Testimony of Ambassador J. Christian Kennedy

Special Envoy for Holocaust Issues

before the

House Foreign Affairs Committee

Subcommittee on Europe

October 3, 2007

Holocaust Survivors in America: An Overview of Outstanding Holocaust Issues

Mr. Chairman, Ranking Member Gallegly, thank you for holding this important hearing.

The principal focus of the Office of Holocaust Issues in the State Department is to help Holocaust survivors and their heirs obtain a measure of justice in their lifetimes for the suffering they have endured and for the property that was stolen from them.

Property Restitution

The restitution to rightful owners of property confiscated by the Nazis in the countries they occupied, and often by the successor communist governments in those countries, is an issue successive administrations have engaged on since the mid-1990s. Where the physical return of property may be impractical or impossible, we have advocated financial payments to the survivors and their heirs.

Property restitution is a particularly difficult and time consuming issue and one on which we have had mixed results. Property restitution is at best a controversial subject. Changing the ownership and usage of buildings and land from one party to another can cause major disruptions that already- economically challenged countries can ill afford. It can involve the displacement of current occupants, who may have had the use of the property for over a half century. When the physical return of an actual piece of property is not possible, compensation in lieu of restitution can be a serious budgetary issue. So neither restitution nor compensation is likely to have a strong domestic constituency in those countries where there are large claims.

Many countries in Eastern Europe succeeded in enacting and implementing some kind of legislation in the 1990s to deal with restitution, but some are still lagging. All the laws have shortcomings, and implementation has been uneven and often plagued with poor management.

In the year that I have held this position, I have taken this issue up in Poland, Hungary, the Czech Republic, Romania, Slovenia, Croatia, and Bosnia-Herzegovina.

Property restitution is important as an indicator of a country’s commitment to property rights and a free market economy. Companies contemplating investments in a country will seek opportunities elsewhere if land titles are clouded with claims and potential claims by former owners. So, apart from the need for justice, there is also a strong economic incentive for a country to resolve these property issues in an expeditious and fair manner.

It is important to keep in mind that each country has a slightly different property restitution situation. For that reason, there is no general solution which can be applied across the board to every country. Each country has had to take into account its own history, the nature of the property at issue, and political and economical constraints. Changing the ownership and usage of buildings and land from one party to another can cause major disruptions that already-economically challenged countries can ill afford.

The United States, other countries and international organizations can offer encouragement and suggestions, but, in the final analysis, each individual country has to assess its own situation, make the necessary political judgments in drafting legislation and then implement the legislation in a manner consistent with the practices of that country. We feel, however, that diplomatic dialogue emphasizes for foreign government officials and the broader public in these countries the importance this issue has in our bilateral relations. This dialogue also reminds these audiences of the moral need for a measure of justice for victims and heirs, and it highlights the need to address problems in order to create a better functioning real estate market.

Restitution laws generally deal with two basic categories of property: property that the authorities confiscated from private individuals, and property that the authorities confiscated from communal organizations such as religious groups. The latter category includes not only property used essentially for religious purposes but also the schools, communal halls, medical facilities and recreational facilities that many European religious organizations maintained in the first four decades of the 20^th century.

In encouraging restitution, we try to keep in mind the following considerations:

· Restitution laws should govern both communal and private property.

· Access to archival records needed for claims should be easy and facilitated by the government in question.

· Uniform enforcement of laws is necessary throughout a country.

· The restitution process must be non-discriminatory. There should be no residence or citizenship requirement.

· Legal procedures should be clear and simple.

· Privatization programs should include protections for claimants.

· Governments need to make provisions for current occupants of restituted property.

· When restitution of property is not possible, realistic compensation should be paid.

· Restitution should result in clear title to the property, not merely the right to use the property.

· Cemeteries and other religious sites should be protected from desecration or misuse before and during the restitution process.

For several years, the Department has maintained a country-by-country summary of property restitution in European countries. An updated version is available for you here today, and is also posted on our website. I would highlight a few specific developments briefly:

Poland. Poland, which I have visited several times this past year, has been a particular focal point. On each visit I have taken this up with the foreign ministry and the treasury, but most importantly with members of Poland’s parliament, the Sejm. While many Sejm members were generally supportive, the political situation in Poland for the past two years has been fragile. Both the President and the Prime Minister gave assurances that property restitution was on their agenda, but the government did not feel confident enough to push forward legislation past an initial reading in the Sejm. In September, the government decided to call elections. When the new government is in place, we will renew our effort on this issue.

Croatia. Croatia is now a candidate for NATO membership. The government decided in 2005 to change its restitution law, but has since made little progress. Like Poland, this is an issue that Croatia will have to deal with following its upcoming election.

Romania. Allegations of fraud and mismanagement have clouded Romania’s modest progress on property restitution. A fund to pay compensation has not yet been fully implemented.

