FROM THE OFFICE OF PUBLIC AFFAIRS

Mr. Chairman, Mr. LaFalce, thank you for continuing to focus public attention on issues related to the Holocaust. The hearings you have held over the last year and a half have contributed significantly in the U.S. government's efforts to bring some measure of justice to those who suffered so much during that horrible period of world history. I am delighted to be here today to give you an up-date on the progress being made, progress to which you have contributed in full measure.

Before reviewing each area in which we have been working, I would like to summarize what we have learned from our work to date, and why we are investing so much time and energy in issues arising out of World War II, fifty years after the end of the War. I would also like to underscore the seriousness and urgency with which we approach Holocaust issues, the historical consistency of U.S. policy in this area, and the practical considerations of foreign policy that underlie our efforts.

As a result of two major U.S. government interagency studies, in 1997 and 1998; two international conferences, in London and Washington, involving over 40 countries and more than a dozen NGOs; research by both belligerent and neutral countries from Europe to Latin America on their role in World War II; the completion of the work of the Tripartite Gold Commission; and our own involvement in lawsuits brought against Swiss banks and now German industrial companies who employed slave and forced laborers during World War II, we have discovered little-recognized facts about Nazi Germany's war effort and learned more about the full depravity of how the Nazi regime systematically plundered the property of those they murdered and imprisoned. We have pieced together new information about the way in which the Nazi war machine was sustained. We have underscored how little justice has been done for those who bore the brunt of the Holocaust and other Nazi brutality.

We have learned how, faced with the lack of value of the Reichsmark, the Nazi authorities helped finance their war effort by looting massive amounts of gold from the central banks of the countries they conquered and from the victims they killed in the Holocaust, smelting and resmelting it into disguised gold bars and, primarily through the Swiss National Bank, converting it into usable hard currency.

We have learned how neutral countries supplied crucial raw materials to Germany which sustained the Nazi war machine.

We have discovered new details about how the Nazis forced some 12 million workers, deported to Germany from Central and Eastern Europe or relocated in their own countries, to work in German industry and agriculture, freeing German men to fight on the front. By its own admission, German industry became an integral part of the Nazi war effort.

We have learned how the Nazis often forced insurance companies to pay over to them the cash surrender value of policies taken out by the people they exterminated, and how after the War the companies generally refused to pay any living beneficiaries.

We know now about the looting of works of art on a scale unprecedented in history, much of which has been returned to its owners at the end of the Second World War. And we have learned how private and communally owned property, from synagogues to cemeteries to schools and community centers, were plundered on a vast scale, much of which has yet to be returned to its owners.

The full dimensions of what happened, during this era of depravity, underscore the importance of trying to do justice, however belated, to the survivors of the Holocaust, many of whom are U.S. citizens. It imposes an obligation on the Administration, the Congress and state and local governments to help secure a measure of justice before it is to late. Israel Singer, the President of the World Jewish Congress, has reminded us that each year 10% of Holocaust survivors pass away. We must not let a biological solution complete Hitler's evil plans for a "final solution."

In December 1997, I set as a goal the resolution of the bulk of the material claims arising out of the Holocaust era before the end of the century and the beginning of the new millennium. While this date is now less than four months away, we are working hard to meet it. While we shall not have finished our work by December 31, 1999, we are hopeful to have in place the mechanisms that can yield comprehensive settlements and rapid distribution of funds and assets to survivors and their families.

The effort to bring a measure of justice to Holocaust survivors and their families did not begin with this Administration or this Congress. It has been a consistent part of U.S. policy for half a century.

As far back as 1945, the United States Government instructed U.S. forces occupying Germany to ensure that stolen property be restituted. Through a massive effort by the U.S. and its allies, millions of dollars of stolen property was returned during the first five years after the war. In 1949, the German authorities modeled German restitution law on decrees by the U.S. military government. The 1955 Convention on Relations with the Federal Republic of Germany preserved the restitution system established under Allied legislation, and led to the establishment of the German system for compensating victims of Nazi persecution. German restitution programs to date have processed over 4 million claims amounting to over DM 100 billion.

