Between the Alps and a Hard Place (26 page)

On the other side of the ledger, only the U.S. government could provide the two Swiss banks, and indeed Switzerland itself, with any measure of security that henceforth they would be left alone. But since the Clinton administration had never
officially
done anything to Switzerland, nor even officially threatened it with anything, it could hardly
undo
what it had not done. The Clinton administration, which had wielded a large part of the stick, had been represented in Judge Korman's courtroom by one James Gilligan, a low-ranking Justice Department lawyer who said that the settlement was “fair, reasonable, and in the public interest.”
¹⁸
But the Clinton administration did not sign the document. Even if it had, the ruling of one federal court in one set of cases could not, in the strictly legal sense, prohibit other judges from entertaining similar suits. Hence the absolution that the Swiss bought was more political than legal.

And so on January 30, 1999, the U.S. and Swiss governments issued an anodyne three-paragraph “Joint Statement.” It committed both countries to “strengthening and deepening the ties between our two countries in the political, economic, and cultural spheres . . . [to] promote international peace and stability, ensure respect for human rights and democratic values, and encourage free markets . . . to continue fighting organized
crime . . . [to] the exchange of people and ideas . . . [and to] the further strengthening of bilateral and multilateral economic cooperation.” The statement was so void of content that any student of international affairs would ask why any two governments would go through the bother of drafting it.

The answer would have to be that the two governments were burying some sort of hatchet, ending some sort of quarrel, that at least one of the two did not wish to identify. The Swiss government had every reason to identify the quarrel, and to make as clear as possible that, the price having been paid, the country could now expect to be left alone. On January 22 the Swiss Federal Council had issued a unilateral declaration that “[t]his settlement provides closure of all the financial claims raised against Switzerland.” The Clinton administration, by making friendly noises void of specific references, could claim that its future intentions toward Switzerland were entirely friendly and that its hands were clean of anything that might or might not have happened in the past.

So, what the Clinton administration did to Switzerland amounted to extending abroad the American interest-group process, by which government officials purchase the support of some citizens by renting to them the power to impose costs on others. In the sixteenth chapter of
The Prince
, Niccolò Machiavelli warned rulers against this mode of governance because, he wrote, the beneficiaries would never be satisfied, and attempts to satisfy them would make opponents out of people who would not otherwise be such. The only exception to this rule, wrote Machiavelli, occurs when a government can pay off its domestic supporters with the assets of foreigners. So it might seem that when the Clinton administration filled the coffers of a valued party contributor with money taken from foreign
companies, it followed Machiavelli's unexceptionable advice. But Machiavelli understood what the Clinton administration did not take into account, that when any government raids foreign citizens' or countries' assets it pays a price in international relations.

The Clinton administration's extortion of Switzerland alienated public opinion in a historically pro-American country. Because Switzerland is a small country, some might think that the world's only superpower can afford to exchange foreigners' ill will for the satisfaction of a domestic constituency. This is not so. The United States as a whole received no benefits from the anti-Swiss campaign, yet it incurred costs.

Swiss public opinion had no reason to blame world Jewry, much less Swiss Jews, for the anti-Swiss campaign. Yet as the campaign gathered momentum and leaders of the Swiss Jewish community were not quite quick enough to disassociate themselves from it, Swiss Jews found that too many of their fellow citizens lumped them in with the “extortionists and blackmailers” of their country. This is what Swiss President Jean Pascal Delamuraz did in his 1996 departure speech. By June of 1997, when Christoph Blocher, leader of the rightist Swiss People's Party, set about mobilizing public opinion against the United States and the WJC, he was careful to absolve Swiss Jews and Jews in general from any blame for what was being done to the country. Blocher blamed “the Americans” and the Swiss political Establishment. Nevertheless, since nothing could erase the fact that the country felt itself unjustly maligned in the name and for the monetary benefit of “the Jews,” Swiss Jews were left holding the proverbial bag.

Blocher intended to damage relations with the United States, and found it easy to do so. In 1992 he had led a popular movement that overturned the entire political establishment's decision to join the European Free Trade Area, a way station into the European Union. By August 1997, just five months after he had kicked off the campaign for a referendum to annul any Swiss government decision to establish a fund to pay off the WJC, observers concluded that he had won over public opinion.
¹⁹
And indeed the government was so sure it would lose the inevitable referendum that it dropped the plan. Anti-Americanism became a staple of political discourse, and books with titles such as
Switzerland's Humiliation
and
Switzerland Faced by the American Empire
enjoyed wide readership.
²⁰

The arguments that resonated with Swiss public opinion amounted to an indictment of the United States and of any Swiss who would take another's money to appease foreigners. How would the American people react, asked Blocher, if any European country attempted to extract money from the United States to pay alleged victims of America's war in Vietnam? How dare the Swiss government negotiate with the WJC, whose only qualification was its success in besmirching the honor of the country? How dare Americans impugn Switzerland's abstention from World War II when America itself abstained until attacked? Switzerland, too, would have fought if attacked. How dare Americans blame Switzerland for failing to take more Jewish refugees when Switzerland took more than America? And how could America accuse Switzerland of having relied on “legalisms” to survive World War II? On what else is a small country supposed to rely? Was America able to protect Switzerland? Could it ensure Switzerland's safety in the future? If not, what practical, moral, or intellectual basis was there for its
demands? And how dare America take sides with Swiss individuals of the radical left against their fellow citizens? If the Swiss Establishment wanted to pay off the Americans, let them do it with their own money, not with that of innocent Swiss citizens. Blocher's equation of America with stupid malevolence became the common currency of Swiss discourse.

