirely justifiable to employ the heaviest legal and political artillery to resolve the outstanding ones. But the issues, in many if not most instances, are not cut and dried. And yet, some inside and outside the organized Jewish community have unrestrainedly availed themselves of any method, however unseemly or even disreputable, to go after every last franc, lira, guilder, and mark, owed or not owed.

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A growing number of attorneys practice the new specialty of Holocaust law. Although they like to wrap themselves in the rhetoric of a sacred cause, a New York Times story suggests an admixture that is at least 99 parts profane. In the free-for-all to obtain Holocaust victims as clients, the paper reports, “competing lawyers from the United States have barnstormed across Europe soliciting clients, publicly castigating each other and privately maneuvering to oust their adversaries.” In the first 50 years after World War II, the number of Holocaust-related class-action law suits could be counted on two hands; in the last four years alone, the number has more than tripled.

Active players range from Cohen, Milstein, Hausfeld & Toll, an eminently respectable Washington, D.C. law firm that has humbled such corporate giants as Texaco, to small-time lawyers like Diane Leigh Davison, a solo practitioner who conducts her primary specialty in “entertainment” law out of an office in Baltimore. Cohen, Milstein boasts that it has assumed “the struggle for justice” for Holocaust victims on a pro-bono basis. Davison, for her part, expects remuneration: “You don’t say to a surgeon, ‘don’t take your fee.’ ” And then there is Edward Fagan, an obscure personal-injury lawyer from San Antonio, Texas who claims to have signed up 31,000 clients in record time. For his role in the Swiss settlement, he submitted to the court a bill for $4 million, or $640 an hour. The average pension that Holocaust survivors today receive from the German government is $640 a year.

Elan Steinberg, the executive director of the World Jewish Congress, has warned that “Holocaust survivors are being exploited by a feeding frenzy of fee-grabbing lawyers.” But his organization, too, has not shied away from eyebrow-raising tactics of its own—for example, against a Dutch insurance company named Aegon that during the war was forced by the SS to surrender all policies owned by Jews to a Nazi-controlled firm. Already at the time, the Dutch government-in-exile declared such compulsory transactions null and void, and, beginning in the 1950’s, Aegon, acting under Dutch law, moved to provide restitution to those who had been robbed. The firm, moreover, participated in successful negotiations with the Dutch Jewish community to establish a fund to cover any additional claims that might come to light.

Despite this eminently defensible record, last year the WJC launched an aggressive campaign against Aegon, insisting that it join the Eagleburger commission or face a boycott of its American-based subsidiaries. Aegon balked at this demand, maintaining that, as a company that had itself been a victim of the Nazis, it would not participate in an enterprise in which it would share equal culpability with Italian and German firms. “Our country suffered,” Kees Storm, Aegon’s chairman, told the Financial Times. “We are in a totally different position from other insurers.” Nevertheless, the World Jewish Congress imposed its sanctions, with Steinberg promising to bring the company to its knees: “the insurance companies,” he warned, “will be even easier” to target than the Swiss banks.

No less troubling than this ungrounded effort to bludgeon a company into submission—the WJC has never publicly referred to a single Holocaustera insurance claim against Aegon that has gone unpaid—is the organization’s attempt to wield Dutch wartime history as a club in its public-relations war against the insurer. Holland, according to the congressional testimony of Israel Singer, the secretary general of the WJC,

had the worst record in Western Europe during the Holocaust—some 80 percent of its Jewish population was murdered. They were handed over by Dutch police. . . . The perception of Holland has been colored by the tragic Anne Frank story. But Anne Frank, who was betrayed and died in a Nazi concentration camp, had her furniture in the hidden annex removed by a Dutch moving company. So the failure of Aegon and the Dutch insurance companies is clearly bound up in the unwillingness to face the past—a failure of moral restitution.