More recently, in 1990, as part of our agreement to the reunification of Germany, the U.S. asked for and received assurances that the German restitution and compensation programs would be extended to victims living in East Germany who, under the policies of the former German Democratic Republic, had until then been denied adequate compensation. In 1996-97, the U.S. Government was directly involved in encouraging the German government to extend the program to victims living in the Russian Federation, Poland, Belarus and the Ukraine who had been "double victims" of both Nazism and Communism.

The U.S. Government has also concluded its own bilateral agreements on this subject. One, concluded in 1992, covered claims for property located in East Germany confiscated by the GDR from U.S. citizens. Additional agreements for one-time payments to U.S. citizens interned during the War in concentration camps were also negotiated.

All of these property restitution and compensation programs, while significant, were not sufficiently comprehensive and thus left gaps. What we have been doing is trying to close these gaps.

The consistency of U.S. policy on Holocaust issues has served important U.S. foreign policy interests. They include the furtherance of the close cooperative relationship this country has had with Germany, one of our most important allies as well as with the nations of Eastern Europe; the maintenance of stability in Europe; and the removal of impediments to greater cooperation and unity among the nations of that continent. More broadly, the horrors of the Holocaust provided a lesson applicable to contemporary events. The firm actions of the United States and NATO in Kosovo were and are motivated, in part, by an unwillingness to repeat the world's indifference to the plight of peoples subjected to persecution reminiscent of the Holocaust.

In attempting to achieve justice for Holocaust survivors and their families, we have been joined by many nations. In 1997 the London Gold Conference brought together 42 countries, seeking to uncover the full implications of the Nazi plundering of gold during World War II. At that conference, the international community created a Nazi Persecutee Relief Fund with assets of $61 million, much of which was contributed by nations in the form of gold. The fund is an international effort with contributions from 18 countries. Managed by the British Government, with the account held by the Federal Reserve Bank of New York, the Nazi Persecutee Relief Fund channels money precisely to provide basic relief to survivors of Nazi persecution. Each country can target its contribution. With respect to the U.S. pledge to provide $25 million to the Fund, for example, for the first FY 1998 tranche of $4 million, we chose to spend the money providing support to the neediest "double victims" (of both Nazism and Communism) abroad, and selected a proposal by the Conference on Jewish Material Claims Against Germany, an organization representing 23 Jewish NGOs globally, to administer it. The Claims Conference, using its expertise in this field and its pre-existing contacts with local aid networks in Eastern Europe and the former Soviet Union, is currently bringing needed food, medicine and clothing to Holocaust survivors in Ukraine, Belarus, Moldova, and the Baltics. We look forward to working with Congress as we select projects for the FY1999 contribution and as we seek to obtain funding for the FY 2000 final balance of the U.S. pledge.

In 1998, the international community again met, this time at our invitation in Washington, to deal with other assets stolen during the Holocaust and never returned, among them art, insurance, and communal property. This groundbreaking conference set us on our current path, which I shall detail later. Also in 1998, the International Commission on Holocaust Era Insurance Claims was established under the Chairmanship of former Secretary of State Eagleburger, to honor unpaid insurance claims and create a humanitarian fund for victims. In short, we have seen in the last few years an sharp increase in activity, reflecting a notable international consensus to achieve a measure of justice for Nazi victims of the 20^th century, so that we can enter the 21^st century with a clearer conscience.

I would now like to turn to a current focus of our efforts, that is payment for those who were forcibly compelled to perform slave and forced labor during the Holocaust. Our efforts here are without regard to religion or national origin. In fact, the vast majority of those compelled to work for the Nazis who still survive are not Jews, but Eastern European Christians from countries overrun by Hitler's forces in the early years of World War II.

To their credit, both German industry and government have stated their intent to do justice for this last large group of individuals not covered by any past or current German compensation program. German Chancellor Schroeder, who even prior to becoming Chancellor exercised extraordinary leadership on the issue, has been extremely helpful to this process. Soon after becoming Chancellor, he appointed one of his senior Ministers, Bodo Hombach, to represent him. When Minister Hombach was asked to head the European Union's efforts to reconstruct South Eastern Europe, the Chancellor ensured that this issue would remain a focus of his government by asking one of Germany's leading elder statesmen, Otto Count Lambsdorff, to take over. I have known Count Lambsdorff from my work in previous administrations and I welcome the opportunity to work with him again.

