Stuart E. Eizenstat, Under Secretary for Economic, Business, and Agricultural Affairs Briefing on the "Foundation Intitiative of German Enterprises: Rembrance, Responsibility, and Future" -- Holocaust-era Forced/Slave Labor Compensation, Washington, DC, July 15, 1999

UNDER SECRETARY EIZENSTAT: We're just in a process of concluding three days of discussions, culminating in the third plenary meeting. Today's meeting was attended by representatives of German Enterprise, headed by Dr. Gentz; the German and U.S. Governments; members of all the political parties, and the German Bundestag; the Conference on Jewish Material Claims Against Germany; and representatives of the governments of the Czech Republic, Poland, Russia, Belarus, Ukraine; and foundations set up by Germany in those countries dedicated to reconciliation; as well as the plaintiffs' legal counsel and counsel for the German companies. I co-chaired the meeting with Director General Westdickenberg, the German Ministry of Foreign Affairs.

The discussion was based on the German Enterprise's proposal, introduced in Bonn to address forced and slave labor issues from the Nazi era and other related issues. We made progress in a number of areas. There was an additional narrowing of differences on the plan to create two categories of former forced laborers, who had received payments on the basis of whether they were inmates of a concentration camp or similar facility, or other detained forced laborers in other facilities -- all without regard to nationality or religion. We call them category A and category B, sometimes referred to as slave or forced laborers.

We agreed that we need to develop an objective approach to determining which facilities belong to which category. Let me make it clear now we're essentially trying to define who fits into what category by where they lived during the time they were forced laborers. That is the most efficient way of doing it.

There was also general agreement that the German foundation which will be established should make one-time payments to survivors rather than pension payments, and that the payments should vary on the basis of whether the applicants to the foundation fell into either category A or category B. We'll continue discussions of precisely what the differential will be between those.

The original concept put forward by the German private sector in its June 17 draft called for variations in a per capita payment depending on need and living standards in particular countries. Many participants asked that this concept be changed in favor of a single flat rate -- an approach that was seen as administratively essential to assure prompt payment to aging victims. This is something that the German companies will have to now debate.

German industry indicated the amount of the foundation will be capped -- that is, there will be a ceiling on the amount contributed -- and they indicated their preference that payments be directed toward those in need. The issue of whether this is a fund for those in need or whether it is a fund for all of those who fit into categories A and B, regardless of whether they are in need today or not in need, remains still open but the differences were narrowed.

There was also a discussion, in addition to a fixed one-time payment, of payments to eligible persons who are particularly needy. The German enterprise representatives will consider these proposals.

There was also a good deal of discussion about the proposed threshold of six months as a minimum requirement for work in order to qualify. This was objected to by those representing the victims' side. Again, I think there was a narrowing of differences there, but this is still an area that needs to be more fully explored.

There was complete agreement that all payments made by German private enterprises after the war -- which range over D100 million starting in the 1950s and including some payments made just within recent months by Volkswagen and Siemens and others -- that all of those payments should fully offset whatever the base per capita payment will ultimately be to individuals.

There was discussion but no agreement on offsets for prior government payments -- for example, to the BEG fund or to the Central European Reconciliation funds -- and whether that should be taken into consideration was not in agreement yet.

Dr. Westdickenberg and I also briefed the participants on the significant progress that's been made over the last three days in meetings starting Tuesday -- and they're still going on now -- regarding the issue of legal closure regarding the pending class action lawsuits in US courts. There were several constructive and creative proposals put forward by both sides, and those are being discussed as we speak, and will be given further consideration. But clearly, progress was made in this area as well.

We hope to have further meetings in either Bonn or Washington shortly, and they will be coordinated with the new co-chairman on the German side, who will be announced as Minister Hombach's successor. I think most of you who have followed this know that Hombach was named by the EU to head the Stability Pact.

So it has been a good and very important and very constructive several days, and moved the process forward. There is still a great deal of work to be done and a great number of issues still remaining, but I think we all felt that we had done a good several days' work.

QUESTION: On the cap, are any figures being mentioned as to the total?

UNDER SECRETARY EIZENSTAT: I have admonished everyone to discuss no figures until we have the structure agreed on; that is, until we've decided on a method of getting legal closure or legal peace, and until the substance of the initiative is determined in terms of eligibility criteria. The reason for that is that there are now 16 German companies willing to contribute into this fund. But those companies have told us time and again, including today, that they believe that they can significantly increase the number of companies who may be willing to pay if they can indicate that legal peace has been brought. That will have a relationship, of course, to the size of the ultimate fund. So it's important to get the structure in place, but I think that with the progress we're making, we're not too far from beginning the discussion on money. But we're not there yet.

QUESTION: You've often said that you hope to get all of these issues resolved before the next century turns over. I wondered while you acknowledged there's been progress, you also say there's a lot of work to be done. Can you finish this by the end of the year?

