Israel Makes Play for Swiss Bank Funds

By Nacha Cattan

Published February 06, 2004, issue of February 06, 2004.
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The Israeli government and an international Holocaust restitution organization with which it is allied are raising eyebrows — and hackles — with a proposal that 48% of any funds left unclaimed from the $1.25 billion Swiss bank settlement be assigned to Israeli charities and government ministries.

The request comes in a proposal submitted by the government and its partner on restitution matters, the World Jewish Restitution Organization, on ways to allocate any moneys that may be left over from a 1998 legal settlement between Holocaust survivors and Swiss banks. The Brooklyn federal judge overseeing the settlement, Edward Korman, directed that proposals be submitted by January 31 for ways of using unclaimed funds to aid needy survivors. The Israeli proposal, one of several dozen proposals submitted to the court, recommends that only 17% of the leftover funds go to survivors in the former Soviet Union and 15% go to the United States.

As much as $600 million may become available in unclaimed funds after the heirs to Swiss bank accounts are paid out.

Under the original distribution plan, adopted by the judge in 2000, a small portion of the $1.25 billion settlement was to be used to benefit needy survivors around the world. Most of that so-called humanitarian fund was allocated to programs assisting destitute survivors in the former Soviet Union, where need was deemed greatest. The judge has agreed to reconsider that ruling.

The World Jewish Restitution Organization is a partnership between Jewish groups and Israel, formed in 1992 to negotiate with European nations other than Germany and Austria over restitution of Holocaust-era properties.

One member organization of the WJRO, the American Jewish Joint Distribution Committee, refused to sign on to the Israeli proposal. Joint officials said there was not sufficient time to examine the proposal, but that when calculating need it seemed to overlook the support Israeli and American survivors already receive from their governments.

Some leaders in the survivor community were critical of the Israeli proposal, saying they did not want to see restitution funds channeled to survivors through the “bureaucracy” of Israeli ministries.

Israeli and American leaders of restitution efforts had resisted an earlier attempt by the Israeli government to access a separate restitution fund, saying they feared the money would be used to balance Israel’s troubled government budget. Israeli officials denied the accusation at the time, promising not to use new restitution monies as an excuse to trim old sources of funding for survivors.

The lead plaintiffs’ counsel in the Swiss settlement, Burt Neuborne, said that the court would not allocate any funds from the settlement to any government entity.

“The money is not going into the Israeli budget,” he said. “If it goes into the Israeli government, it’ll be over my objections. I don’t think the judge will be inclined to do that.”

In the past few weeks scores of requests for funding have streamed in to the office of the court. Among them are proposals by North American Jewish federated charities, which calculated the unmet needs of survivors in cities across the country. In New York alone, the cost of meeting survivors’ needs was estimated at $70 million a year.

The Joint, which administers the court-designated aid programs for survivors in the former Soviet Union, submitted a proposal for a new program that would improve the level of service to survivors at a cost of $15 million per year. A court hearing on the many proposals is scheduled for April 29.

The Israeli proposal was roundly criticized last week after an initial draft included an index that divided survivors by their levels of “sufferance.” The so-called suffering index was removed after several member organizations of the World Jewish Restitution Organization complained. But critics found other points objectionable as well. They took issue with the proposal’s demographic breakdown of survivors, questioning the Israeli estimate that 46.5% of all Holocaust survivors live in Israel. Another recent study put the number at 38.5%.

Critics questioned Israel’s inclusion within its so-called survivor population of Jews who came to Israel from North African countries that were essentially untouched by the Holocaust. Israeli experts have argued that Jews who lived in Arab countries allied to Nazi Germany during World War II may be considered victims of Nazism.

Critics also questioned the Israeli proposal’s system of quantifying where survivors are most in need. In a report submitted along with the proposal, Israeli demographer Sergio DellaPergola lists variables in each country that could affect a survivor’s level of need, such as access to essential drugs.

“I am against giving money to the government,” said Noach Flug, president of the Center of Survivor Organizations in Israel, a roof body of 44 survivor groups. “The ministry cannot make differences between a survivor and not a survivor, and I think this money belongs only to needy survivors.” Flug, however, praised the rest of the proposal.

Rabbi Israel Singer, co-chairman of the World Jewish Restitution Organization, defended the Israeli proposal to fund government agencies. “These institutions were chosen because they are assumed to be the most effective,” he said.

“Depending on the exact percentages, nearly half of the survivors live in Israel,” said Elan Steinberg, executive vice-president of the World Jewish Congress and a board member of the World Jewish Restitution Organization. “The question which has been raised by those within the Israeli government is, why aren’t [Swiss] resources reflecting that?”

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