Our current involvement in this issue dates to the Fall of 1998, when I was asked by the German government to help find a resolution between class action claimants who had filed suit in U.S. courts for wages and damages arising from slave and forced labor during the Nazi era and 16 defendant German corporations. The German companies, recognizing their moral responsibility for the behavior of private companies during the Nazi era, proposed to establish a foundation which would provide payment to those who were forced to work for private industry as well as those who were victims of other actions during the Nazi era in which German companies participated. The German government, in support of its companies, has proposed to establish a government foundation, which would compensate many others who were forced to work for the Nazi state who might not be covered by the private sector foundation.

These German proposals are currently the subject of intensive discussion in plenary and working groups chaired by Count Lambsdorff and myself. The Participants are:

• The Conference on Jewish Material Claims Against Germany
• Five Central and East European Governments (Poland, the Czech Republic, Ukraine, Belarus, and Russia) and the German-financed Reconciliation Foundations located in these countries
• the Israeli government
• a number of plaintiffs' attorneys representing former laborers in class action lawsuits in U.S. courts
• representatives of German corporations currently supporting the foundation, and
• the German and U.S. Governments.

By late August, discussions on the administrative and legal aspects were far enough advanced for the issue of payment levels to be discussed. This began in Bonn August 24-26, and will be continued here in Washington October 6-7. Meanwhile, Count Lambsdorff has publicly campaigned for increased German industry participation in the industry foundation, noting that "there was hardly a German company that did not use slave and forced labor during World War II". Consistent with his personal commitment to the process, Chancellor Schroeder convened a meeting, September 6, of German industry leaders and told the press following that session that 35 German companies were now willing to join the industry foundation, more than double the original 16.

The fundamental trade-off for German industry is to grant a reasonable amount of payment to former forced/slave industrial workers in return for what they have termed "legal peace" i.e. an end to lawsuits on the subject. If agreement can be reached on payment levels, and the plaintiffs' attorneys and survivor groups concur, the Department of Justice is prepared to file a "Statement of Interest" in future lawsuits brought in United States Courts against German companies in cases where the foundation provides a remedy stating our belief that the Foundation should be regarded as the exclusive remedy for future claimants who could utilize it. If asked by the court, we would indicate that dismissal of such suits is consistent with U.S. policy. Such statements by our Government in open court are extremely rare, and I hope German industry realizes this. I want to stress that we would only agree to do this if the participants in this process agree to establishment of the private foundation and a federal foundation.

As regards the German government foundation, Count Lambsdorff has conveyed to me Chancellor Schroeder's pledge to seek legislation establishing it when the Bundestag returns from vacation in September. In order to obtain the support of the Central and Eastern European Governments participating in this process, which is necessary for moral, political and legal reasons, it is essential that the government's foundation offer as broad coverage as possible, so as to include workers who were relocated from their homes and forced to work for the Nazi regime.

There are two main reasons why we support resolving these claims through a negotiated settlement rather than trial. First, the age of the survivors -- now averaging around 80 years -- necessitates an expeditious solution. Second, the number of victims who would be covered by the two German foundations would be much greater than those covered by the lawsuits pending in United States Courts. Thus, justice will be better served if agreement can be reached to establish the German foundations, rather than put Holocaust victims at risk in uncertain and lengthy litigation.

The central unresolved issue is the amount of payments to be made to the various classes of laborers. While I cannot discuss details related to payment levels, it is clear that the participants are far apart on this issue and both sides will have to give considerably to achieve an agreement. I hope the German industry realizes just how far the U.S. government has gone in the interests of an equitable settlement. We have devoted the better part of a year, and considerable staff resources, to creating a framework for productive negotiation. We have done what they and the German government have requested.

The German companies have time and again denied any legal liability in U.S. courts, but have clearly indicated their moral responsibility for the gross abuses inflicted on millions of forced and slave laborers. It is now time that they make a proposal to settle the suits in a fashion consistent with their moral responsibility not only for their own workers but for all workers employed in German private industry during the Nazi era. Likewise, it is appropriate for the German government to establish a Federal Foundation to cover the forced laborers not covered by the industry Foundation. We are encouraged by Chancellor Schroeder's willingness to do this.

