Navigate to Israel & The Middle East section

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

Batya Ungar-Sargon
June 17, 2013
Mohammed Abu Yussef al-Affendi, a 67-year-old Palestinian refugee in the Dehaishe Refugee Camp, displays the original key and title deeds to the home his family abandoned when they fled their village of Deir Aban during the 1948 Israeli War of Independence.(David Silverman/Getty Images)
Mohammed Abu Yussef al-Affendi, a 67-year-old Palestinian refugee in the Dehaishe Refugee Camp, displays the original key and title deeds to the home his family abandoned when they fled their village of Deir Aban during the 1948 Israeli War of Independence.(David Silverman/Getty Images)

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.”

A few NGOs have recently made this claim more visible, such as Justice for Jews From Arab Countries, which seeks to educate people about refugees from Arab countries. JJAC’s director, Stanley Urman, wrote a doctoral dissertation in which he argued that the United Nations has treated Jewish refugees from Arab countries and Palestinians differently—the bias leaning in favor of Palestinians. “It’s a core issue of recognition,” Urman said. “One million Jews were displaced, and it is important that their story is not lost.” I asked him if their suffering should be equated with that of the Palestinians, to which Urman responded, “No. All suffering is unique. But both populations are refugees under international law, and they were both made so by the same conflict: The Arab-Israeli conflict. The peace fund is an equitable approach to resolving the question of compensation,” Urman said, though he believes a Truth and Reconciliation Commission is also in order.

And more recently, even Congress has gotten on board with the idea of parity between the two refugee populations. Jerrold Nadler, a New York Republican Congressman, sponsored a resolution in 2008 that was passed by the House in which “any resolutions relating to the issue of Middle East refugees, and which include a reference to the required resolution of the Palestinian refugee issue, must also include a similarly explicit reference to the resolution of the issue of Jewish refugees from Arab countries.” Nadler is now at work on “bi-partisan legislation, H.R. 6242, that calls on the Administration to report to Congress on its progress in pursuing justice for Jewish refugees from Arab countries,” according to a September press release.

But linking Palestinian reparations and recognition with that of Jews from Arab Countries is a political act with very real political consequences. “Equating the refugees from Arab countries with Palestinian refugees means that Israel is off the hook,” Fischbach told me. “It means that there was a big Middle East reallocation, or population exchange, and just as those Jews will not be going back to their homes in Iraq or Syria, so too, it is implied, these Palestinians will not be returning to their homes. How can they? Their villages are gone.” It’s not about the money, Fischbach said. “Equating these two populations of refugees deflates the moral claim of the Palestinians, which is what it is designed to do. This is political football.”

The PLO has always been against linking the two groups of refugees, as are most Palestinians, Fischbach said: “Their thinking is, we’re not accountable for what those countries did, so why should we pay? Don’t negate our right of return because of something Iraq did.”

“I’m all for people getting reparations for what they suffered,” Fishbach added, “but what links these two issues? You have to wonder, why now?” Fischbach asked. “Where was everyone 30, 40 years ago?”

Nor is it even clear it would work. “For Palestinians, by and large it would not be acceptable to take money,” Amjad Alqasis, legal advocacy coordinator of the Badil Resource Center for Palestinian Residency & Refuge, told me. “First we would need the state of Israel to acknowledge that an atrocity happened and that it continues to occur in the displacement of Palestinians, the confiscation and destruction of their property, and the building of settlements. This is not just a historical problem, but it is linked to today, an ongoing process,” he said. Furthermore, Alqasis says, it is crucial that the question of monetary reparations be detached from the possibility of refugees returning. “If they are only offered money, it is not a fair discussion. But a wide range of possible reparations must be offered, such that refugees have the choice to return or to accept reparations.”

“Israel has been offering money to Palestinians since 1948,” said Eitan Bronstein, director of the Israeli organization Zochrot, which seeks to make Israelis aware of the events of 1948 from the Palestinian perspective. “Since 1948, Israel has had the policy to pay individuals if the individual signs a paper that says, ‘I have no more demands.’ They pay per dunam. But they do not pay at market rate, though nobody knows how much they do—it’s top secret. It’s also a sensitive topic among Palestinians, a few of whom have accepted the money due to economic pressures,” he said. “Money is not a real acknowledgment. It’s not enough. It’s part of the solution, but it must be part of a choice. Otherwise, offering money is not the moral option.”

Bronstein believes that fewer than 1 million Palestinians would choose to move back should they be granted the right of return and thinks more would visit and enjoy owning land.

Indeed, in 2003, the Palestinian Center for Policy and Survey Research released a survey that showed that when given a choice between the option to “stay in the Palestinian state that will be established in the West Bank and Gaza Strip and receive a fair compensation for the property taken over by Israel and for other losses and suffering” and the option to “receive fair compensation for the property, losses, and suffering and stay in host country receiving its citizenship or Palestinian citizenship,” 38 percent of residents of the West Bank and the Gaza Strip opted to receive compensation and statehood, and 0 percent opted for compensation without statehood. Interestingly, 33 percent of Palestinians living in Jordan opted for compensation without statehood. The survey estimated that “the number of refugees wishing to move from Lebanon and Jordan to the Palestinian state in an exercise of the right of return would be 784,049.” Perhaps most crucially, only 33 percent of the refugees polled, estimated to be the equivalent of 373,673 individuals, including refugees in the West Bank, Gaza, Jordan, and Lebanon, stated a wish to physically relocate to land currently inside Israel.

The individuals who applied to Eizenstat’s foundation signed away their right to any future claims, which is why Neuborne believes that this model would work for Palestinian reparations. “My sense is, if you’re going to deal with a refugee problem, you have three options. You can ignore it, which is unfair and politically unrealistic. Or, you can give the right of return, which Israel wouldn’t accept and which would be unjust, because it would unbalance the Jewish state, which would eliminate it as a Jewish refuge. Or, you can give some portion the right of return, and some portion reparations. I can’t think of a single instance in the history of the world where a country has agreed to the right of return where it would mean that country was swamped, erased as a political institution.”

When I told Neuborne the results of the survey, in which only 700,000 Palestinians actually claim to desire to return, he said, “Oh, that’s perfect! The foundation could negotiate that cap, and the rest would be granted restitutions. The administrative body would decide.”


You can help support Tablet’s unique brand of Jewish journalism. Click here to donate today.

Batya Ungar-Sargon is a freelance writer who lives in New York. Her Twitter feed is @bungarsargon.

Batya Ungar-Sargon is a freelance writer who lives in New York. Her Twitter feed is @bungarsargon.