Subject: Trans: Briefing on Austrian Compensation for Nazi-era...

Subject: Trans: Briefing on Austrian Compensation for Nazi-era

Trans: Briefing on Austrian Compensation for Nazi-era Property

(Eizenstat, Sucharipa in Vienna December 1) (4,810)

Another round in the negotiations to compensate persons who
suffered property losses during the Nazi era in what is now the
Republic of Austria concluded December 1 in Vienna.

U.S. Deputy Treasury Secretary Stuart Eizenstat, the special
representative of the president and the Secretary of State for
Holocaust issues, facilitated the negotiations and briefed
reporters afterwards.  He was joined by Ernst Sucharipa, the
Austrian government's special representative responsible for
negotiations on the restitution of Aryanized property.

Eizenstat announced that the U.S. and the Austrian governments
intended to exchange diplomatic notes December 1 that would
bring into force the recently signed labor agreement concerning
the Austrian Reconciliation Fund, thus providing 6 billion
[6,000 million] schillings to 150,000 mostly non-Jewish
survivors of Nazi labor practices.

He then discussed progress made on property restitution issues,
the main subject of the current negotiations.

The victims' representatives made a reasonable opening offer,
Eizenstat said, but it exceeded what Austria feels it should
pay.  He also said the two sides disagreed on gaps and
deficiencies in prior Austrian restitution laws, with the
Austrian negotiators finding fewer than those cited by the
victims' representatives.

"While the Austrians disagree with some of the contentions," he
said, "all parties, including the Austrian Government, agree,
for example, that liquidated or destroyed properties were a
category not generally covered by prior Austrian restitution and
compensation programs, and need to be addressed in considering a
capped amount."

Eizenstat said he was pleased to learn that there seems to be a
consensus in the Austrian Parliament to pass, by the end of
January, legislation providing $150 million for losses related
to apartments, small business leases, household property, and
personal effects.  Sucharipa said that when the legislation is
passed, disbursements could start immediately thereafter.

The next round of negotiations is scheduled for December 21 in
Washington.  These property talks were launched in Vienna on
October 24, immediately following the signing of an agreement on
a slave and forced labor fund.

The property talks are based on a Framework Concerning Austrian
Negotiations Regarding Nazi Era Property/Aryanization Issues,
which was agreed upon also in October.

Following is a transcript of the briefing:

(begin transcript)


Austria Center
Vienna, Austria
December 1, 2000

SECRETARY EIZENSTAT: Before I begin, allow me to express my
displeasure with remarks recently made by one of the plaintiffs'
attorneys participating in this process, Mr. Fagan. He
incorrectly asserted that this process had broken down and, as a
result, had endangered the labor agreement we recently signed,
and that is categorically wrong. I unfortunately seem to spend
every one of my press conferences starting by correcting
misstatements made by him.

I am pleased to report that this very day the United States and
the Austrian Governments will exchange diplomatic notes to bring
into force the recently signed labor agreement concerning the
Austrian Reconciliation Fund. This is a historic achievement of
which we shall all be proud. This will lead to the establishment
of the Fund and bring us one step closer to distributing the 6
billion [6,000 million] schillings to some 150,000 elderly
survivors, most, by the way, non-Jewish. All plaintiffs'
attorneys who participated in the negotiations and signed the
Joint Statement remain committed to dismissing all of their
Nazi-era labor claims against Austria and Austrian companies.
That's what they signed, that's what they agreed to, that's what
they will do.

Since the labor issues have been resolved, and we anticipate
that the labor claims will soon be dismissed, we have focused
our attention on Nazi-era property restitution. Let me give you
an update of where things stand with respect to property issues.

We had very good discussions over the past 24 hours with
Chancellor Schuessel, with Parliamentary President Fischer, with
other Austrian officials, including Ambassador Sucharipa and
Ambassador Winkler, and with victims' representatives.

While we made some progress, much work remains to be done.

An initial proposal for compensation has been conveyed by the
victims' representatives.

The victims' representatives made a reasonable opening offer,
but as in any negotiation, their offer is a starting point. It
exceeds what Austria feels it should pay.

My role in this matter, however, remains to facilitate a fair
and expedited resolution of all property issues. This will
require flexibility on all sides.

It will also require that the Austrian Government act on its
historical and moral responsibilities, and that the Austrian
private sector do its part.

It will also require that the victims' representatives engage in
a reasonable process of negotiation and show flexibility
regarding their proposal.

