News Analysis: Swiss Banks’ Move on Fund Seen As a Key Turning Point

A decision by three Swiss banks to transfer $71 million into a fund earmarked for Holocaust victims is being viewed as an important turning point in the longtime quest for financial and moral accounting.

Credit Suisse, Swiss Bank Corp. and Union Bank of Switzerland placed $100 million Swiss francs into a special escrow account Wednesday and invited further contributions from the Swiss government, the Swiss National Bank and other institutions.

The action marks the first concrete move since Switzerland’s announcement last month that it would establish a fund to begin compensating Holocaust victims and their heirs whose families transferred their assets to Swiss banks for safekeeping.

The decision comes after months of international pressure on Switzerland in the face of revelations that it horded the wealth of Holocaust victims while helping to finance the Nazi war effort.

In a statement, the three Swiss banking giants said, “Reflecting the intensive discussions which are under way in Switzerland to create such a fund, the banks said the time has come for action, not words.”

The World Jewish Congress, which spearheaded the campaign for such a fund, welcomed the move as a “positive response” to the WJC’s call late last year for a “good faith financial gesture” from the Swiss.

Elan Steinberg, the WJC’s executive director, stressed that the banks made clear that the humanitarian fund was only preliminary and that it would not prejudice a final settlement.

“I believe we finally may have at last turned a corner,” Steinberg said, adding that “the road toward complete moral and material recitation is still a long one.”

Sen. Alfonse D’Amato (R-N.Y.), who has led the congressional quest, said the Swiss move amounted to an “acknowledgment of wrongdoing” and called it a “first step.”

“I believe very strongly that $71 million is nowhere near enough, but it is an acknowledgment and a start,” he said.

The U.S. State Department also weighed in, saying that the banks’ contributions marked “an important demonstration of good will.” It also expressed hope that the Swiss government and central bank would contribute to the fund “expeditiously.”

The move comes a week after New York politicians threatened to pull the rug out from under three Swiss banks operating in Manhattan if Switzerland did not make good on its promise to set up the fund.

The New York state Assembly and City Council of New York announced separate hearings last week to examine ways to help Holocaust victims and their heirs reclaim their wealth.

The two bodies said they would review New York’s relationship with Swiss banks and examine how a foreign bank’s license or certification could be revoked.

In addition, N.Y. Gov. George Pataki said he would order audits to determine whether any looted assets were transferred to the New York branches of Swiss banks.

Steinberg last week welcomed the New York proposals as further help in “advancing the cause of justice and morality.”

But after the establishment of the Holocaust fund in Switzerland this week, he said, “I don’t think a boycott is in the cards.”

The state Assembly and City Council are still planning to go forward with hearings next week, but it remained unclear what, if any, action they might now take.

In another development, the United States, Britain and France have agreed to halt distribution of $68 million in gold looted by the Nazis while officials investigate whether some of it came from Holocaust victims.

The gold bars, which have been stored at the New York Federal Reserve Bank and the Bank of England, were supposed to be distributed to Europe’s central banks early this year.

But D’Amato and Jewish groups, led by the WJC, intervened after documents unearthed at the National Archives revealed that some of the plundered gold had been melted down from the weddings rings, watches and even the teeth of Holocaust victims.

The Clinton administration, citing newly found evidence in support of the finding, convinced Britain and France to freeze distribution of the stockpile until the facts could be weighed.

WJC President Edgar Bronfman has asked that the money be turned over to Holocaust victims.

Meanwhile, Undersecretary of Commerce Stuart Eizenstat, the administration’s point man on the issue of missing Jewish assets and Switzerland’s wartime role, toned down U.S. criticism of a Swiss diplomatic cable that led to the resignation of Switzerland’s ambassador to the United States.

He said the private strategy paper, which called for a public relations “war” against Switzerland’s critics, did contain some “very strong, unfortunate wording.”

But he said a study of the full document found no signs of anti-Semitism.

Carlo Jagmetti resigned as Swiss ambassador last week after the document he authored was leaked to the media.

At a news conference in Washington, Jagmetti released the full text of the secret cable and said it was meant to “energize” Swiss decision-makers to advance the search for missing Jewish assets “as quickly as possible.”

He acknowledged that some of his expressions were harsh, but said, “My words were and are a call for the Swiss to get our act together.”

In Switzerland, meanwhile, President Arnold Koller and Israeli Prime Minister Benjamin Netanyahu, who visited there this week, said they would make every effort to calm Swiss-Jewish relations.

“We’re serious when we say we want the full truth also about the troubling time of our history,” Koller told reporters after meeting with Netanyahu, who was attending the World Economic Forum in Davos, Switzerland.

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