By the same token, I hope that plaintiff's attorneys are aware that the initial monetary demands they have put forward in this negotiation are not considered realistic by German industry or the German government and make it more difficult for that government to muster public support for helping fund a reasonable solution. They will need to show flexibility if these cases are to be settled within the lifetimes of the survivors they represent.

Despite the wide disagreement over payment, I feel we have nevertheless come far in this process. If the remaining differences can be resolved, agreement could be achieved in principle on all slave/forced labor issues before the end of this year.

On insurance, efforts to provide rapid and fair resolution of claims have intensified. The International Commission on Holocaust Era Insurance Claims, created in November 1998, has been charged with establishing a just process that will expeditiously address the issue of unpaid insurance policies issued to victims of the Holocaust. Under the very able leadership of former Secretary of State Lawrence Eagleburger, the Commission has achieved significant progress in creating a claims-based process to pay outstanding insurance claims in the lifetimes of Holocaust survivors. The International Commission includes five leading European insurance companies, representatives of international Jewish survivor and other Jewish organizations, U.S. and European insurance regulators, and the State of Israel. Under Chairman Eagleburger, a fact-based effort to resolve Holocaust insurance claims promptly and fairly is being negotiated. The objective is to provide expeditious resolution of insurance claims without resorting to lengthy litigation that would delay payment to survivors.

The International Commission is making significant progress in resolving a complex set of issues which includes valuation of policies, independent audit review, and the waiver of the statute of limitations. It will establish a help line for claimants. It has designed a non-bureaucratic claims process and relaxed set of standards of proof. It is prepared to publish the names of potential policyholders; has agreed that the insurance companies will bear the cost of claims processing; and proposed establishment of a humanitarian fund.

Chairman Eagleburger expects to have the claims settlement system in place in the near future. The International Commission's blueprint for settling Holocaust-era insurance claims is now in the final round of negotiations. Once the claims process is in place, we expect that the legal and the claims process will be merged.

The Administration supports Chairman Eagleburger's and the Commission's efforts to bring justice to Holocaust survivors through the establishment of a fair claims process. We have worked with European countries to bring them into this international effort to obtain justice. Recently the, Belgian, Czech, and Polish governments joined the German, French, Israeli and Italian governments in participating in the Commission. In France, I have met with the Matteoli Commission, which is testifying before this committee in the person of Dr. Adolphe Steg, with whom we have worked closely.

We continue to believe that the International Commission is the best vehicle for resolving Holocaust-era insurance claims and have great confidence in Chairman Eagleburger's leadership. We commend the five insurers that have voluntarily agreed to join the International Commission - Allianz, Generali, AXA, Zurich, and Winterthur. These companies' commitment to the Commission, demonstrated by the $90 million escrow fund established at the beginning of the process, and their willingness to negotiate on these difficult issues, has helped make possible the progress to date. We call on all insurance companies that hold policies from the Holocaust era to participate in this process. And we call upon all of our states to give those companies participating in this process a safe harbor from regulatory action as they complete the claims process and begin making payments.

Mr. Chairman, I would now like to turn to an issue with which you have great experience and to which you made a significant contribution when you chaired that portion of the Washington Conference on Holocaust-Era Assets dedicated to stolen art. Significant initial progress has been made to restitute art that was confiscated by the Nazis during World War II. The 44 nations participating in the Washington Conference reached consensus on a set of eleven principles relating to Nazi-confiscated art that envision a massive cooperative effort to trace the current location of this art, publicize this information so that pre-War owners can come forward, and reconcile competing claims of ownership to produce just and fair solutions. The Conference specifically urged nations to encourage the use of alternative dispute resolution mechanisms instead of lengthy court proceedings to accomplish our mutual goals more quickly.

Since the Conference last December, there have been many positive developments in this area:

• In February, Austria agreed to return to the Rothschild family over $40 million in art pursuant to the Austrian restitution law enacted in November.
• In March, Britain's National Gallery issued a list of 120 paintings in its collection that it is investigating to make sure they were not confiscated or stolen in the Nazi era.
• In April, France returned to the Rosenberg family the Monet painting, part of its MNR collection, that had been loaned to the Museum of Fine Arts in Boston and exhibited there.
• In June, the Prussian Cultural Heritage Foundation -- the German Foundation that runs many of Berlin's most prominent museums -- agreed to return a van Gogh drawing to the heirs of Max Silverberg.
• Also in June, the Seattle Art Museum agreed to return a Matisse to the Rosenberg family, following an independent investigation into the work's provenance.