It is, of course, indisputable that, in percentage terms, more Jews perished in Holland than anywhere else in Western Europe. In his outstanding Victims and Survivors: The Nazi Persecution of the Jews in the Netherlands, 1940-1945, the British historian Bob Moore emphasizes the interplay of elements that helped to account for this disparity, among them the deeply ingrained deference to authority that characterized both the Dutch people and the Dutch Jews themselves; the fact that it was civilian Nazi officials who ruled Holland in the war years and not, as elsewhere in Western Europe, the Wehrmacht, thus giving a freer hand to the SS, the key instrument of Nazi genocide; and the continuation, during a temporary pause in deportations to Auschwitz from locations across Western Europe, of transports from Holland alone to the death factory of Sobibor. Indeed, Moore records in one highly relevant passage, “the Dutch victims of Sobibor more or less account for the percentage difference in mortality between the Netherlands and its nearest neighbors.”

It is also true, as the WJC’s Israel Singer observes, that there was extensive collaboration in the roundups and deportations of the Jews to the death camps, particularly by the Dutch police and the civil service, and in this respect the fate of Anne Frank was typical. But one cannot speak of Dutch collaborators without also taking note of the other side of the coin: the Dutch men and women who gave shelter to those forced to wear the yellow star, many of whom paid a terrible price for their pains. Yad Vashem, Israel’s Holocaust museum and research institute, has kept a meticulously researched record, broken down by country, of the men and women who came to the aid of persecuted Jews in occupied Europe. In absolute numbers of such “righteous gentiles,” tiny Holland outstrips all the countries of Western and Central Europe combined. Holland, moreover, was the only country in Nazi occupied Europe to witness a general strike in response to Nazi depredations against the Jews, a heroic and costly move that tragically failed to affect the Nazi resolve to hunt down and murder every last Jew in the land.

One can hardly say that the Dutch had an unblemished record during World War II; far from it. And in the aftermath they were often as callous as they could be to the relative handful of Jews who returned alive. Still, the image we have of the “good Dutchman” is not simply a myth to be torn away. To assert without qualification that the Netherlands had “the worst record in Western Europe during the Holocaust” is wickedly to blacken the name of a country that, from the bombing of Rotterdam in 1940 to the hunger winter of 1944-45, itself suffered grievously in the war. One would expect an organization attempting to right a historical wrong to acknowledge, and honor, its special obligation to historical truth.

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As clouded as are the issues presented by the claims against insurance companies, an even more complex case is presented by Switzerland. In pursuing the Swiss banks, major Jewish organizations have loosed the most forceful weapons in their arsenal, including class-action lawsuits, boycott threats, and barrages of adverse publicity. The World Jewish Congress has again taken the lead, lambasting the Swiss in forum after forum for sins ranging from gold laundering to the failure to admit refugees. It has also published a series of hard-hitting pamphlets, with titles like The Sinister Face of “Neutrality”: The Role of Swiss Financial Institutions in the Plunder of European Jewry, that detail instances of misconduct during and after the war.

Summing up the overall charge, Edgar Bronfman testified before Congress that, contrary to received wisdom, the Swiss were “far from neutral” in the war:

Their assistance to the Nazi war machine, through the clandestine conversion of looted gold into Swiss francs, enabled the Germans to buy fuel and other raw materials they needed to prolong the war. Some estimates in testimony before the U.S. Senate hearings following the war suggest the cost may have been staggering in the lives of American soldiers, Allied soldiers, Jews, and other civilians across that continent.

What are we to make of this indictment?

Clearly, the picture of wartime Switzerland as a kind of happy haven, encapsulated in the Broadway show The Sound of Music, has long been in need of adjustment. But in its place has come a mirror-image caricature that does no greater justice to historical reality. As with the Dutch, the actual record of the Swiss is very checkered.

Thus, a case can be made—and has been made by, among others, Angelo Codevilla in a new book3—that, surrounded on all sides by the Nazis and their allies and vulnerable to invasion, Switzerland acted from necessity when it served as a banker for the Third Reich. It is also reasonably clear that Switzerland did not violate international law merely by trading with Nazi Germany, which was in any event again not a matter of choice. On this point international law is fairly straightforward: neutral countries are permitted to engage in commercial relations with belligerents so long as the government itself does not participate in such trade and so long as none of the belligerents is given special favor. For the most part, Switzerland complied with these two conditions.