UNDER SECRETARY EIZENSTAT: Yes, I think we can. I think that I'm always cautiously optimistic in any negotiation. I think I would say I'm cautiously optimistic we can finish by the end of the year.

QUESTION: But by the September 1 deadline that has been set?

UNDER SECRETARY EIZENSTAT: I'm cautiously optimistic that we can do that as well.

QUESTION: Will you continue on, even though you're going to change buildings, a? And b, you mentioned the 6-month threshold. I take it some of the victims think that's too long a period; is that correct?

UNDER SECRETARY EIZENSTAT: Yes, in the President's announcement of my appointment, he stated specifically that I would maintain this portfolio, which I will do so.

With respect to the 6-month threshold, there was objection by the victims' representatives to that long a threshold period. That period was not an entirely arbitrary period; it was a period that had been chosen because that's the period that the so-called BEG payments have been made through the Jewish Material Claims Conference against Germany since the 1950s. That's the eligibility criteria. The companies, I think, have indicated some willingness to look at other dates. It's an issue where the German Government and any precedential value it may have on the BEG -- the claims conference made it absolutely unmistakably clear today that they would not use any shorter period as a negotiating vehicle to change the terms of the BEG formula.

QUESTION: Could you talk a bit more about the closure agreement? Where do you see progress in the third way between the model of the Iran claims conference and then the class action suits? And what kind of guarantees will be in involved - should be involved from your government?

UNDER SECRETARY EIZENSTAT: I hope you'll understand that I do not want to go into any detail on this. I do think it's important to say -- and if it hadn't occurred, I wouldn't say it -- that there has been significant progress in coming up with this third way of settling the suits, somewhere between, as you put it, the Iran Claims Tribunal concept and a traditional class action settlement.

We've been dealing a great deal with the issue of heirs and other issues which are very complicated under our legal structure. I think that we have come up with some creative ideas, which everyone is now willing to consider as a way of creating this third way. I think, for the first time, we see that there may indeed be a way to do this. But again, we're not there yet, and there's still a lot to be discussed.

Our legal system is a very complicated legal system; it creates a lot of hurdles. The Supreme Court's Ortiz decision didn't make things any simpler, in terms of settling these broad kinds of claims.

I think we also recognize that in many respects, as we go into the next century, these kinds of claims -- I mean, not necessarily Holocaust-related, but sort of mass actions -- are going to increase. So what we're doing will have some importance in terms of how other actions will be treated.

Again, I think that there are still very significant issues on the legal side, but we all felt that we had made some significant steps forward conceptually.

QUESTION: Could you talk to numbers, the number of victims and the number of victims who you estimate remain alive?

UNDER SECRETARY EIZENSTAT: One of the issues we spent a good deal of time on today was numbers: How many people are we talking about in each category? One of the attorneys has hired a very reputable economic consulting firm to take information from the central European governments and from the Claims Conference to come up with that number with as much precision as possible. Because when you're dealing with a capped fund, you have to know how many people are going to take from that capped fund that have a per capita amount to deal with. This is not an asbestos, open-ended case, where anybody's who's eligible gets a certain per capita amount. It is a capped fund with a ceiling on it. Professor Niethhammer, who has been working with some of the German companies, also made a presentation. The figures that I'm going to mention now are not definitive figures; we won't have those for several weeks. They're figures that have been batted around as ballpark estimates. I think that with respect to overall category A and category B people -- all forced workers fitting into both categories -- that it could be a total of up to a million survivors. That could be less depending on definitions -- but it could be up to a million -- of whom around 200,000 or so are in category A as slave laborers. But that figure, again, could vary really considerably when we get better data. But that's the sort of rough universe of magnitude that was mentioned today. Again, those numbers could be considerably less, depending on how tight the definitions are. They might be more, but these are the kinds of numbers we're looking at in terms of total number of survivors who fit into these categories.

QUESTION: Your word survivors confuses me. You don't mean heirs.

UNDER SECRETARY EIZENSTAT: I do not. I use the term survivors to mean those surviving workers.

QUESTION: Do you have any estimate at all as to what the original number was?

UNDER SECRETARY EIZENSTAT: No, that's a figure that we need to get in order to get more concrete figures here.

We also know that the German Government paid about D1.8 billion in the early 1990s and allocated those among the five reconciliation foundations with these very same five countries. So there's a German-Czech, German-Polish foundation, et cetera. Those foundations then made payments to particular recipients. What we're trying to do is get from them -- and this is one of the things I urged them to give us in the next couple of weeks -- we need to find out exactly how many people received benefits; and, if they can estimate, how many of those received benefits because they were forced laborers as opposed to other general humanitarian purposes.

So again, these figures could vary greatly. I would urge you to understand that we're talking about vast ranges of figures that could very substantially change.