More broadly, as a result of an April hearing in Paris on "Looted Jewish Cultural Property", the Committee on Culture and Education of the Council of Europe is preparing model legislation on the return of looted Jewish cultural property for adoption by the Parliamentary Assembly of the Council. This model legislation should, in turn, initiate new legislation on this subject in European national parliaments hopefully similar in scope to the groundbreaking legislation adopted by Austria. One of the organizations represented at the April Council of Europe meeting was the newly-created European Commission on Looted Art, which is supported by organizations and individuals in 35 countries in Europe.

We have still to receive indications of how the Russian Federation intends to follow up on their commitment, made during the Washington Conference last December, to open up their Nazi-era archives in order to help create a data base. These archives are essential to the search for stolen art of the Holocaust period, and we stand ready to cooperate with the Russian government in any initiatives they propose.

In the United States, the guidelines of the American Association of Museum Directors, similar to the Principles of the Washington Conference, which call upon museums to research their holdings to see if there are any works with a Nazi-World War II provenance, are in the process of implementation. So far, the Association reports that no museum has reported finding such a work. If any are found, the guidelines call upon museums to publicize that fact, so that pre-War owners and their heirs can come forward and a just and fair solution can be worked out between them and the museum.

Provenance work in the field of art can be a lengthy and expensive process. To assist American museums in completing this research, perhaps some of our higher education institutions could encourage their art history majors to work as interns on Holocaust-related provenance research. This could be a useful source of free help to museums, and students would be gaining practical research experience working on a project of current interest which may be meaningful to them personally

In the area of property restitution, there has been slow but steady progress in the countries of eastern and central Europe during the past few months. Much remains to be done, however. As these countries seek to join western political and economic institutions, it is important that they adopt laws and practices on property which are consistent with international standards. It is toward that objective that we have been working since I started my activities as U.S. Special Envoy on Property Restitution in eastern and central Europe in 1995. I have visited all of the involved countries at least once to urge the adoption of equitable, transparent and non-discriminatory laws and practices. Officials at all levels of the executive branch have followed up my initiatives, as have many Members of Congress in their meetings with foreign government officials both here and abroad.

In each country, the historical context and the current political situation have resulted in very different approaches to the issue of returning property, both private and communal, to rightful owners.

As an example, let me here describe developments in Poland, where the large, pre-war Jewish community owned a great deal of property. Polish law provides for the restitution of communal property to Catholic, Orthodox, Lutheran and Jewish communities. A significant amount of property has been restituted to the three Christian communities. The Jewish community faced a particularly difficult situation since the present community consists of only a few thousand members, compared to the 3.5 million in the late 1930's. To help ensure that this property is restituted promptly, the Union of Polish Jewish Communities and the World Jewish Restitution Organization have been working to establish a foundation to claim and manage the restituted property. Ambassador Henry Clarke of the Department of State recently facilitated the reopening of these negotiations, and we hope the foundation will be established soon.

A vast amount of private property was also wrongfully seized by the Nazis and by Communist regimes in Poland. The present Government expects to submit a bill to the Parliament shortly on restitution of, or compensation for, these properties. This has aroused a great controversy -- some opposing the high cost of such a program, others arguing that the proposed compensation is inadequate.

Restitution remains an important political issue in other countries of Eastern and Central Europe as well. In Romania, the Parliament has been heatedly debating new legislation for several months, and a bill for restitution of private property passed the lower house by a wide margin. In Ukraine, the Parliament is preparing new legislation on property of religious communities.