The Swiss did violate international law in another way—by trading in Nazi gold, which they had reason to know had been looted from the treasuries of Germany’s victims (although there is no evidence suggesting they knew that some of the gold had been taken from death-camp inmates). This violation, however, was in effect cured, legally if not morally, by the Washington Accord of 1946, in which the Swiss agreed to settle Allied claims in exchange for a contribution of $58 million ($500 million in today’s dollars) to the reconstruction of Europe.

This sum was paid only after much kicking and screaming; but it was not a particularly large amount, and from our present vantage point the Swiss would seem to have gotten off far too easily. Even so, however, some additional considerations are relevant. Washington was hardly in the dark about the true nature of Switzerland’s gold transactions, having obtained through decryption of diplomatic communications and other means a generally comprehensive picture of Bern’s activities. In signing a binding accord, then, the U.S. government was not snookered. And the Truman administration had solid reasons of its own for avoiding a major breach with Switzerland, the one wholly intact country in the heart of Europe in the chaotic year 1946.

But international law aside, was Swiss neutrality itself not an ethical disgrace? This, as it happens, is the gravamen of a 1997 U.S. government report prepared by the office of Stuart Eizenstat, which also points out that Nazi Germany “was a mortal threat to Western civilization itself, and had it been victorious, to the survival of even the neutral countries themselves.”

That the Swiss were free riders on the Allied war effort is indisputably the case, but it is difficult to imagine what kind of useful contribution a belligerent Switzerland—a nation of 5 million—could have made to the defeat of Nazi Germany; in all likelihood, a major portion of the country would have been conquered within days and, among other consequences, the Jews of Switzerland would have been rounded up and shipped away, never to return. As things stood, moreover—and as no lesser an authority than Winston Churchill would later attest—neutral Switzerland was not without considerable value to the Allies, too: as a trading partner (in gold, as with the Germans), an espionage porthole, and a “protecting power” for German-held Allied prisoners of war. To reprove Swiss neutrality from an office in Washington five decades after the fact, without considering the alternative and what it would have entailed, is to indulge in the worst kind of armchair moralizing.

As for Switzerland’s exclusionary immigration policy, it was arguably no worse than that of many other countries during the war. (The United States itself hardly has a glorious record in this department.) But there can also be no blinking some of the terrible things done by the Swiss, like the encouragement given to the German authorities in 1938 to stamp the passports of Jews with a “J” in order to help the Swiss border control keep out terrified refugees fleeing for their lives. Although some have denied anti-Semitism was prevalent in Switzerland in this period, and Codevilla goes so far as to say that no Swiss officials wanted to put their names on “a policy of exclusion of Jews per se,” a profusion of easily obtainable documents belies such apologetics. Nor was it just low-level bureaucrats who instructed, as in one crucial circular, that the passports of those “who are Jewish or probably Jewish” should be stamped “turned back.” Such policies flowed from the very top, and were approved unanimously by the Federal Council, the highest decisionmaking body in the land.

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Gold laundering and a pinched or anti-Semitic refugee policy undoubtedly constitute the blackest mark on Switzerland’s wartime history. But the irresistible lure both to class-action lawyers and to Jewish organizations has been not these but the dormant bank accounts belonging to Holocaust victims. Thanks in large measure to an Independent Committee of Eminent Persons, set up in response to the growing clamor about these unrestituted funds and headed by Paul Volcker, the former chairman of the Federal Reserve, our understanding of this matter is much more complete than it was before the shouting began—and strikingly at variance with the picture we have been given.

The Volcker committee examined the records of some 254 Swiss banks that operated during the period 1933 to 1945, covering every institution likely to have had foreign depositors. It scrutinized some 4.1 million accounts, or 60 percent of the total from those years (the records for the other 40 percent no longer exist). From these, the commission attempted to cull accounts matching the names on lists of Nazi victims provided by Yad Vashem. In all, the auditors found some 53,886 accounts bearing what they cautiously describe as “a probable or possible relationship to victims of Nazi persecution.”