The victims' representatives have made a strong case that there
were indeed gaps and deficiencies in prior Austrian restitution
laws. While the Austrians disagree with some of the contentions,
all parties, including the Austrian Government, agree, for
example, that liquidated or destroyed properties were a category
not generally covered by prior Austrian restitution and
compensation programs, and need to be addressed in considering a
capped amount. With respect to liquidated properties, some
points were made as follows:

- The 1938 Austrian business register valued Jewish-owned
businesses that were liquidated or destroyed completely at 321
million reichsmarks, or 130 million 1938 U.S. dollars;

- Prior restitution laws provided no compensation;

- In today's dollars, Jewish-owned businesses liquidated in
1938-1939 would be worth about $1.3 billion [$1,300 million].
There were even more such businesses liquidated that were not
registered, the reason being that the Nazi laws required
registration only of properties above a given value.

In addition, the victims' representatives made the following

- The claimants had to reimburse the "Aryanizer" of property for
that Aryanizer's purchase price, even though the proceeds of the
sale had been placed in blocked accounts never accessible to the
original owner and seller.

- That amounts paid in "Flight and Discriminatory Taxes" (which
were estimated in 1938 to be 328 million reichsmarks, were often
not deducted from purchase prices. The Austrian Government has
confirmed that this was often the case, that is, that they were
not deducted and that the purchaser trying to regain his or her
own property had in many cases to repay the very discriminatory
taxes that they were charged.

- Claimants often therefore could not afford to reimburse new
owners; some decided not even to file and/or accepted very
unfavorable settlements.

- It was also asserted that huge German investments in Austria
in war-related industries from 1938-45, partially funded by
confiscated Jewish assets, were often converted into Austrian
government-controlled corporations and privatized after the War.

The Austrian negotiators for their part noted that, in their
review of the historical record on restitution and compensation,
that they found fewer gaps and deficiencies than those cited by
victims' representatives.

One should balance this discussion with what Austria has done
recently for victims:

- In recent years, the Austrian Government provided $150 million
to victims of National Socialist persecution through the
Austrian National Fund, although this was not related to
property. It was an important humanitarian gesture.

- The government recently agreed to provide nearly $400 million
to former forced and slave laborers.

However, these again were not for property restitution. The only
payment thus far for property restitution would be the $150
million advance payment for losses related to apartment and
small business leases, household property, and personal effects.
I was very pleased to learn in my meetings with the Chancellor
and with the President of the Parliament Mr. Fischer that there
seems to be a consensus for the passage of the legislation
providing for $150 million for losses related to apartments,
small business leases, household property and personal effects
by the end of January. This, on the other hand, covers only one
category of property.

We all recognize that whatever settlement agreement we will
finally reach, that that amount will only be a percentage of the
total uncompensated loss suffered by victims of the Nazi-era on
the present-day territory of Austria.

It is important that the Austrian side make a reasonable
counter-proposal at our next negotiating session on December 21
so that we can complete these negotiations early next year, and,
again, that both sides show flexibility. Thank you very much.

If Ambassador Sucharipa would like to make a statement...

AMBASSADOR SUCHARIPA: Thank you very much. Let me just shortly
supplement what Secretary Eizenstat has said, and I cannot do
that without first thanking him again -- I've done that a couple
of times in the past -- for his constructive leadership as a
facilitator in these talks. And I think you've just heard a very
good example of the very constructive role Mr. Eizenstat is
playing in all of that. My account would be briefer and will be
basically echoing basically what you've just heard. I think we
have achieved prior to that round an important step inasmuch as
there is an emerging consensus among the four parties
represented in Parliament on the passing of the necessary
legislation for this 150 million U.S. dollars we want to
disburse for the categories Mr. Eizenstat has mentioned. The
sequence of events now will be that as a result of the
discussions on that we had here we will be able to put the
necessary smaller revisions into the legislation. There will be
a meeting of the Constitutional Committee of Parliament before
Christmas and then according to the timetable we've been offered
-- if everything goes well -- the legislation would be passed
the end of January, meaning in fact that disbursements could
start immediately thereafter.

Second point as again Secretary Eizenstat has mentioned, we have
-- and I think this is a major breakthrough as it were -- we
have obtained agreement on the exchange of notes that will now
make it possible for the executive agreement on the slave labor
issue to enter into force, something we've been awaiting for
quite some time and we have now achieved.

I think we have also -- and that is because I see Hanna Lessing
in the room -- an important result again of this round -- we
have reconfirmed, all of us, the trust and the great recognition
we all have both in the national fund as an institution and in
the leadership Hanna Lessing is giving to that fund, because
this is important and because the fund will become the major
operational actor in that whole process.