Slovenia. A promising solution to a communal restitution problem in Slovenia has been delayed by issues regarding the completion of a survey of the properties in question. We hope for progress by December.

Lithuania. A solution to the Jewish communal property issue has been delayed for several years and the government is now again considering legislation.

Art Restitution

In addition to real property, the restitution of movable property – particularly artwork – is an important issue. Art claims have generally been adjudicated by the courts, although less formal proceedings have also been successful in some cases. The United States strongly supports the Washington Conference Principles on Nazi-Confiscated Art, adopted by consensus at the 1998 Washington Conference on Nazi Era Assets.

A Measure of Justice

Let me turn now to the various arrangements reached among the representatives of Holocaust survivors and European companies in the late 1990s through 2001 to address the theft of assets and other wrongs arising from the Holocaust. A combination of court settlements and other U.S.-facilitated agreements resulted in over $8 billion for Holocaust victims and their heirs from Swiss banks, German companies, Austrian companies, and French banks, as well as several large European insurance companies. Most of these agreements were concluded with the participation of European governments and the U.S. Government.

As of today, nearly all of the $8 billion from these agreements has been either distributed to survivors and heirs or otherwise obligated for continuing programs to support needy survivors or promote Holocaust education and remembrance. There were some delays in implementation at the outset, largely due to the complexities of the agreements and some legal issues that arose in U.S. courts. Nevertheless, as the person in charge of the office in the Department of State responsible for monitoring and advising on implementation, I think we can be proud of the results.

Let me briefly summarize the payments programs. I and my predecessors in this office have monitored and overseen agreements relating to the following programs:

· The German Foundation, which made $6 billion in payments to 1.6 million former slave and forced laborers, as well as to those who suffered other injuries. The German Foundation also made $500 million in payments for certain property losses, including insurance.

· The Austrian Labor Fund (Reconciliation Fund), which paid out $330 million.

· The Austrian Tenancy Rights Fund, which paid out $150 million to compensate some 20,000 Jewish victims for the loss of household and small business leases and goods.

· The Austrian General Settlement Fund, which is paying out $210 million for other property losses not covered in the Tenancy Rights agreement. In addition, The General Settlement Fund includes an agreement regarding the physical return of real property, which we cannot now value but it is likely to be more than $30 to $50 million.

· The Austrian Pension Fund expansion to include enhanced nursing home care for Jewish non-residents forced to emigrate during the Nazi period, valued to pay out some $112 million over a decade.

· The French Funds which have provided over $30 million in payments to victims and heirs, largely for property losses.

· The International Commission on Holocaust Era Insurance Claims (ICHEIC) has made $300 million in payments to the beneficiaries of insurance policies, many of whom are survivors but some are the heirs of survivors. In addition, ICHEIC has allocated $200 million mainly for social welfare projects benefiting needy victims. For the most part these projects are being administered by the Conference on Jewish Material Claims, or the Claims Conference.

· Finally, I would like to note also the Swiss bank agreement of $1.25 billion. The negotiations, facilitated by the State Department, led to a settlement of class action lawsuits, and that agreement is under the supervision of a federal district court. A similar class action settlement of claims against Austrian banks resulted in additional payments of $40 million.

Thus, approximately $8 billion have been made available to Holocaust victims and their heirs in recent years. These programs have largely been completed and the funds paid out or allocated and will be paid out very soon. We anticipate that the Austrian General Settlement Fund will complete payments sometime in the year 2008.

With so much loss of life and the horrors of the Holocaust, there can never be adequate compensation to the victims, particularly at this late date. Our work surely embodies an effort to obtain “imperfect justice.” But I am confident that the results we achieved could not have been approached, let alone achieved, had the victims and heirs been left to contend with the uncertainties and costs of litigation.

ICHEIC

We recognize that some continue to express disappointment with these agreements or their implementation. For example, there are some who believe that the process for paying insurance claims was inadequate. We at the State Department view with understanding the difficulties that the ICHEIC had to overcome, and we also must defer our own assessment to that of those survivor organizations and state insurance regulators closest to the ICHEIC process. In this regard, I note that at ICHEIC’s concluding board meeting in March, there was unanimity among the survivor organizations and the state regulators on the success of the ICHEIC process. I would also note that the ICHEIC process proceeded with remarkable fairness and transparency. This is clear from the extensiveness of its web site at www.icheic.org, which includes a comprehensive final report and extensive documentation regarding its rules of procedure. I urge all who are interested to read the documents available on the ICHEIC web site, particularly those under the heading “Final Reports.”

Finally, with ICHEIC, as with any of the recent arrangements, there have been concerns that the amount of money available was not enough. Again, let me stress that what was achieved was imperfect, and no amount of money could ever be enough. But in addition, it is worth noting that survivor organizations and advocates for victims played a crucial role in each and every negotiation during the recent years, and their judgment regarding what was possible and what was appropriate should also be taken into account.