While the Swiss Federal Council was propitiating the United States and feigning remorse for any sins that its fathers might have committed, Swiss public opinion was turning against both the Establishment and America.
²¹
Indeed, blaming the Swiss Establishment for failing to stand up to foreigners who were humiliating the country became the opposition's rallying cry. As in World War II, the government parties' understandable attempt to appease the dominant power of the day resulted in a political windfall for their opponents. In the October 1999 general election, Blocher's Swiss People's Party made the biggest gains in the history of modern Swiss politics, winning forty-four seats and becoming the country's second largest party—and perhaps its most influential. While one may debate whether this was good or bad for Switzerland, there is no doubt that for American diplomacy it was a self-inflicted wound. Nor would this be the last such wound.

No sooner was the ink dry on the Swiss settlement than the very same lawyers and organizations, backed by the very same Clinton administration, moved against Germany. It was
déjà vu
all over again. On September 11, 1998, attorney Melvyn I. Weiss filed a suit against the German steelmaker Krupp. This piggy-backed other suits filed in Judge Korman's Brooklyn courthouse (where else but Brooklyn?) against Krupp, the Ford Motor Company's branch in Germany, as well as Deutsche
Bank and German companies such as Volkswagen. The charge was that they had profited from slave labor, partly Jewish, during World War II. The
New York Times
, which had supported the anti-Swiss campaign, expressed worry that “efforts to right clear moral wrongs can be seized upon by people with less than noble motives.”
²²
The
Times
might have noticed this earlier. Indeed, it might have noticed that this race for a “fast buck” abroad through political influence was part and parcel of what American politics had become at home.

These suits were open to the same criticism as the anti-Swiss campaign: How can one impute profit, much less guilt, to persons who were not even born at the time the damages were done? Could anyone argue with a straight face that the prosperity of German companies in the year 2000 was due in any way to the companies' balance sheets at the end of World War II? In fact, the war's balance sheet for the German economy was total disaster. Or could one argue that any given loan by a German bank was dictated by independent judgment rather than by a
Führerbefehl
, Hitler's capricious command? It was also quite impossible to put objective value on the labor and misery inflicted on individual slave laborers during the war. The Reich enslaved perhaps 1.5 million people, of whom fewer than a quarter million remained alive in the late 1990s. Who was to distinguish rightful claimants from fraudulent ones? It was certain only that the discretionary power that would come from managing any settlement of these suits and keeping what was not distributed stood to enrich mightily the organizations and lawyers involved, and would in part find its way back into the support mechanism of the Democratic Party.

Moreover, the Third Reich had not been alone in imposing slave labor. The Soviet Union enslaved perhaps a million Germans and almost as many Poles after the war. Why were these American class action lawyers not suing Russia? Simply because Russia had neither the money nor the disposition to be blackmailed. None of this was lost on the Germans or other Europeans.

The mechanism for forcing the Germans to pay was identical to the one used against Switzerland. Once again, the Clinton administration backed the campaign through Stuart Eizenstat as well as in a meeting between President Clinton and German Chancellor Gerhard Schroeder. But, once again, the real hammer was provided by the fact that Deutsche Bank was in the process of acquiring Bankers' Trust Company in New York and needed a license from New York City Comptroller Alan Hevesi. Even after the German government agreed in principle to a multibillion-dollar settlement with the WJC, Hevesi said he would wait until the agreement was consummated before issuing the license: “The good news is that there is the beginning of an agreement to set up a process to come to a global settlement of all the remaining issues between Holocaust survivors and heirs and German institutions. In the meantime, I continue to believe that federal and state officials should take no action on the proposed merger between Deutsche Bank and Bankers' Trust until these issues are fully resolved.”
²³

The deal was struck on December 17, 1999; the German government and German industry would pay $5.1 billion to “American class action lawyers and Jewish groups” in exchange for a total release from future suits.
²⁴
Although in contrast with Switzerland there was no ambiguity about Germany's role in World War II, the softer terms of this agreement reflected the fact that Germany was more powerful vis-à-vis the United
States than was Switzerland. The sum, $5.1 billion, was less to Germany than $1.5 billion had been to Switzerland. And instead of being satisfied with an anodyne statement, the Germans demanded from the Clinton administration an official executive agreement by which the U.S. government promised to oppose any suit against Germany or German companies concerning World War II in any U.S. court. As of this writing the German government was continuing to refuse payment because the Clinton administration's proposed language for the executive order did not fully preclude further suits. Many German companies believed that the Clinton administration would be unwilling or unable to preclude such suits. By June 2000 German companies had contributed only a small percentage of their share of the fund. Also, the Germans retained the right to direct the disbursement of some of the fund. Finally, the Germans were strong enough to make public that they resented the ransom they had been forced to pay: “Ten billion marks is the final amount” that Germany will ever pay with regard to World War II, said Germany's chief negotiator, former economics minister Otto Lambsdorf.

On December 17, 1999, another group of plaintiffs' lawyers filed a nearly identical suit in Judge Korman's Brooklyn courthouse against every major bank in France, alleging that the banks had “fail[ed] to account to survivors and the families of victims for assets that were seized, blocked, or frozen and breached their contractual and fiduciary duties by failing to take reasonable steps to locate the rightful owners of these assets or their families.” And in April 2000 yet another group of American lawyers filed an $18 billion suit against the Austrian government and Austrian companies for having profited from wartime slave labor. But by that time the Clinton administration
had apparently decided that enough was enough and did not put the same amount of quasi-official muscle behind it.

Still, America suffered. The French did not need much prompting to try to diminish American influence wherever it could be found, and the Austrians had already made their rightmost party the country's ruling party.