We have talked -- over those last I don't know how many hours --
about those categories Secretary Eizenstat has mentioned. In
addition let me may say that we also listened to a report by
Professor Stieffel who is right now finishing his written
analytical study on the issue of insurance companies. We got a
sort of short preview of that report and that again of course
was helpful for the discussion.

We had discussions on liquidated property. As was mentioned, I
agree that as a category per se, liquidated property was not and
could not have been an element in the restitution legislation.
The difficulty there, of course, is that some parts of the
business like real estate might very well have been restituted,
but it is obviously true that the issue as such needs to be
further developed. We talked about discriminatory taxes where I
think we all agree that the legislation under the restitution
laws was not uniform and that of course does create a problem we
have to address.

Two or three final points: we got again, and this is, as you
will understand, very important, affirmation from the U.S.
government that as far as the class actions are concerned, there
will be no further proceedings under these class actions, and we
got corresponding confirmations from the lawyers concerned and
we've made it very clear, and I think again there is agreement,
that in the continuation of our talks, only those class action
lawyers can participate that abide by this agreement. We have
asked for and we have been promised a number of further
supporting materials and we will make our best efforts to
respond to them prior to the next meeting, which we have
scheduled for Washington on December 21. At that meeting, we
will also do our very best to come up with a concrete
comprehensive offer from the Austrian side.

Maybe one additional point, because that is also important in
the wider framework of our discussion, there are a number of
issues which already in the past, but also in the future we want
to take and continue a kind of sort of collateral measures I
would say in the social areas, in the educational areas, one
example being the issue of "Pflegegeld", where the full amount
of the seven categories that are disbursed in Austria can as of
now not be disbursed for people living abroad. There is very
concrete consideration to redress this situation. Thank you very

SECRETARY EIZENSTAT: Let me just as we take your questions,
mention two things: First, we will make the exchange of notes
that brings into force the Labor Agreement public early next
week. And second I'd be very remiss if I didn't say how valuable
a role Ambassador Hall [U.S. Ambassador to Austria Kathryn Walt
Hall] and her entire staff at the Embassy have played in all of
these talks; they have been enormously helpful and constructive
and creative, and we appreciate that. Questions?

Q: Do you have a timetable? How long will it take until the
final agreements on all the reimbursements are not only ... but
also --

SECRETARY EIZENSTAT: It's my hope that the issues we are now
negotiating under the context of creating this capped general
settlement fund will be decided within the life of this

Q:  Also comprising real estate and --


Q: Mr. Eizenstat, when you talked with the Chancellor yesterday,
did he tell you why it took 55 years (or 54 years last year) to
begin to compensate people -- What was the reason for this
55-year delay?  Why is it done now?

SECRETARY EIZENSTAT: We are trying to look forward, not
backward. There were, in fact, some restitution efforts. I think
that those restitution efforts clearly had gaps and deficiencies
and they were not as broad as those that existed for example in
Germany, but there were some programs. We are trying to look

Why is it happening now? I think it's frankly part of a
world-wide effort that began several years ago and that's
encompassed Switzerland, Germany, Austria, and the negotiations
now in France, the creation of over 15 historical commissions by
countries from Argentina and Brazil, to Lithuania, Spain,
Portugal, Switzerland, to look at their past, to try to
re-examine the worst events of World War II, to try to do
justice to the remaining survivors, and to try to learn the
lessons of what happens when there is a breakdown of the rule of
law and of tolerance. So I think that what Austria is doing is
part and parcel of this worldwide effort to try to come to terms
with our past.

Our own country, the United States, has a presidential
commission in which we are examining our treatment of Holocaust
era assets and this is happening with countries throughout the
world. There is a very important historical commission occurring
here -- the Jabloner commission -- they are doing an
extraordinarily thorough and professional job of looking at
Austria's role in the confiscation of property, and the
restitution of property, and the report will be due in final
form in 2002, but their preliminary report on apartments was a
very important ingredient in the $150 million settlement that we
have reached on that piece dealing with leased apartments,
buildings, movable property and household effects.

Q: May I ask one supplementary? Mr. Eizenstat, you have probably
been asked this question in the United States, and if you were,
I don't know about it, but there is around [sic] a Jew, a
communist, a slightly crazy communist, called Norman
Finkelstein, who is attacking the leaders of the Jewish
community in America for imposing the Holocaust on people. He
has never gotten over the fall of the Berlin wall.

SECRETARY EIZENSTAT: I am familiar with his book and I
fundamentally disagree with his premise. As in any civil action,
if an Austrian citizen today had his or her property confiscated
or liquidated, they would expect to be able to have compensation
for it. It's a very basic principle and a basic right. The fact
that it has taken 55 years to have this full justice brought to
those whose properties were confiscated and destroyed throughout
Europe shouldn't be blamed on the victims. It ought to be the
responsibility of governments to take that responsibility up
now, and it is being taken up now by government after
government, so this is a positive development -- I think it's a
highly moral act that countries are taking -- and far from
criticizing the victims for trying to get back what was
confiscated from them one ought to applaud the process.

