News Analysis: Swiss Bank Bid to Settle Claims Leaves Thorny Issues Unresolved

An agreement by Switzerland’s three biggest banks to negotiate a global settlement of Holocaust-era claims marks a partial breakthrough, but it leaves many thorny issues unresolved.

The settlement, to be worked out in coming months, would involve a compensation fund for Holocaust survivors to cover all victims’ assets that ended up in Swiss banks, and possibly other assets as well.

But in the days since a possible settlement was announced last week, it has become clear that the devil will be in the details of the agreement to be reached — and there are indications that Switzerland and Jewish groups are poised for a major conflict.

The agreement to negotiate a settlement was reached after months of intensive bargaining involving the World Jewish Congress, lawyers who have filed a multibillion-dollar class-action lawsuit on behalf of Holocaust victims and their heirs, and representatives of Credit Suisse, Swiss Bank Corp. and Union Bank of Switzerland. The bargaining was conducted under the aegis of Stuart Eizenstat, U.S. undersecretary of state for economic affairs.

At issue are claims for dormant bank accounts, Nazi-looted gold that was purchased by the Swiss central bank, Swiss companies that benefitted from slave labor during World War II and stolen artworks that wound up in Switzerland.

But it remains unclear whether the Swiss banks will negotiate regarding anything except the dormant accounts.

An agreement to seek a settlement finally came in a dramatic turnabout March 26, just minutes before U.S. public finance officials meeting in New York were set to recommend a boycott of Swiss banks after the March 31 expiration of a moratorium on such punitive measures.

A first round of talks regarding a settlement is scheduled to take place April 24.

New York City Comptroller Alan Hevesi, who is leading the panel of U.S. public finance officials, said a final deal could be worked out within 90 days of that session.

But in the wake of last week’s accord, confusion abounds as to what exactly has been agreed to and how things will progress from here.

In a letter to WJC Secretary-General Israel Singer, the chief executives of the three banks said the talks aim for “an honorable and moral conclusion through a global resolution of Holocaust-era issues directly related to our banks.”

But WJC officials see last week’s accord as an agreement in principle with the Swiss to negotiate a settlement to all Holocaust-era claims — not just an agreement with the banks on settling bank-related matters.

“There is a whole array of Holocaust-related claims that we want satisfied,” said Elan Steinberg, the WJC’s executive director. “How the Swiss choose to deal with that internally is for them to decide.”

But the banks insisted following last week’s meeting that only claims against banks themselves will be on the table.

Last week’s agreement provides a framework “to go ahead and discuss details of the bank-related issues. It is not a global settlement in the common sense of the word,” a spokesman in Switzerland for Credit Suisse was quoted as saying.

The agreement does not involve the Swiss National Bank — Switzerland’s central bank — or the Swiss government, which informed the banks last week that they are on their own in seeking a global settlement of Holocaust survivors’ claims.

Indeed, Swiss politicians have been at pains to state that a settlement would not involve Swiss taxpayers’ moneys or the reserves of the Swiss National Bank.

Jewish officials in Switzerland, however, are expecting their government to offer compensation on one issue — the treatment of Jewish refugees during the war.

Switzerland expelled more than 30,000 Jews during the war, most of whom died.

At the same time, however, Switzerland provided haven to some 25,000 Jewish refugees, who survived the war together with Switzerland’s 20,000 Jewish citizens.

But those refugees were accepted on condition that Jewish groups pay in advance for their support — a sum that is estimated at some $40 million.

This policy did not extend to the 300,000 non-Jewish refugees who flocked to Switzerland and whose needs were paid for by the wartime Swiss government.

“We are expecting some compensation” from the government regarding the refugee issue, said Thomas Lyssy, vice president of the Federation of Jewish Communities in Switzerland.

In the global settlement negotiations, the Swiss government’s involvement is likely to be key in arriving at a final settlement of claims that remain beyond the purview of the banks.

But a spokeswoman for the Swiss Embassy in Washington said the Swiss government is “not involved and does not intend to be involved” in the settlement talks.

For now, this would appear to leave the banks negotiating with Jewish representatives on a settlement to only one component of the larger series of claims stemming from Switzerland’s wartime activities.

“If they only agree to a partial settlement, they have partial closure,” Steinberg said.

The question, he added, is “whether the principle” of a global settlement to all claims “will become a reality. If it, does everybody wins. If it doesn’t, we lapse back into a crisis.”

Other Jewish officials had a sober reaction to last week’s developments.

Rabbi Abraham Cooper, associate dean of the Simon Wiesenthal Center in Los Angeles, characterized the agreement as a “small step” forward, saying that remarks from Swiss bank officials backing away from a global settlement shows “this is not as crucial a development as one would have hoped for.”

“It also points to the fact that the Swiss government is going to have to take a much more direct role,” he added.

In Israel, Avraham Burg, chairman of the Jewish Agency for Israel, said the agreement would not satisfy Holocaust survivors.

“The principles in the agreement may be acceptable to the U.S. government, but they are contrary to the interests of the survivors,” Burg said in a statement.

As for the amount of any settlement, the banks, WJC officials and lawyers representing Holocaust survivors in a $20 billion class-action lawsuit filed in New York have not reached a consensus, though some sources have said it could range between $1 billion and $3 billion.

“I felt it was very important not to put the cart before the horse, not to start throwing dollar amounts out before we agreed to a structure,” Eizenstat told reporters.

U.S. and Jewish officials said the fund, to be supervised by the Federal District Court in Brooklyn, N.Y., will pay claims from victims whose bank accounts were lost or who can provide evidence that family assets were looted by the Nazis.