This number is dramatically higher than all previous estimates given by the Swiss banks themselves—a 1962 survey turned up only 739 accounts, while in 1956 Swiss bankers had been able to find a paltry total of 86. The disparity is overwhelmingly the result of sheer bad faith on the part of the Swiss—but it is also a testament to the technical and legal problems wrapped up in this issue. For, even after the expenditure of almost a quarter of a billion dollars in what became the most expensive audit of all time (not even counting the sizable internal costs imposed on the banks themselves) and with the aid of a “fuzzy logic” algorithm and other advanced computational techniques, the Volcker audit itself encountered enormous difficulties in tying particular accounts to particular Holocaust victims with any certainty.

The report is properly severe in its judgments. Some banks, it concludes, did engage in “questionable and deceitful actions.” These included “withholding of information from Holocaust victims or their heirs about their accounts, inappropriate closing of accounts, failure to keep adequate records.” Then there were “many cases of insensitivity to the efforts of victims to claim dormant or closed accounts, and a general lack of diligence—even active resistance—in response to earlier private and official inquiries.” Some of the more egregious instances of dissimulation and stonewalling involved the charging of extraordinary fees to those seeking information, or closing accounts in such a way as to complicate or rule out any future tracing of ownership.

On the other hand, the offending behavior was evidently limited to a relatively small number of banks and is not of recent vintage. Rather, it “took place years ago in a particularly difficult period with different banking standards.” Significantly, the Volcker commission uncovered no evidence of “organized discrimination against the accounts of victims of Nazi persecution” or “concerted efforts to divert the funds of victims of Nazi persecution to improper purposes.” Although many records could not be located, this could not be attributed “to systematic or widespread and deliberate alteration or destruction of bank-account records for the purpose of obliterating the history of the accounts of these victims.” Indeed, in a stunning conclusion completely contrary to the picture drawn by the World Jewish Congress and the Western media, the commission reports “many cases” in which banks “actively sought out missing account holders or their heirs, including Holocaust victims, and paid the account balances of dormant accounts to the proper parties.”

No less remarkable than this conclusion is the committee’s analysis of the root cause of the problem, which, it avers, lay less in cupidity (though there was that, too) than in the underlying legal framework of the Swiss banking system. One pillar of that framework was, and remains, the secrecy rules that were adopted in the 1930’s, ironically enough in large measure to protect the assets of persecuted German Jews. These secrecy laws then helped underpin the decision (later to become the subject of much criticism) “not to publish the names of the dormant account holders after World War II.”

A second and no less important pillar was the absence of an escheat provision that would, as in most other countries, mandate the transfer of unclaimed banking assets to the state after a specified period of inactivity. This continuing anomaly in Swiss law has given rise to what the Volcker report calls “large numbers of dormant accounts even in settled times” and also, for the period in question, “very large amounts of dormant accounts completely unrelated to victims”—a circumstance from which the report concludes that “the banks, for the most part, treated foreign and domestic customers alike.”

This lapidary finding puts paid to the notion that Swiss bankers deliberately sought to profit from the Holocaust. Although they clearly harbored their share of miscreants, for the most part their dereliction, characteristic of bankers, lay in applying the ordinary rules of procedure to an extraordinary situation. Thus, what can be said of them as a whole is that they failed to rise to the occasion, and that they made no systematic effort, until challenged, to resolve a glaring scandal.

Although one hesitates to compare, something similar can be said of other banks, including, as the Jerusalem Post and other news outlets have reported in great detail, local banks in Israel that have been found to be sitting on dormant accounts belonging to Holocaust victims. (Once again, avarice is not the cause; it is merely the intrinsic difficulties of determining who owns what.) And as the Jerusalem Report has recounted in a series of scathing articles, even the Claims Conference, whose vice president is Israel Singer and on whose board of directors sits Edgar Bronfman, has faced its share of unsightly entanglements in carrying out its fiduciary responsibilities—principally by failing adequately to inform actual property owners or their heirs of their rights to unclaimed property that then fell to the Conference to dispose of as it wished. In short, in managing large sums of money belonging to the dead, even the best-intentioned bodies can fall prey to procedures and incentives that can make them appear as self-serving and heartless as the Swiss banks.