We believe the survivors’ interests are best served through continued cooperation with European countries and companies on Holocaust issues, and not through confrontation. As I outline below, we have already achieved additional benefits for Holocaust victims through such cooperation. I am referring to the recent expansion of the German pensions program. This expansion of an existing program demonstrates that cooperation through diplomacy leads to quick results. Confrontation and litigation do not, and time is an urgent issue for elderly survivors. We believe that ICHEIC has already achieved many of the objectives being sought through proposed legislation. At this point, we believe legislation would not be helpful and would interfere with the work we are doing. It would also create significant foreign relations problems for the United States. I would welcome the opportunity to discuss this matter further with you.

German Payment Programs Since the Second World War

Some may understandably still ask this question: How can we as a government and nation be satisfied with merely $8 billion in payments to Holocaust victims and heirs? However, it is important to view these recent payments in the context of numerous other programs introduced by Germany since the Second World War. German governments have established several programs and paid out some 64 billion Euro (over $100 billion in today’s dollars) in compensation and restitution to victims of Nazi crimes. Of course, while recognizing what Germany has done, we must always acknowledge that no amount of money could ever compensate for the atrocities of the Holocaust.

Recent Expansion of German Pensions Programs

Some programs continue even today and have been expanded in the last few weeks through negotiations between the German Government and the Conference on Jewish Material Claims, or the Claims Conference. I am referring in this regard to new pensions for an estimated 6,000 survivors worldwide, including many in the United States. In support of Claims Conference negotiations with the German Government, I met in Berlin with German officials on three occasions to press for an expansion of the pensions programs. We have achieved a substantial improvement. The total payout over the next ten years in new pensions is estimated to be $250 million. This is a major expansion, perhaps the largest single expansion ever, of the pension program for survivors. In addition, following discussions with the Claims Conference, Chancellor Merkel established a new program to make one-time payments of 2,000 Euros ($2,800) to an estimated 50,000 survivors worldwide who had worked in ghettos, another significant expansion of the program to provide payments to such workers.

Other efforts to secure compensation and restitution are underway. The United States is now consulting with a number of European Governments to organize a follow-up to the 1998 Washington Conference that laid a foundation for Holocaust-era compensation and restitution principles. The U.S. will continue to address restitution /compensation issues.

Holocaust Education and Remembrance

While today’s focus is on the State Department’s work on Holocaust restitution and efforts to address the injustices suffered by so many, it is also important to mention U.S. leadership in promoting Holocaust education and remembrance. Without such efforts, future generations will not be aware of the tragedy of the Holocaust, or learn the lessons it teaches us.

Since my March 28 testimony before this Committee on the subject of the International Tracing Service (ITS), the United States has steadfastly continued its push to make the Bad Arolsen archives more accessible to Holocaust survivors and victims’ families. The archives, which are managed by the International Red Cross and located in Germany, are the most comprehensive source of documents regarding the fate of the victims. At the ITS International Commission meeting this past May, the 11 member states agreed to make an advance electronic copy of the collection available to member states that need to harmonize their national repository’s computer system with the ITS data – in our case the U.S. Holocaust Memorial Museum. The first tranche of the advance transfer took place this August. This step is the first time that ITS archival data has been transferred outside of Bad Arolsen, and is a hugely important, indeed an irreversible, step toward making the archive freely available outside of Germany. We will continue to press France and Greece to ratify the provisions expeditiously so that the agreement can come fully into force, allowing vastly expanded accessibility to the data for survivors and scholars. Our Embassy in Paris informed me that the French Senate approved that country’s ratification last week.

Conclusion

The subject of Holocaust property restitution and compensation schemes is certainly complex and difficult. There is no question that results have been mixed. For every property that has been restituted, payments made for slave or forced labor, stolen art work returned, or unclaimed insurance or bank account settled, there have been instances of foot-dragging and questions of fairness and implementation. But it is important to note that progress has indeed been made. Without U.S. leadership, many Holocaust survivors and heirs would still be embroiled in protracted court battles, and none of the recent advances would have been likely. The Swiss Bank Settlement, the German Foundation, Austrian Funds, the French Bank Agreement, and ICHEIC have cumulatively resulted in payments to over two million recipients, most of whom had insufficient legal documentation to prove any claims. The U.S. Government’s position has always been to strive for a measure of justice and that is exactly what we continue to do.

There is indeed more work to be done on the issue of property restitution and compensation. I will continue to urge all the parties involved to continue their efforts and fulfill their commitments. In this area we can certainly use your help as Members of Congress in pressing your counterparts abroad to adopt or implement fair and transparent laws on this issue.

Chairman Wexler, Ranking Member Gallogly, Members of the Committee, thank you again for the opportunity to testify before you today. I’d be happy to answer any questions you may have.