FROM THE OFFICE OF PUBLIC AFFAIRS

This is a great day. We have taken a huge step forward today. We achieved a consensus agreement on the allocation of the 10 billion D-Marks in the German Foundation to which all parties have agreed -- German business led ably by Dr. Manfred Gentz, the countries of Poland, Ukraine, Russia, Belarus, and the Czech Republic, the State of Israel, the Jewish Claims Conference, and the attorneys who represent victims in U.S. courts. I would like to express special appreciation to the German Parliamentarians for their tireless support and assistance. This is a remarkable achievement, in particular for the German government and the Chancellor's gifted Special Representative, Otto Count Lambsdorff. This brings this process a substantial step closer to completion.

To achieve this consensus, all of the participants in these negotiations have had to make compromises, because there is only a limited amount of money in the foundation. All had to show flexibility from their initial demands.

Count Lambsdorff and I met with each group of participants. All vigorously defended their positions, but all recognized the larger imperative of reaching agreement now, so that funds could promptly go to survivors. Count Lambsdorff and I introduced a joint proposal that sought to meet the basic needs of each participant.

I am pleased to report that all participants have given their assent to our joint proposal. This could not have been done without all parties demonstrating flexibility and a spirit of compromise. For that, I express gratitude and appreciation to each participant.

At the same time, what we have achieved today is a fair agreement that takes account of the interests of all parties.

Let me outline the allocation agreement that we have achieved:

There will be 8.1 billion DM allocated to make payments to surviving slave and forced laborers and to others for other personal injuries.

The German Foundation will allocate the 8.1 billion from within the 10 billion to labor. The 8.1 billion will be increased by anticipated interest earnings of 50 million, for a total of 8.150 DM. We also hope there will be a contribution from the Swiss settlement to the Foundation.

The labor payments would be allocated among seven partner organizations: the Conference on Jewish Material Claims, the five Reconciliation Foundations in Poland, Ukraine, Russia, Belarus, and the Czech Republic, and a yet to be designated organization for the rest of the world. In addition, the Foundation will hold an amount in reserve for other personal injury cases.

Here are the agreed allocations, including an amount of estimated earned interest:

Claims Conference: 1.812 billion

Poland: 1.812 billion

Ukraine: 1.724 billion

Russia: 835 million

Belarus: 694 million

Czech Republic: 423 million

Rest of the World: 800 million

Other Personal Injury: 50 million

The allocations to the Conference on Jewish Material Claims will reach surviving slave laborers residing outside of the five Central and East European Countries. The Reconciliation Foundations in the five CEEs will handle payments to all their citizens, including Jewish slave laborers.

Aside from labor, our agreement on allocation also covered the other categories in the Foundation: property, the Future Fund and administration.

We agree that the allocation to property will be one billion D-Marks. The one billion will be divided as follows: 350 million for claims and a 650 million for humanitarian cases.

The 350 million DM claims portion will be allocated as follows:

1. 150 million for racially-motivated property claims against German companies.
2. 50 million for all other property claims against German companies.
3. 150 million for insurance claims, which will be supplemented by an additional 50 million to be generated from interest earned.

There will also be a reserve of 100 million in the Future Fund to cover any additional insurance claims if necessary - creating the potential for 300 million in insurance claims, if required.

The 650 million DM humanitarian portion will between insurance and property.

The insurance portion of the settlement involving both claims and non-claims will be consistent with the procedures established by the International Commission on Holocaust Era Insurance Claims.

Finally, we have agreed that 200 million DM will be reserved for administration of the Foundation.

With this allocation agreement, we have now concluded a key element of our December, 1999 agreement for the funding of the German Foundation.

Today's agreement puts in place two of the three important elements of this settlement -- the overall figure of DM 10 billion and allocation of the funds. A key third element -- legal peace for German firms -- requires agreement on provisions affecting actions before U.S. courts. The Federal Cabinet approved a draft law yesterday, which will help move the legislation through the Bundestag. But, as I have stated often, the final law will be the linchpin of the legal settlement. I cannot overemphasize this point. The German legal basis for the Foundation will be examined carefully by our courts. If it does not incorporate the substance of the agreements reached here, it will not be deemed to be sufficient basis for dismissal of the lawsuits or for the U.S. to act in support of that goal.

In conclusion, I want to re-emphasize the significance of today's achievement, and I look forward to continuing to work on the remaining issues in the coming weeks.

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