Q: Please comment on the categories to be covered in the
agreement with the Austrians? Was there a counter-offer?

SECRETARY EIZENSTAT: Yes, there is agreement on the broad
categories. We have a framework agreement that is generally
understood. It will cover liquidated businesses, including
licenses, bank accounts, stocks, bonds and mortgages, real
property, movable property not covered by the $150 million
amount, for example property that was auctioned through the
Dorotheum [auction house], insurance policies will be covered
possibly in one way or the other -- this is still to be debated.
I think it's our hope, and I think that's shared by some on the
Austrian side, that the insurance companies in Austria will make
a contribution to this general settlement fund and get legal
peace as a result. They have insisted that they will only
respond on a claim-by-claim basis and even then not in
accordance with the international principles established by the
International Commission on Holocaust-Era Claims, the ICHEC
Process, so insurance is an issue that is still outstanding, but
it would cover those categories of property. There will also be
consideration given to communal properties owned by the Jewish
community that were either destroyed or not restituted.

Q: If I'm correct, 150 million dollars only covers the --

SECRETARY EIZENSTAT: Let's understand what the $150 million is.
$150 million covers three categories of property and there will
be legal peace as much as one can provide it in US courts for
these three categories: apartment and small business leases,
household property, and personal valuables and effects, for
survivors. So the $150 million, as soon as the Austrian
Parliament passes it, which as Ambassador Sucharipa said, and as
I was told yesterday by Mr. Fischer and Mr. Schuessel, we expect
by January 31, would be distributed to victims of National
Socialism who were in Austria at the time, and it will cover
those three categories only. So the balance of the kinds of
properties I mentioned --businesses, business licenses, bank
accounts, stocks, bonds, mortgages, real property -- are being
negotiated now as part of a larger capped fund.

Q: Can you give us a global figure regarding the proposal made
by the victims' representatives, a global figure overall of how
much they're asking for?

SECRETARY EIZENSTAT: Yes. First of all, I don't want to start
bandying figures around. There was a general consensus amongst
most of the lawyers and the Jewish claims conference and the
Austrian Jewish community for a particular figure. I don't think
it's useful -- a lot depends on how you measure that and what is
included. I think it is a reasonable opening offer, but it is
one from which the victims' side is going to have to show
flexibility if there is to be a settlement. We don't yet have a
counter-proposal from the Austrian side and that's what we hope
to have at our next negotiating session.

Now again, let me try to make it clear what it is the
negotiations are all about, following the $150 million. What we
have tried to do since the labor agreement was done, is to fill
in gaps and deficiencies in the seven prior Austrian restitution
laws. I have just given you two of those gaps or deficiencies.
One was that they didn't cover at all property that was totally
liquidated and destroyed. If you couldn't identify the property,
there was no way of getting the property back, obviously, but
neither was there a way of being compensated. Another example
was that often those trying to get their property back had to
pay for the purchase price and for discriminatory taxes. That
was not universally the case, but it was often the case. Those
are examples of the kinds of gaps and deficiencies that we are
trying to deal with.

Q: When you say a reasonable amount --

SECRETARY EIZENSTAT: I said a reasonable opening offer --

Q: -- opening offer, you are talking about the 1 billion dollar
[1,000 million dollar] request of the victims --

SECRETARY EIZENSTAT: Well, a lot depends on how you measure it.
It's been stated in amounts smaller than that, it depends on
what else is added. There was a lower amount that was stated
than that, but I think rather than get into specific figures --
because a lot of figures have been thrown around -- suffice it
to say that we hope on December 21 that we will have a
reasonable counter-offer from the Austrian side and that we will
at the same time have a show of more flexibility on the victims'
side to lower their figure into a range which is more
acceptable. That is on December 21, and that's when the
negotiations will occur. I also want to make it clear that in
the $150 million settlement for the three categories that I
mentioned -- the leased apartments, household goods, and
personal effects -- that that specifically excluded in our
framework agreement those properties, like movable properties,
that were auctioned through the Dorotheum. That was not included
in the $150 million. The Dorotheum is being represented in our
talks, and we believe that they will make a contribution to an
overall settlement.

