FROM THE OFFICE OF PUBLIC AFFAIRS

Before I begin, allow me to express my displeasure with remarks recently made by one of the plaintiffs' attorneys participating in this process, Mr. Fagan. He incorrectly asserted that this process had broken down and, as a result, had endangered the labor agreement we recently signed, and that is categorically wrong. I unfortunately seem to spend every one of my press conferences starting by correcting misstatements made by him.

I am pleased to report that this very day the United States and the Austrian Governments will exchange diplomatic notes to bring into force the recently signed labor agreement concerning the Austrian Reconciliation Fund. This is a historic achievement of which we shall all be proud. This will lead to the establishment of the Fund and bring us one step closer to distributing the 6 billion schillings to some 150,000 elderly survivors, most, by the way, non-Jewish. All plaintiffs' attorneys who participated in the negotiations and signed the Joint Statement remain committed to dismissing all of their Nazi-era labor claims against Austria and Austrian companies. That's what they signed, that's what they agreed to, that's what they will do.

Since the labor issues have been resolved, and we anticipate that the labor claims will soon be dismissed, we have focused our attention on Nazi-era property restitution. Let me give you an update of where things stand with respect to property issues.

We had very good discussions over the past 24 hours with Chancellor Schuessel, with Parliamentary President Fischer, with other Austrian officials, including Ambassador Sucharipa and Ambassador Winkler, and with victims' representatives.

While we made some progress, much work remains to be done.

An initial proposal for compensation has been conveyed by the victims' representatives.

The victims' representatives made a reasonable opening offer, but as in any negotiation, their offer is a starting point. It exceeds what Austria feels it should pay.

My role in this matter, however, remains to facilitate a fair and expedited resolution of all property issues. This will require flexibility on all sides.

It will also require that the Austrian Government act on its historical and moral responsibilities, and that the Austrian private sector do its part.

It will also require that the victims' representatives engage in a reasonable process of negotiation and show flexibility regarding their proposal.

The victims' representatives have made a strong case that there were indeed gaps and deficiencies in prior Austrian restitution laws. While the Austrians disagree with some of the contentions, all parties, including the Austrian Government, agree, for example, that liquidated or destroyed properties were a category not generally covered by prior Austrian restitution and compensation programs, and need to be addressed in considering a capped amount. With respect to liquidated properties, some points were made as follows:

• The 1938 Austrian business register valued Jewish-owned businesses that were liquidated or destroyed completely at 321 million Reich Mark or 130 million 1938 U.S. dollars;
• Prior restitution laws provided no compensation;
• In today's dollars, Jewish-owned businesses liquidated in 1938-1939 would be worth about $1.3 billion. There were even more such businesses liquidated that were not registered, the reason being that the Nazi laws required registration only of properties above a given value.

In addition, the victims' representatives made the following assertions:

• The claimants had to reimburse the "Aryanizer" of property for that Aryanizer's purchase price, even though the proceeds of the sale had been placed in blocked accounts never accessible to the original owner and seller.
• That amounts paid in "Flight and Discriminatory Taxes" (which were estimated in 1938 to be 328 Million Reich Mark, were often not deducted from purchase prices. The Austrian Government has confirmed that this was often the case, that is, that they were not deducted and that the purchaser trying to regain his or her own property had in many cases to repay the very discriminatory taxes that they were charged.
• Claimants often therefore could not afford to reimburse new owners; some decided not even to file and/or accepted very unfavorable settlements.
• It was also asserted that huge German investments in Austria in war-related industries from 1938-45, partially funded by confiscated Jewish assets, were often converted into Austrian government-controlled corporations and privatized after the War.

The Austrian negotiators for their part noted that, in their review of the historical record on restitution and compensation, that they found fewer gaps and deficiencies than those cited by victims' representatives.

One should balance this discussion with what Austria has done recently for victims:

• In recent years, the Austrian Government provided $150 million to victims of National Socialist persecution through the Austrian National Fund, although this was not related to property. It was an important humanitarian gesture.
• The government recently agreed to provide nearly $400 million to former forced and slave laborers.

However, these again were not for property restitution. The only payment thus far for property restitution would be the $150 million advance payment for losses related to apartment and small business leases, household property, and personal effects. I was very pleased to learn in my meetings with the Chancellor and with the President of the Parliament Mr. Fischer that there seems to be a consensus for the passage of the legislation providing for $150 million for losses related to apartments, small business leases, household property and personal effects by the end of January. This, on the other hand, covers only one category of property.

We all recognize that whatever settlement agreement we will finally reach, that that amount will only be a percentage of the total uncompensated loss suffered by victims of the Nazi-era on the present-day territory of Austria.

It is important that the Austrian side make a reasonable counter-proposal at our next negotiating session on December 21 so that we can complete these negotiations early next year, and, again, that both sides show flexibility. Thank you very much.