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In bringing this inquiry to a close, let us leave aside the “fee-grabbing” lawyers, who are doing what such lawyers, for better or worse, are nowadays wont to do. But has the organized Jewish community itself been pursuing Holocaust claims in a legitimate manner?

It is indisputable that without the aggressive campaign waged by the World Jewish Congress and its affiliates, many of the restitution efforts in train today would never have been set in motion. Although much of the money promised in the 1990’s remains tied up in litigation and bureaucratic wrangling, if and when it begins to flow freely it might yet benefit the dwindling group of Holocaust survivors dispersed around the world, many of whom, particularly in Eastern Europe and the USSR, are said to be destitute and forsaken.

But consider what else has been set in motion. There is, to begin with, the questionable nature of at least some of the claims themselves, especially those that have been settled en bloc and under duress by banks or corporations anxious to avoid an unceasing notoriety and/or to continue doing business in the United States. As we have seen in the case of the insurance companies, the issues are so tangled as inescapably to inject uncertainty into the validity of any given claim, with questions arising about the timely payment of premiums, the existence of reinsurance guarantees, the effect of currency devaluations, and so forth. And as we have seen with the dormant bank accounts, the Volcker committee’s authoritative report clearly refutes the accusation that the Swiss bankers engaged in widespread and systematic larceny.

If anything, indeed, the Volcker report highlights the suspect nature of a good number of the claims for compensation that have been streaming in ever since this issue was highlighted in the 1990’s. Through a campaign of public statements and paid advertisements, Jews around the world have been actively solicited to locate their names on lists of dormant bank-account holders and unpaid insurance policies. More, they have been given the impression that filing a claim is a moral imperative, a way of seeing justice done.

The Volcker report itself expresses serious reservations about publishing lists of accounts, which carries a “greater implication of widespread insensitive and even unethical behavior than is warranted by the facts,” and invites “frivolous claims” that can “clog the claims-resolution process [and] delay justice rather than serving the legitimate claimants.” An independent tribunal of distinguished jurists has been at work evaluating claims against the Swiss banks, and has already denied some 80 percent of them. But the organizations are pursuing an agenda of their own, and have been deterred not at all by the undifferentiated scramble for compensation they have unleashed.

_____________

 

Quite apart from the merits or demerits of individual claims, that agenda may be inflicting injuries ever more costly to Jewish interests. When, in the early 1950’s, Prime Minister David Ben-Gurion asked the Israeli people to come along with him in accepting reparations from Germany, he did so reluctantly and for the weightiest of reasons: namely, to obey the “final injunction of the inarticulate six million, whose very murder was a ringing cry for Israel to rise, to be strong and prosperous, to safeguard her peace and security, and so prevent such a disaster from ever again overwhelming the Jewish people.” Does even a shadow of such a vital imperative exist today?

Assuredly, the restitution effort now being pushed forward by U.S.-based Jewish organizations contributes nothing to Israel’s security. Conceivably, it may even harm it. For many years now, Germany, Holland, and Switzerland have been staunch supporters of Israel in a Europe that has been less than friendly to the Jewish state. The arm-twisting, the threats of boycott, the bad press—some of it undeserved, and some of it undertaken for the naked aim of extracting money—cannot but leave a distinct impression on European minds.

Stoking the fires of anti-Semitism on the far Right is only one and by no means the most significant danger. The real peril comes not from the fringe but from the damage done in the European political center. Countries that fail to fall into line, Israel Singer has warned, will be “publicly attacked and humiliated,” and on more than a few occasions his organization has made good on this threat. When moments of strain come along, as when Israel’s Arab adversaries come shopping for advanced weapons systems, will the nations that have been “publicly attacked and humiliated” be ready to do the right thing? It is impossible to say for sure, but one senses that moral and political capital has been heedlessly squandered.

