Switzerland Unveils Plan for $4.7-Billion Victims Fund

Increasingly haunted by the ghosts of World War II and endangered in their ability to do business abroad, the Swiss on Wednesday unveiled plans for a $4.7-billion fund to aid victims of the Holocaust and others who have suffered greatly.

The fund, which would rank among the largest philanthropic institutions in history, was proposed in a solemn speech by President Arnold Koller to both chambers of the Swiss parliament in Bern, an address televised live to the nation.

The fund would be financed by selling off some of the gold reserves of the Swiss National Bank. In World War II, that institution purchased bullion--which some historians estimate would now be worth almost $12 billion--from the German Reichsbank, much of it plundered from countries conquered by the Nazis, bank officials have recently admitted.

Koller said the fund, to be named the Swiss Solidarity Foundation, would “reinforce Switzerland’s humanitarian tradition and prove our gratefulness for having been spared during two world wars.” It would also “do some good to those who endured unspeakable sufferings 50 years ago.”

The foundation, proposed in talks between the Swiss Federal Council, or Cabinet, and the country’s central bank, was a clear sign of Switzerland’s increasing desperation over angry charges from Israel, the United States and other nations that the Swiss coolly profited from wartime dealings with the Nazis and pocketed the assets of Holocaust victims.

According to Swiss officials, at least three U.S. states--New York, New Jersey and Rhode Island--have recently announced that they will conduct hearings on Swiss banking activities. Authorities in New York City, the world’s financial hub, threatened to pass a law on their own revoking the operating licenses of Swiss banks doing business on Wall Street and in Manhattan’s financial district.

Some international Jewish groups have also threatened a boycott of Swiss banks. Switzerland’s biggest banks have been sued in U.S. courts by Holocaust survivors who claim that they have held assets of victims and their heirs for more than half a century.

Koller’s speech “marks an end to the stonewalling,” Jean Ziegler, a sociologist and Socialist member of the Swiss parliament from Geneva, said in a telephone interview. “This is the first time they [Swiss authorities] confessed guilt. They don’t say it, but they factually confess guilt.”

Rabbi Marvin Hier, dean and founder of the Los Angeles-based Simon Wiesenthal Center, which has pursued justice for Holocaust victims, said of the proposed fund: “It’s a step in the right direction. . . . But we also need to know exactly what the historic record of the time was.”

In Jerusalem, Avraham Burg--chairman of the Jewish Agency, the quasi-governmental Israeli agency that has been one of the most vocal critics of the Swiss banks--called Koller’s proposal “first and foremost a victory for the moral position for which we have fought all along the way.”

Sen. Alfonse M. D’Amato, the New York Republican who heads the Senate Banking Committee and who has led the charge in pressuring the Swiss, called their decision to establish the fund “a breakthrough declaration. . . . It is the first significant acknowledgment from individuals in responsible positions . . . that massive wrongdoing occurred. It will take massive resources to begin the process of healing.”

The proposed fund, which requires at least two constitutional amendments and could still be torpedoed in Switzerland’s parliament, would be the latest step in a stunning turnaround for the Swiss, whose former president, Jean-Pascal Delamuraz, in December rejected demands for compensation funds as “blackmail” by international Jewish organizations.

Koller said the foundation, with a proposed launch date in 1998, could “rapidly help the victims of the Holocaust or Shoah” and become “a unique and permanent institution that will still display its beneficial effects in 10, 20 or 50 years in Switzerland and abroad.”

Its objective will be to assist “grave cases of human distress in Switzerland and abroad,” he said. Besides European Jews victimized by the Nazis, beneficiaries could include “victims of poverty, of catastrophes or genocides and other grave violations of human rights.” Half of the beneficiaries would be in Switzerland and half in other countries.

The foundation would be in addition to a 100-million Swiss franc ($68-million) aid fund that the country’s three largest banks created for Jews, gays, Gypsies and other Holocaust victims last month.

Koller announced that the Swiss National Bank will also deposit the equivalent of $68 million in the fund set up by the three banks.

The method of funding for the new foundation would require no taxpayer money, a gambit evidently intended to minimize the effectiveness of opposition from right-wing Swiss politicians who defend their country’s wartime stance of “armed neutrality” and oppose any action that could be interpreted as a sign of collective contrition.

If approved, the Swiss Solidarity Foundation could draw on about 7 billion Swiss francs ($4.7 billion) in official gold reserves, or enough bullion to generate several hundred million dollars annually for its charitable activities, said Koller, who currently holds the revolving one-year presidency.

Swiss National Bank Chairman Hans Meyer told reporters that the plan would entail selling off gold over a 10-year period but insisted that it would not disrupt the international gold market or undermine the Swiss franc, one of the world’s benchmark currencies.

Gold posted its biggest one-day drop in almost two years Wednesday. March gold futures contracts in New York plunged $6.10 to $354 an ounce. Gold’s price has been under pressure for months amid expectations that European central banks will continue to sell off significant parts of their hoards to help their governments meet budget goals related to planned economic union in 1999.

Because the gold in the central bank’s vault has been valued at a third of market prices, Meyer said the Swiss can cede some of their bullion to the foundation and still keep enough of the precious metal on hand to support the franc.

Using tax money to fund the foundation would be politically dangerous because any 50,000 Swiss citizens could petition for a nationwide referendum, a vote that Ziegler and other advocates of the compensation funds believe they would lose.

On Wednesday, industrialist Christoph Blocher, a leading conservative member of parliament, immediately rejected Koller’s proposal, saying the Cabinet “has lost its head.”

Ziegler, whose book on the wartime dealings between the Swiss and the Germans will be published this month in German and French, contends that the Swiss Solidarity Foundation would only pay back “a fraction of the billions” that Swiss banks and other businesses owe to Holocaust victims and survivors.

Swiss bankers laundered gold for the German Reichsbank during the war, helped spirit capital out of the Third Reich to South America and other destinations for Nazi higher-ups and commandeered assets that had been deposited in Swiss accounts by European Jews for safekeeping, Ziegler said.

In 1962, after years of denials, Swiss banks said they had found $7 million belonging to Jews killed in the Holocaust. After the issue resurfaced two years ago, the banks said they found an additional $28 million in dormant accounts. Jewish groups claim the total fortune left by murdered European Jews in Swiss vaults could be as much as $7 billion.

A commission chaired by former Federal Reserve Chairman Paul A. Volcker is investigating the issue.