In August of 1998, a settlement was arrived at in principle in which our government played a significant part. Under it, two Swiss banks, who were defendants in a class action brought in the Federal District Court in New York alleging they had failed to return dormant bank accounts to the heirs of account holders who died in the Holocaust would settle the suit with a payment of $1.2 billion. Since that time, the parties, the court and a court-appointed special master have been engaged in the lengthy procedures required under class action settlements. The notification process is still underway. A fairness hearing is scheduled for the end of November, after which a distribution plan must be drawn up for comment and subsequent presentation to the court for approval. The earliest date for commencement of distribution is the late spring of next year. While all involved in the case are proceeding conscientiously to conclude it, this shows the drawbacks of this type of litigation when members of the class are of advanced years. We have benefited from this experience in working on the Foundation solution to the slave/forced labor issue, where all involved intend that distribution will be delayed no longer than six months after final agreement.

Last year, the Congress unanimously passed legislation sponsored by you, Mr. Chairman, creating the Presidential Advisory Commission on Holocaust Assets in the United States, on which I serve and on whose behalf I can speak. The Commission is composed of 21 members, including 8 members of Congress and is chaired by Edgar Bronfman, who has dedicated years to this cause.

The Commission, is hard at work fulfilling the mandate given to it by the Congress: to conduct original research into what happened to the assets of Holocaust victims, including art and cultural objects, gold, and other financial instruments, that passed into the possession or control of the U.S. Federal government, including the Federal Reserve. The Commission will then deliver a report to the President and Congress with the facts it has found and its policy recommendations. Similar historical commissions have been established in 17 other countries.

At the most recent meeting of the Commission, we released a "map" of all World War II-era Federal and related entities which may have possessed or controlled assets of Holocast victims. It detailed more than 75 offices, divisions, and units of the government that dealt with Holocaust assets before, during, and after the United States' entry into World War II.

The intricacy of the web of offices through which these assets passed and the large volume of documents that must be reviewed to ascertain exactly what each agency did or did not do make this a lengthy work of research. For this reason, Representative Rick Lazio, with Chairman Leach, Ranking Democrat LaFalce, Representatives Jim Maloney and Brad Sherman, and International Relations Committee Chairman Ben Gilman have introduced HR 2401, the US Holocaust Assets Commission Extension Act of 1999, to extend the Commission's life for one year.

I strongly support this legislation, and I urge this Committee to report this bill out to the full House as quickly as possible, to emphasize the American commitment to learn what our own government did during this period and what can be done to achieve justice and bring closure.

Perhaps the most significant achievement of the Washington Conference on Holocaust-Era Assets was the encouragement it gave to the cause of Holocaust education. Insuring the education of future generations may be the greatest legacy of our efforts. As time grows short for survivors to actually use the fruits of the legal settlements, we look the widest possible dissemination of the facts and meaning of the Holocaust, as a way of ensuring it will never happen again. While money will be of significant help, it will never be enough. And, it cannot be the final word on the Holocaust.

That is why the President pledged the U.S. to be a founding member of an international task force to promote Holocaust education worldwide. In addition to the United States, members of the Task Force for International Cooperation on Holocaust Education, Remembrance and Research include France, Germany, Israel, Italy, the Netherlands, Poland, Sweden and the United Kingdom. Israel currently chairs the task force.

Holocaust education and remembrance will be the focus of three upcoming international conferences scheduled for Prague, Jerusalem, and Stockholm. The rededication among all participating nations to ensuring that the victims' individual worth and personal dignity will never be forgotten means their memory will provide enduring lessons for all humanity as we enter a new millennium.

The terrible aftermath of the Holocaust and its forever-relevant lessons will always be part of our life. We must learn these lessons, to make the 21^st century a time when human rights and human dignity will be better respected -- and the international community more willing to act to protect those rights -- than was the case during World War II.

The challenge to the international community -- and ourselves -- to deal with the remaining material claims from the Holocaust before the end of the century, remains unfulfilled. But I look back at all the progress that has been made and say that we have made great steps forward in bringing these issues before the conscience of the world and putting them on the global agenda - no mean feat. We have taken on all of the important issues. We have created institutions and set in motion processes that, with creative thinking and good will, can bring about rapid resolutions.

I want to thank all of those in so many countries, and those in Congress, especially on this Committee, who have worked so hard to get us to where we are. We hope the survivors feel we have their interests at heart and can depend upon their support and their prayers, as we work against the clock to win for them what they have been so long denied, and what they so richly deserve.

Thank you.