An injury of another sort may be done to relations between Jews and non-Jews. With the exception of the forced laborers and some other currently favored groups like Gypsies, homosexuals, and the mentally ill, both European corporations and Jewish organizations have said embarrassingly little about the great numbers of non-Jews who were deprived of life, limb, and property at the hands of the Nazis. But if banks and insurance companies, in particular, have unpaid obligations, they have them to all of their murdered customers with whom they had valid contracts. Obviously, the firms do not wish to widen their exposure to thousands upon thousands of more claims, and Jewish organizations are fighting first and foremost for Jewish interests.

So they should; that is their job, and besides, the fate of the Jews, it hardly needs emphasizing, was singularly terrible. Nevertheless, to lead or participate in a process through which some are given restitution while others in similar circumstances, but on the wrong set of lists, are not, is to sow the seeds of needless acrimony and to court censure on grounds to which Jews of all people should be especially sensitive.

_____________

 

Prudential considerations of this sort are by no means the end of it; at stake also is Jewish honor, violated in several ways. For one thing, we have been witnessing the spectacle of American Jewish organizations teaming up with politicians whose tears for the six million are exquisitely synchronized with their need for campaign contributions and applauding headlines. A bipartisan complement of this breed will attend the black-tie reparations banquet at the Waldorf-Astoria, an exercise in self-congratulation that promises to drag the mass murder of European Jewry into ethnic politics at its crassest.

For another and much graver thing, there are those indigent survivors languishing in isolation while their claims are laboriously processed. The Jewish community has a proud history, extending across millennia, of taking care of its own, buttressed by a voluminous legal and moral literature on the sacred obligation to feed the hungry, clothe the naked, and ransom the captive. Can it really be that, at the very moment when American Jewry has been investing millions of dollars in the construction of Holocaust museums and memorials in every city and suburb of the United States, and when hundreds of millions of dollars have been spent digging through European banking archives, these suffering souls have been kept waiting for Swiss and German money to materialize? Yet so we have been solemnly assured by those spearheading the press for Holocaust restitution. If what they say is false, merely a public-relations ploy, then the pursuit of “blood money,” in Menachem Begin’s withering phrase, will have ended by casting into disrepute Jewish integrity; if what they say is true, it will have ended by casting into disrepute Jewish self-respect as well.

And finally there is the damage done to our understanding of history, to which I have already alluded. In testimony before Congress earlier this year, Israel Singer declared that “the importance of financial restitution must not overshadow the priority of moral restitution—the honest confrontation and accounting of the past.” Unfortunately, he and his associates have rendered any such “honest confrontation” all the more difficult. History is not clay to be molded this way or that in the service of a cause, no matter how worthy, and treating it as such only eases the way for extremists of Left and Right to reshape the past toward their own, entirely different ends, including the end of proclaiming that the Holocaust, like everything else touching upon the Jews, was just about money after all.

Some of these extremists have accused the organized Jewish world of engaging in gangster tactics. One can only hope that the venom of such attacks will not deter other, more responsible voices from issuing criticism when and in whatever measure it is due. Thus far, alas, only a few such voices have been heard. “The pursuit of billions in Holocaust guilt money,” warns Charles Krauthammer with characteristic directness, “has gone from the unseemly to the disgraceful.” To Abraham Foxman, the reduction of the Holocaust to a matter of dollars and cents amounts to a “desecration” and “too high a price to pay for a justice we will never achieve.”

They are right. It is past time to reconsider.

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Footnotes

1 In what follows I use the words “restitution” and “reparations” interchangeably, though the former, strictly speaking, refers to the return of property to its rightful owner and the latter to compensatory payments for wartime or occupation losses agreed to, usually in a treaty, by a vanquished belligerent state.

2 The Holocaust Industry: Reflections on the Exploitation of Jewish Suffering, by Norman Finkelstein. Verso, 150 pp., $23.00.

3 Between the Alps and a Hard Place. Regnery, 288 pp., $27.95.

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About the Author

Gabriel Schoenfeld is senior editor of COMMENTARY.




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