The unintended consequence of a good deed

Jerusalem Post 29 March 2008
By Marilyn Henry

No good deed goes unpunished. So it would seem with treaties the US signed with many Soviet satellite states during the Cold War to settle war claims and commercial debts between American and Eastern European corporations and citizens.

The treaties were good for foreign policy and international commerce. They encouraged American companies to do business with Eastern Europe, unencumbered by the past, and allowed US citizens to recoup some of what they had lost during World War II or to communist nationalizations.

A war-claim settlement is a good idea in the abstract. But that is not the world in which we live. Many individual claims were based on material losses during the Nazi era. These are hard to compensate with cash.

Nor was there much cash. Eastern European governments pleaded poverty.

The amounts they paid the US to settle claims were based on the size of their national treasuries, not the value of the properties. Warsaw, for instance, in a 1960 agreement, agreed to pay $40 million over 20 years to settle Americans' commercial and personal claims for properties in Poland.

In 1973, the US concluded another settlement, under which Hungary agreed to pay $18.9 million, in installments, to cover $58 million in claims of US nationals. Once it paid in full, Hungary was to be free of its obligations to the American government and citizens.

The US government judged the merits of the American claims. The agency in charge, the US Foreign Claims Settlement Commission, certified awards for 5,022 claims against Poland. These had an assessed value of $151.8 million, although there was only $40 million in the Polish pot.

ONE CLAIMANT was Michael Taffet, an Auschwitz survivor who later settled in Teaneck, New Jersey. He filed a claim for his family's property - two brick and three wooden houses in Debica, about an hour's drive east of Krakow. The US commission assessed their value at $19,500. The actual payment was based on how much money was available. In the end, successful claimants for Polish funds received about one-third of the commission's assessed value of their claim.

It was roughly the same percentage for the Hungarian funds. Among those beneficiaries was Erzsebet Herzog Weiss de Csepel, the daughter of Baron Mor Lipot Herzog, a Budapest banker and art collector whose artworks included paintings by El Greco, Munkácsy, Cranach, Courbet and Velasquez.

For decades, these treaties and subsequent judgments by the Foreign Claims Settlement Commission were the only means for American citizens to try to recover a fraction of what was lost in Eastern Europe.

However, since communism collapsed and some former Soviet satellite states instituted restitution measures, these countries reject claims made by families that obtained payments from the US commission. For instance, although a Budapest court ruled in 2000 that Hungary must return 10 paintings to Herzog's heir, Hungary recently dismissed the claims of Herzog's granddaughter, Martha Nierenberg of Armonk, New York.

The Hungarian government said the US payments under the 1973 agreement had settled the Herzog claim.

It is easy to understand why Hungary wants to keep the Herzog paintings in its possession. They are not only beautiful; they are valuable, worth roughly what Hungary paid the US to settle all war claims. Nonetheless, having joined the West, Hungary cannot hide behind Cold War agreements, especially one in which Hungary was treated so gently by the US. Seen as progressive and admired for its uprising against the Soviets, Hungary was let off the war-claims hook for a paltry amount. The effect is that the Herzog collection has been stolen twice.

FOREIGN RELATIONS and domestic politics are not static. Western European nations have revised post-war agreements and policies in line with the politics of the new millennium.

Some nations acknowledge that prior compensation for Holocaust-era losses should not automatically preempt an opportunity to recover an object, be it a painting, a house or a business. The German federal cultural authorities realized this: Federal museums will return Nazi-era looted artworks to the pre-war owners or their heirs, and if prior compensation has been paid, the claimant simply refunds the payment.

In the last decade, the Dutch government reopened and liberalized its post-war restitution policy because of what it called "changed (historical) insight in respect of the justice and consequence of the policy pursued at the time." However odd the language, the sentiment was that claimants deserved greater rights and more sympathetic consideration than they had been granted after the war, which the Dutch intended to rectify.

Europeans who became American citizens after the war were more fortunate than others because the US government attempted to recoup their losses.

The American policy for the last dozen years has been to encourage Central and Eastern European nations to restitute properties that were confiscated during the Nazi era or nationalized by communist regimes.

However, it has overlooked an important facet. The US did not insist on some provision to protect the rights of American citizens who took the pittance the US was able to recover for them during the Cold War.

EARLIER THIS month, Prime Minister Donald Tusk of Poland pledged, during a meeting with Jewish organizations in New York, that his government would address the question of private property restitution. It is hard to be sanguine. Poland repeatedly has failed to pass "reprivatization" measures, which are extremely unpopular on economic and social grounds among Poles.

The US, which had been a forceful leader in restitution, should exert its influence to ensure that all European property measures make provisions for families like the Taffets and the Herzogs, so that Americans are not penalized decades later for accepting a token's worth of their properties' value from the Foreign Claims Settlement Commission.

Restitution measures that bar claimants who got prior compensation create a certain injustice: although Nazi victims outside the US may be able to benefit from restitution in Eastern Europe, no Americans need apply.
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