A Cool-Down, Then Justice

Time is precious for aging victims of the Holocaust who are pressing to reclaim family bank accounts that Swiss banks have refused to turn over since World War II. The claimants suffered a setback this week when negotiations on an out-of-court settlement broke down. Now further efforts to quickly resolve the dramatic dispute may be jeopardized by state officials in America threatening to boycott the three Swiss banks.

A proper course would be a cooling-off period while the U.S. and Swiss governments try to get all parties back to the negotiating table.

The Swiss banks and a committee of American state and local government financial officers had been working on a framework for settling class action suits brought on behalf of Holocaust family survivors. Negotiations collapsed over differences on whether the settlement would cover only bank accounts or other plundered assets such as gold that were held in Swiss banks.

The desultory approach of the Swiss government and its clear culpability in handling so-called Nazi gold during World War II have long frustrated its allies and Jewish groups. For half a century, Switzerland has been in denial over its role. Its political neutrality did not preclude profitable commerce.

The Nazis used looted gold and other confiscated wealth to buy war materiel. Nazi Germany deposited hundred of millions of dollars in looted gold, cash, jewelry and artwork in Swiss banks. European Jews deposited their money in the banks as well, counting on Switzerland’s reputation for safekeeping. In the last few years, the Swiss government, in response to reports detailing Swiss trade in gold, established study commissions and funds to help Holocaust victims.

The issue of bank accounts did not get much attention in the United States until some states, including California and New York, temporarily stopped doing state business with Swiss banks last year because of the controversy. They later resumed banking relations but now are threatening to stop again.

New York state plans to boycott Swiss banks this fall. On Wednesday, California Treasurer Matt Fong directed his staff to break off contacts with the Swiss banks, but it was largely a symbolic move because California withdrew all of its $2 billion in state deposits from the Swiss institutions between last August and December.

Late this week, Bern warned that boycott threats by U.S. cities and states threaten U.S.-Swiss relations and could lead to a trade conflict. It also said it will support companies that bring legal actions against American sanctions. In addition, the banks said they might withdraw a $600-million blanket offer to settle the claims.

Washington is right to discourage disinvestment by U.S. state government, but it must not go easy on Switzerland despite the threats coming out of Bern and despite the political vulnerability that this half-century-old ghost has raised for the government of a friendly nation. Families of the Holocaust should pursue what is rightfully theirs in a settlement with the Swiss banks. It’s not the money that this issue turns on, it’s justice.