Can $5 Billion Holocaust Litigation Show the Way to Palestinian Reparations?
With Sec. John Kerry re-engaging in Middle East peace negotiations, the thorny issue of cash for refugees returns to the fore
John Kerry has been re-engaging in Middle East peace negotiations, which will—if he can get them off the ground—kick the collection of age-old hornets nests of the conflict. One such nest has, while the Obama Administration was resting quietly, received some attention in academic circles: the question of reparations for Palestinians for property lost in 1948.
In the world of New York Jewish politics, reparations for Palestinians gets tied to reparations for Jews. At a luncheon in December hosted by the American Jewish Committee, Burt Neuborne—the nationally renowned civil liberties defender, NYU law professor, and lead counsel in Holocaust litigation against Swiss banks—explored the topic of reparations for Palestinians in front of a group of influential lawyers (the luncheon was by invitation only). The talk was titled “Discussion on Lessons From the German Slave Labor Litigation: A Framework for Resolving International Human Rights Cases.” Neuborne suggested using the model that he and Stuart E. Eizenstat, deputy secretary of the Treasury in the Clinton Administration, deployed in the late 1990s to obtain compensation for World War II slave laborers from the industries that benefited from that labor, including Deutsche Bank, AG, Siemens, BMW, Volkswagen, and Opel. The deal, which is described in Eizenstat’s book Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II, collected funds for claimants into a foundation monitored by a board that was independent of the governments involved. Victims applied to the fund for a maximum and predetermined amount.
The 1999 agreements differed in crucial ways from the one brokered in the early 1950s between the Israeli and German governments. In 1952, Germany furnished the equivalent of $13 billion dollars to the state of Israel (in 1956, reparations money from Germany represented fully 87 percent of the state’s income). Economic concerns were a crucial factor. At first, many opposed the reparations—indeed, saw them as a betrayal of the victims; reparations seemed tantamount to forgiveness. In the end, Israel’s dire economic situation overcame the outrage, argues University of Pennsylvania political scientist Ian S. Lustick. “A crucial element in moving Israeli leaders toward direct negotiations with Germany was the severity of Israel’s economic circumstances,” he writes in a 2005 essay diplomatically titled “Negotiating Truth: The Holocaust, Lehavdil, and Al-Nakba”; “Closed discussions within the Israeli Foreign Ministry in late 1949 and 1950 focused on the importance of using Germany’s need for Israeli goodwill, while that need still existed, to gain access to substantial economic resources.”
Conversely, the agreements brokered by Eizenstat, who is now a partner at Covington & Burling, and Neuborne, had a twofold purpose: to get money from the accused, which would be encouraged to pay by the limit imposed on the foundation, and to avoid a situation where outstanding judgments for billions of dollars would keep German, Swiss, Austrian, and French trade out of the United States by putting an end to court cases brought by individuals against the private industries that had benefited from slave labor during the war. “The Holocaust victims and others injured by the Nazis, many of whom were now U.S. citizens, were particularly deserving of some justice at the end of difficult lives,” Eizenstat writes in Imperfect Justice. “There were also traditional foreign policy concerns. Without American involvement, U.S. relations with friendly countries and close allies would be negatively affected by the lawsuits and the threats that surrounded them.”
“But there was another reason,” he writes: domestic politics. “Even the most sophisticated Europeans fail to appreciate that U.S. foreign policy is a unique and complicated mixture of morality and self-interest,” he wrote. Edgar Bronfman, “the billionaire head of the World Jewish Congress,” urged the president and the first lady to look into this matter and use their considerable power to put pressure on the issue. The foundation meant that individuals would no longer be able to sue the industries or the countries that house them, effectively serving to “lift a cloud over their companies doing business in the United States,” Eizenstat writes in the introduction. It also meant that individual plaintiffs had to settle for a maximum recovery amount, which in some cases was far lower than they would have gotten had they pursued the case. It was a case of the individual sacrificing for the benefit of the collective.
A lump sum of $5 billion was set up in a foundation called “Remembrance, Responsibility, and the Future,” from which applicants could receive either $2,500 or $7,500, depending on the severity of their slave labor. In the case of Austria, Eizenstat said on the phone recently, a $210 billion fund was set up to pay reparations for property, and each applicant could get a maximum of $2 million. “We didn’t know how many people would apply,” Eizenstat said. Twenty-thousand people applied, and that was how they determined how much each would receive.
“The nice thing about the model,” Neuborne said on the phone, “is that it takes government out of the process. All the stakeholders are represented in the foundation’s board. Because it is an independent entity for reparations money, the source and the amount are negotiable.”
In a phone interview, I asked Eizenstat what he thought of using Neuborne’s idea, to use “Rememberance, Responsibility and the Future” as a model for Palestinian reparations. “The issue of slave labor is not applicable to the Palestinians, but the situation in the Middle East does come close to the Austrian case with its focus on lost property,” Eizenstat said. “Reparations would only be applicable at the summation of a political process of land for peace,” at which time, “this would be an elegant way of solving that issue without the right of return.”
In connecting via analogy Holocaust litigation with Palestinian reparations, Neuborne comes close to the literal version of that idea proposed by Israel’s first Foreign Minister, Moshe Sharett. In 1952, Lustick notes in in his article, Sharett suggested “transferring some of the money [from German reparations] to the Palestinian refugees, in order to rectify what has been called the small injustice (the Palestinian tragedy), caused by the more terrible one (the Holocaust).”
But rather than transferring some of the money from German reparations to compensate Palestinian refugees, a third refugee group has entered the picture to complicate the matter further, according to Michael R. Fischbach, a professor of history at Randolph-Macon College who has written extensively on reparations. He says that since the early 1950s, the Israeli government claims that the question of compensating Palestinian losses must be balanced against losses incurred by a different refugee group: the 800,000 Jewish refugees to Israel, fleeing mid-20th century Islamic prosecution and expulsions. This idea came to fruition when President Clinton proposed at Camp David that an international fund be established to pay claims to both Palestinians as well as Jews who fled Arab countries. Israel would pay into this fund but would not be responsible for it. Rendering the compensation of these two groups—Palestinians and Jewish refugees from Arab countries—co-dependent, was called “linkage.”
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