QUESTION: What are the prospects now of compensating also people employed in agriculture during the war, and also families of these farmer-laborers?

UNDER SECRETARY EIZENSTAT: The German industrial initiative is to cover those workers who worked for German private industry during the war. I'd like to say that, as a result of our conversations and the discussions the last couple of days, I think the German companies are being very forthcoming about the issue of private companies. For example, they've indicated a willingness to consider -- and I underscore consider -- in the definition of who is a private company those companies who were private companies during the war but who no longer are in existence today -- which would be a substantial number of companies. So in other words, they would be willing to pay surviving workers of private companies that existed during the war, whether or not they continue to be in existence today.

They're also willing to consider -- underscore consider -- private companies including those who were public companies during the war and were privatized afterward. One particularly difficult set of issues are SS companies, who passed out of existence and which were not, per say, in the private sector -- and that's one of the issues that we're still trying to resolve. For example, Hermann Goering Wercke was a large employer. It was a conglomerate, a large employer of slave enforced labor. So the question of how you cover or if you cover them is one that is still being discussed.

With respect to agricultural workers and workers who work for public institutions like Deutsche Telekom, in lieu of workers who were fighting on the war front, the German Government in its announcement of February 16, indicated a willingness to consider the creation of a federal foundation that the Bundestag would create to compensate workers like agricultural or public workers not covered by the private fund.

This is an absolutely critical feature of the agreement. It is critical to the Central European governments. It is critical to the United States Government's ability to participate in any legal closure. We look forward to the German Government continuing to move forward in considering that initiative.

QUESTION: I may have missed something here. Did you say that the definitions of the two categories were still being determined?

UNDER SECRETARY EIZENSTAT: They are, but we've gotten fairly close to the actual definitions based on where the particular laborers resided when they worked. But there are still some quite critical outstanding issues on the definition of eligibility.

QUESTION: Well, the reason I ask is because you said when you were talking about the numbers, and you said you could make -- it could fluctuate wildly, so how do you get 200,000 could be in category A if the definition --

UNDER SECRETARY EIZENSTAT: Because the Claims Conference has fairly good ideas based on their payments over 50 years of how many people still survive today who were in concentration camps or in enforced ghettos like the Warsaw Ghetto.

QUESTION: Can you give us a general - what a general idea of what category A is, and what category B is?

UNDER SECRETARY EIZENSTAT: Well, category A is generally what some call slave laborers -- we prefer to call them category A workers -- that is those who forcibly worked for German industry while they lived in concentration camps or similar facilities. There we have a great help because the international tracing service of the Red Cross has a list that's been used by the Claims Conference for many years of what is considered a concentration camp or similar facility.

QUESTION: Then B would be people that weren't in --

UNDER SECRETARY EIZENSTAT: Who weren't in those, but who were in -- it doesn't cover just those who worked. If they lived in their home while they were working, they're not covered. They have to be in some kind of an enforced facility, and we're trying to work there. That's one of the areas where we're open in terms of trying to come to a clearer definition of what type of a facility that would be.

QUESTION: Just two more things. The original plan you said called for allocating money as the cost of living and that kind of thing -- has it been decided now it will be a flat rate, or is that something that German industry is still deciding, discussing?

UNDER SECRETARY EIZENSTAT: Well, we all agreed it would be a flat rate. The question is whether the rate would vary with respect to need and cost of living, and that's still an open set of issues. Although again, I think we have narrowed our differences there, but it's still open.

QUESTION: Could you just step back a little bit and, perhaps, be able to provide some context?

UNDESECRETARY EIZENSTAT: I don't have much room to step back, so I'll --

QUESTION: As much as you can, why is it important with then sort of the process in which you're engaged to come up with these two categories? What's the point really?

UNDER SECRETARY EIZENSTAT: Because the payments will vary. Those in category A will get a higher amount than those in category B based on the harshness of their treatment, not on the basis of their religion/nationality. I want to point out that there will be both non-Jews and Jews in category A, and there will be non-Jews and Jews in category B. But if you're in category A because you were in a concentration camp as opposed to, say, a labor camp, the harshness of your condition would merit your getting a higher payment. One of the open issues will be what the differential should be in payment between those who are in A and those who are in category B.

QUESTION: Stu, can you help straighten out something for me? Do I gather then that everything applies only to surviving workers, nothing applies to heirs? Is that correct?

UNDER SECRETARY EIZENSTAT: Charles, this is a very important issue, and let me talk about the heirs issue because this is one of the very difficult points in term of the legal closure issue.

There is wide agreement, I think on all sides, that the per capita payment to people in category A and B should be those who are surviving workers. Now, even there, there's a little bit of a difference. For example, the German initiative suggested that as of the time that this plan goes into effect, if someone's filed a claim and then dies -- and we're told by the Claims Conference people that 1% of the survivors die each month -- then their heirs would be able to collect because the application would have already been filed.

