Pay back

Final reparations for Holocaust victims might seem too little too late, but Covington lawyer Stuart Eizenstat says they are a ‘symbol of accountability’. Jon Robins reports

Thousands of former Nazi slave labourers began receiving final payments this month from a multibillion dollar German compensation fund after years of legal wrangling. The Conference on Jewish Material Claims Against Germany, which deals with the Holocaust reparations, announced that it will distribute $401m (£217.8m) to more than 130,000 victims. Each survivor will receive about $3,000 (£1,600).

“It is hardly a king’s ransom, and, in terms of the labour itself, it’s more a symbol of accountability,” says Stuart Eizenstat, the lawyer who was deputy secretary of the treasury in Bill Clinton’s administration and special envoy for Holocaust-related issues.
Eizenstat is also head of international trade and finance at Washington firm Covington & Burling.

Between January 1995 and January 2001, Eizenstat had arguably the most controversial foreign policy brief of any US government official in Europe. He was at the centre of every major effort to achieve redress for all those victimised by the Nazi plunder machine. “The total number of people involved was staggering, close to 10 million,” says Eizenstat. “There are now 1,250,000 surviving forced labourers and 200,000 slave labourers left alive, including 130,000 Jews.” He explains that the difference between forced labourers, who were deported to Germany and treated harshly but generally survived, and slave labourers, is that the latter were “worked to death”.
Eizenstat’s Eastern European grandparents lost three siblings in the Holocaust.

In July 2000, Eizenstat, together with former German economics minister Count Otto Lambsdorff, the chief negotiators for Germany and the US respectively on the reparations settlement, signed off the DM10bn (£3bn) compensation agreement for Nazi slave and forced labourers. The compensation comes from a fund created by the German government and financed by major German corporations.
Around $200m (£108.6m) was from a settlement that Jewish groups struck with Swiss banks in 1998. This month’s compensation is the second pay-out in the past few years. “The reason why it’s been paid in two tranches is that it was impossible to know the exact number of claimants we would have for a fixed pot of money,” says Eizenstat. “The discouraging thing is that there’s been two years between the two tranches and people are dying at the rate of 10 per cent a year.”

While that deal was welcomed on the international stage as providing some kind of historic, moral and legal closure to a uniquely horrific episode in history, the years of negotiations reflected poorly on all major players involved. In his book Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II, Eizenstat noted: “Political and economic self-interest, realpolitik, is the primary force behind European foreign policy… Not so in the United States. Even the most sophisticated Europeans fail to appreciate that US foreign policy is a unique and complicated mixture of morality and self-interest.”

Eizenstat joined Covington in 2001, after 15 years of service with the US government, where he began as President Jimmy Carter’s chief domestic policy adviser and executive director of White House domestic policy staff. He had a number of high-profile roles in the Clinton administration, including negotiating the Kyoto Protocol on global warming. When he joined Covington, the former US Secretary of State Madeleine Albright paid tribute to her former colleague, saying that “he was known around the globe as a world-class negotiator of great ability”.

As far as the Holocaust survivors are concerned, the compensation is often regarded as inadequate, if not derisory. As Elie Wiesel, the Nobel laureate and a survivor, asks in the foreword to Eizenstat’s book: how does one measure human suffering in terms of material award? “How much ought a government body have to pay a surviving mother for the murder of a child?” he asks. “To me, Auschwitz and Treblinka had to do with something other than financial evaluation.
They had to do more with morality and even theology.”

Eizenstat’s own reservations about the settlement are clear from the title of his book, although he defends the concept of financial compensation. “It’s a matter of Anglo-Saxon legal principles that if you’re injured, then you have a right to be compensated. That’s the case if someone negligently injures you,” he says, “and so, certainly, it should be the case if someone tries to violate your human rights in the most fundamental way possible by killing you or enslaving you. I think they have every right to that compensation and they have waited 50 years and most have died without getting any justice.”

The lawyer stresses that the settlement was not just about financial compensation. “We were also trying to make sure that money was not the last word,” says Eizenstat. Every cheque comes with an apology from Johannes Rau, Germany’s president in 2000 – or the Austrian president if appropriate – reading: “I pay tribute to all those who were subjected to slave and forced labor under German rule, and in the name of the German people beg forgiveness…” In addition, four international conferences have been set up to deal with educating future generations about the legacy of the Holocaust, together with an education task force involving 16 countries looking at the issue.

Eizenstat says: “We don’t want kids to necessarily know the ghoulish details, but we want them to know what happens when good people and good countries stand on the sidelines in the face of injustice and companies participate in evil activities.”

Eizenstat might be a lawyer, but he has little time for the contribution of the US legal profession in seeking reparations. “I had as much difficulty dealing with the class action lawyers as I did the governments – whether it was the Swiss banks, German, Austrian or French companies,” he says. In his view class action lawyers “hijacked” the Swiss bank dispute. Claims filed were not restricted to dormant accounts in Swiss banks, and included allegations that private Swiss banks had accepted deposits not only from Hitler’s victims, but from German nationals depositing assets looted from victims and from German companies depositing profits derived from use of slave labour. Eizenstat says that many of these allegations had “little legal merit” but were “politically charged”. “The lawyers weren’t in it to find historical truth,” he writes in one chapter, ominously entitled ‘Enter the lawyers’. “Most were in it for the money.”

The highest-profile lawyer was Ed Fagan, who has since mounted a string of class-action lawsuits against multinational companies on behalf of groups including victims of South Africa’s apartheid system and, most recently, against Lloyd’s of London on behalf of descendants of American slaves. While the diplomatic efforts were going on behind closed doors, Fagan’s tactic was, according to Eizenstat, “to try and embarrass the Swiss and get publicity for himself by press appearances with his Holocaust survivor clients”.

Nonetheless, Eizenstat believes that the threat of litigation did spur things on. “The lawyers were pushing the US government on as far as they could and pushing the companies as far as they could,” he says. “Without them we wouldn’t have got these big settlements, but they certainly complicated my life. From the companies’ standpoint, it was not a moral pang of conscience 50 years later to repair damage done by their predecessor management, but it was very much a practical business decision, plus the pressure from the law suits and our diplomatic initiative.”

Eizenstat does defend lawyers from charges of greed. “People always think that the lawyers made out like bandits,” he says. “In fact, we negotiated a 1 per cent cap on their fees in the German cases and several acted for no fees in the Swiss action.”

So what is the legal legacy of this marathon diplomatic process? “It was very much a political and diplomatic effort and in many ways we won in the court of public opinion more than in the court of law,” says Eizenstat. However, he points to a ruling in June by the US Supreme Court that allowed a Jewish woman who fled from the Holocaust to sue the Austrian government for the return of six paintings by Gustav Klimt that were stolen by the Nazis.

Eizenstat believes that one lasting impact is that the legal battle has created “a higher moral standard” for companies. “This is the first time that private companies were held accountable for the civil liabilities of their war-time activities,” he says. “I believe that that has implications under our laws – such as our Alien Torts Claims Act [which allows victims to sue third parties for human rights abuses committed anywhere in the world] – in terms of how the US courts at least will look at claims for genocide.”