Q: Mr. Eizenstat, I take it that the $150 million, the Austrian
offer, only comprises the first three categories --

SECRETARY EIZENSTAT: That's right. There is only one proposal
that has been made by the Austrian government, and it has been
accepted, and that's part of the legislation, and that is not
contested. That is for only those three categories and that will
be covering survivors who owned or they may have been children
of parents who had these leased apartments, leased small
businesses, household properties -- pianos, furniture, etc., and
personal valuables and effects -- jewelry and things such as
this.  Those are the three categories covered by the $150
million. There will be legal peace for those three categories.
What we are now negotiating are the balance of properties that
were either liquidated or not restituted and that fall into
these gaps and deficiencies in prior laws.

Q: The offer of the victims' representatives of 1.1 billion
dollars [1,100 million dollars], does it --

SECRETARY EIZENSTAT: That is not the offer that was provided.
That figure was not the figure that was given by the majority of
the lawyers, it was a lower figure.

Q: Yes, but it is a comprehensive one?


Q: What do you think about the idea to use earnings of
privatization for this fund? It's an idea of the --

SECRETARY EIZENSTAT: One of the ideas that has been put forward
so that there would not be a direct budget cost for this final
settlement was the concept of using some portion of the
privatization of state-owned properties, and putting that into
this fund. That is, I think, a creative idea, it's one possible
avenue. It has not at this point been accepted by the Austrian
government, but I think it is one creative idea that ought to be

Q: We thought that there has been a misunderstanding about the
categories of victims who get these $150 million. Nazi victims
who were not Jewish, maybe? Like homosexuals --

SECRETARY EIZENSTAT: The categories that will be covered are the
victims of National Socialism, and that will include Jewish
victims, it will include homosexuals, it will include Romanis,
and there will be ways in which the particular discrimination
against Jewish victims will be dealt with -- and that I think
everybody is satisfied -- will make it certain that everyone is
dealt with in a fair way. I don't think there is any desire to
discriminate against particular victims, but there is a
recognition that virtually all of the Jewish victims had leased
apartments or other categories that fall into these three, and
so I think that everybody is satisfied that the way in which the
$150 million allocation will be made, the way in which the
legislation is drafted, will be fair -- and one of the, I think,
important things that occurred at this meeting was an agreement
on that. I would also say that one concern that we did have and
that we did express and that I think will be taken care of is
with respect to the timing of the payments. The way the draft
legislation read it could be interpreted to mean that it would
be spread out over 2 years and I think that we are all in
agreement that we want the great bulk of the payment to be made
immediately upon passage of the legislation -- so I think that
was also important.

Q: How many claimants will there be for the $150 million?

SECRETARY EIZENSTAT: Well, in terms of the number of claimants
for the $150 million, according to Hanna Lessing, who I think is
here, our understanding is that there are a total of about
24,000 people who will be eligible. That doesn't mean that they
will all make claims, but the universe of people we are talking
about is around 24,000.

Q: Will $750 million be nearer the range of the claim figure
being named? And also one question on the leased properties,
does that include rented properties?

SECRETARY EIZENSTAT: No, it's leased properties, rented
properties, properties with long-term rental leases. This is A
unique feature in Austria in which, unlike in the United States,
rents are generally on a year-to-year basis, or two years, and
they are not the kind of property right that can be transferred.
Long-term leases in Austria, at least at that time, during the
pre-war period and early Anschluss period, was a right that
could often be transferred, and there were certain property
rights attendant to it and most of the residents, Jewish or
non-Jewish, had leased rather than owned apartments.

I think it's not useful to talk about figures. You are going to
hear people throwing around figures, everybody has got his or
her own interpretation of what was offered. Suffice it to say
it's more than the Austrian government is willing to pay, but it
is a reasonable opening offer and we hope that there will be a
counter-proposal that will narrow the range of difference.

AMBASSADOR SUCHARIPA: Just before we leave, two words. On the
offer from the victims' representatives, I think you've seen a
good example from your questions today, it is not as uniform as
we'd like it to be, but we do know the order of magnitude, so
that should help us at least. It is also important then -- I'd
just stress a point that Stu Eizenstat has made -- that we are
basing ourselves on those measures that have already been taken
in the past, so they are not forgotten, they are taken into

SECRETARY EIZENSTAT: One other remark. One of the key
participants in these talks has been Dr. Pichler, who is
representing the Austrian Federation of Businesses, what we
would call chambers of commerce. He's been a very active
participant; he was in Washington, and he has made it clear that
the chamber and the Austrian business community is willing to
make a contribution to the general settlement fund, and we think
that that's important in indicating that industry will be
participating in this effort on a basis of a moral commitment
and a moral obligation and we appreciate very much Mr. Pichler's
leadership in this area.  Thank you.

(end transcript)

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