Some on the victims' side would like a somewhat more liberal interpretation of that. But by and large, there's agreement the payment should go only to surviving workers, not to heirs. At the same time, we're looking at creative ways in which the heirs can be handled because this is important in terms of the legal closure.

So a whole variety of options are being considered for that. That's one of the things that our legal working group is working on, how do you do it and still not have it as a per capita payment to heirs of whom there are multitudes? I mean, you're talking about not just spouses but children. Where do you cut it off, is it grandchildren, nephews and nieces and so forth?

QUESTION: Do you still envisage follow-on negotiations if no agreement was reached in the critical matter of legal closure, and how far will the U.S. Government be prepared to help?

UNDER SECRETARY EIZENSTAT: I don't foresee a breakdown. I think that we've created a significant amount of momentum over these three days, and I think that momentum will continue to propel us. Now again, I don't want to be Pollyanna-ish. This is unbelievably complex, and it made the Swiss case almost look like a tea party compared to the complexity of this because of the number of countries, the different categories of workers, the difficulty on the legal closure issues. This is an extraordinarily complex issue; but I believe that we have created a momentum now on the basis of what's happened over these three days that will propel us. I don't even want to consider the possibility of a breakdown. That's not to say it won't happen, but I don't want to consider it.

QUESTION: If you have received compensation in the past from the government, can you still receive further compensation in this --

UNDER SECRETARY EIZENSTAT: What was agreed to today was that if you have received compensation from private industry - private German industry, that will be offset dollar for dollar or deutsche mark for deutsche mark against whatever the basic minimum payment will be. If your basic minimum payment is less than what you got, you'd get nothing. If it's more, you'd get the difference.

There was no such agreement with respect to prior government payments. Let's remember, the German Government has paid - and this is to its great credit - something on the order of D100 billion since the early 1950s. So if you had a dollar-for-dollar offset, then you'd basically be saying that very few people who received those payments would get anything. But the issue of how you "take into account," which is the phrase the German initiative talks about, federal payments, government payments is still an open issue.

QUESTION: I have two questions. First of all, do you have an estimate of the number of people who survived forced labor in agriculture and public companies, or is that included; and my second question is whether -- sorry if I'm pronouncing his name wrong - Dieter Kastrup will succeed Hombach?

UNDER SECRETARY EIZENSTAT: I don't know who will succeed Hombach, but whoever it is we'll work with him. In terms of the whole issue of public versus private companies, it's very difficult. One of the things that we found out today from Professor Needhammer and from the Claims Conference, which has begun to do some research on this, that most of those as you can imagine at least who fit in category A, don't know for whom they worked. They don't know whether it was an SS company or a private company. Sometimes it was one, and then the next day it was another. Sometimes they were clearing a road for an SS company for a private company to be built, and then they would work in the private company.

So this is one of the issues that we're trying to do research on and see if we can get any accurate figures on who worked for whom. But you can imagine after 60 years, that's exceedingly complex. So how to handle the workers for the SS companies is a very, very difficult issue and one that we're struggling with. Again, I want to say that the German companies are trying to be very creative and very positive in this respect, but there are obviously limits beyond which they can't go.

QUESTION: Well, there's no additional number of survivors of labor --

UNDER SECRETARY EIZENSTAT: The figures that I mention -- again, please realize these are extraordinarily gross estimates that have been thrown around by people. We do not have the kind of accurate figures we need, and that's what we're trying to get over the next couple of weeks. But those would include all those who would be forced or slave laborers regardless of the companies for whom they worked.

QUESTION: You seem to indicate that this might be precedent-setting, the whole issue of war reparations. I know the Japanese are still trying to --

UNDER SECRETARY EIZENSTAT: Well, I don't mean precedent-setting in terms of other war reparations. What I mean is the question of how you settle these mass-action issues, whether it's a Bhopal or an asbestos or this kind of a situation. Our legal system now, particularly again with the Ortiz decision by the Supreme Court, is an extremely complex system for resolving these. If we didn't have that kind of complexity, this would be much easier, and we're all struggling.

Again, I have to say I think the plaintiffs' attorneys and the attorneys for the German companies are being extraordinarily innovative in sort of pushing the legal envelope to come up with ways to deal with this situation, and how do you handle heirs, and so forth, within the context of our very complicated legal system.

QUESTION: In the case of existing claims, have you discussed any cut-off dates for the application?

UNDER SECRETARY EIZENSTAT: Yes. It's generally agreed that once the foundation is created, there would be a cut-off date. Different dates have been suggested -- a year, a little more. There would be a reasonable cut-off date. There would have to be notice given so that people were notified that they had the opportunity to claim. Again, we have not come to a decision on what that cut-off date should be, but clearly that there would be a cut-off date.

Thank you.