A U.S. judge refused on Wednesday to dismiss lawsuits brought by Holocaust survivors against German and Austrian companies, throwing up a roadblock that could further delay nearly $5 billion in compensation payments to Hitler's victims.
Germany last July created a Holocaust fund to settle all the lawsuits brought by Holocaust survivors, who charged the country and its companies profited from Nazi atrocities, from slave labor to looting assets.
In return for agreeing to pay reparations more than half a century after World War II, Germany has insisted that all Holocaust-related lawsuits be dropped.
In one of the Bush administation's first major statements on Holocaust reparations, the State Department on Wednesday said it backed the Clinton administration's approach to the German cases.
Saying the decision by Judge Shirley Wohl Kram had delayed payments to one million Holocaust survivors, Richard Boucher, State Department spokesman, said in a statement: "We continue to support the German foundation and will do all we can to implement it and to bring some measure of justice to the long-waiting survivors."
The Bush administration has tapped the Clinton administration's top Holocaust negotiator to resolve outstanding issues - including Kram's decision.
In declining to dismiss the suits, the U.S. District Court judge, in a 27-page decision, said it was not fair to block other lawsuits Holocaust survivors might bring against Germany and its companies, according to a lawyer who represents Holocaust familes.
But Stuart Eizenstat, the Clinton administration's top Holocaust negotiator, disagreed sharply with that interpretation, saying: "No, the ruling did not attack the statement of interest." The term statement of interest refers to the novel approach devised to satisfy German demands that any new Holocaust lawsuits be barred.
In her decision, the U.S. judge also cited Germany's failure to fully fund the foundation. Though the German government has come up with its share of the funding - one-half - contributions from industry have lagged.
Eizenstate, former deputy Treasury secretary, noted two other U.S. judges had accepted the German foundation and already dismissed cases brought by Nazi-era slaves and people whose pre-war insurance policies were never honored.
LEGAL OPTIONS BEING EXPLORED
The judge told the plaintiffs they could ask her again to dismiss the cases once the German foundation was fully funded - and German banks answered charges they could be liable for running Austrian banks that helped loot Nazi victims. Germany annexed Austria in 1938.
Kram's decision so rocked some lawyers who represent Holocaust survivors they were considering trying to get an appeals court to overturn the judge. "The United States is currently studying the decision to determine what option might be available for further judicial review," Boucher said.
While the U.S. executive branch cannot tell the judiciary what to do, the federal government agreed to file a statement of interest with any courts hearing Holocaust cases to advise them the specially created German foundation was the one remedy for these claims.
PRESSURE TO SPEED PAYMENTS
Representatives of Holocaust survivors are under pressure to speed payments because this group is elderly, and dying at a rate of 10 percent to 15 percent a year.
"Many of the absent plaintiffs in this case have waited decades to receive compensation for their property claims, and it would be unjust to divert their claims to a forum whose funding remains in question," Kram wrote.
Elan Steinberg, executive director of the World Jewish Congress, which helped negotiate the German foundation agreement, told Reuters: "The foundation should begin to allocate the funds regardless. Holocaust survivors should not suffer at the whim of court rulings."
Israel Singer, WJC secretary-general, called on the United States and German governments to hold an emergency meeting to resolve the problems created by Kram's ruling so that payments can begin swiftly.
In Germany, a spokesman for the German government's fund representative declined comment until ex-Economics Minister Otto Lambsdorff had read Kram's decision.
Earlier, Lambsdorff said Chancellor Gerhard Schroeder had offered to take part in talks between the German parliament and industry over legal peace, the precondition for the firms to release cash to the fund.
The companies contributing to the fund believe legal peace should include something approaching a guarantee they will not face further related claims in the future.
The German parliament, which must certify legal peace under the legislation that set up the fund, appeared content with a looser definition of legal peace relating only to legal action filed before the July 2000 accord.