Neutral Nations Kept Nazi Forces Going, U.S. Says

Nazi Germany’s war machine might have broken down months or even years sooner if Adolf Hitler’s government had not been able to use stolen gold to purchase crucial raw materials from neutral nations such as Turkey, Portugal and Sweden, the U.S. government reported Tuesday.

Without ball bearings and high-quality iron ore from Sweden, chromium ore from Turkey and tungsten ore from Spain and Portugal, Germany could not have produced warplanes, submarines, tanks and other arms, according to the report, produced by 10 agencies coordinated by the State Department.

The 180-page document supplements an earlier report that was sharply critical of Switzerland for buying gold from the Nazis, even though Swiss bankers knew the bullion was plundered from central banks of occupied countries and, in some cases, pried from the teeth of people murdered in concentration camps.

The new report follows the Nazi money trail to the capitals of the war’s other neutral nations. It concludes that all of them assisted the German military in some way, although some did so with extreme reluctance. And all of them ended the war with more money in their treasuries than they had when the conflict began.

Most of the countries named in the report issued statements Tuesday denying any wrongdoing.

Some of the looted gold made its way to the other neutral nations, but most of it was converted in Switzerland into Swiss francs.

During the economic chaos of World War II, only the U.S. dollar and the Swiss franc were acceptable international currencies. Germany’s reichsmark was worthless outside of German-occupied territory.

“Each of the wartime neutrals made a substantial contribution to the economic foundations of the Nazi war effort,” said Stuart E. Eizenstat, undersecretary of State for economic affairs.

The report notes that each of the neutral nations had argued that it had no choice but to deal with the Nazis. To refuse, the neutrals said, would have invited German occupation. But the commerce continued long after the tide of the war had turned against the Nazis, the report says, and it became extremely unlikely that Hitler would risk opening a new front.

Although the activities of the neutrals almost certainly prolonged the war and increased the death toll among soldiers and civilians, Eizenstat commended the same countries for helping 250,000 Jews and thousands of other refugees escape. In this regard, he said, they performed far better than the United States.

“The United States had one of the worst records in accepting refugees, and with less justification,” he said. “Only 21,000 refugees fleeing from Europe were accepted in the United States during the war.

“It was not just neutral countries that acted in seemingly contradictory or ambiguous ways,” Eizenstat continued. “Some differences were apparent even within families.”

He cited the Wallenbergs of Sweden. The best-known Wallenberg--Raoul--is credited with saving the lives of 20,000 to 30,000 Jews in Hungary in 1944 alone from his post in the Swedish Embassy in occupied Budapest.

But the Enskilda Bank, owned by the Wallenberg family, was used to “cloak” German assets in the United States, and became an integral part of Nazi Germany’s financial structure.

The general outlines of the sordid story of Nazi gold emerged over the past several years. However, Eizenstat said this new report--based on previously classified U.S. documents and captured Nazi papers--contains details that had not been disclosed before. They include:

* The Ustashe regime in the Nazi puppet state of Croatia amassed as much as $80 million (about $720 million in today’s dollars) by robbing, murdering and deporting to death camps as many as 700,000 Serbs, Jews and Gypsies. Some of the money eventually made its way to the College of San Girolamo, a Vatican-associated institution in Rome, which helped Ustashe leaders escape after the war.

The report says Father Krunoslav Dragonovic, the secretary of the college, helped Ustashe fugitives escape to South America by providing temporary shelter and false identity documents.

Eizenstat urged the Vatican to search its records about this matter. “A full accounting should be made,” he said.

He noted that Vatican officials had told him such a search would be difficult. Vatican officials have said they cannot find any records related to Nazi gold.

* More than $40 million (in today’s dollars) was deposited in the infamous “Melmer account,” named for the German SS officer who administered it. The deposits, twice as large as previously estimated, included gold bars made from smelted tooth fillings, wedding bands and other personal effects taken from Holocaust victims.

The report focuses on the wartime activities of Argentina, Portugal, Spain, Sweden, Switzerland and Turkey, although Eizenstat said Argentina apparently received little or no looted gold and exported very little to Germany. It was included because its government was openly sympathetic to the Nazi cause and because it became a postwar refuge for war criminals.

“Sweden was clearly among the most helpful of the neutral countries to the German war effort,” Eizenstat said. “Not only did it supply Germany with critical war supplies and receive substantial amounts of looted gold, but it gave the Germans significant transit rights across its territory to reach Finland in order to fight against Soviet forces, as well as to facilitate the occupation of Norway.”

On the other hand, the report notes, Sweden was the most forthcoming of the neutrals in cooperating with the Allies after the war by accounting for looted gold and other Nazi assets.

Of the other neutrals, Portugal was generally pro-Allies, although it traded with Germany. Spain, under Fascist dictator Gen. Francisco Franco, was pro-Axis, although technically neutral. Turkey feared invasion from both Germany and the Soviet Union, a wartime ally of the United States.

Between them, Spain and Portugal provided Germany’s entire supply of wolframite, the ore from which tungsten is obtained. Tungsten is a critical component of hardened steel. Turkey supplied most of Germany’s chromium ore, also necessary for steel production.

On Tuesday, Spain, Portugal and Turkey--now U.S. allies in the North Atlantic Treaty Organization--issued separate statements insisting that they had nothing to be ashamed of.

In Spain, Foreign Minister Abel Matutes said the government’s action regarding Nazi gold was “impeccable.”

Portugal and Turkey issued nearly identical statements, saying that they have “nothing to hide” and noting that they have appointed special commissions to investigate World War II activities.

Sweden had no immediate comment.

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Neutral Nations’ Wartime Roles

Countries classified as neutral or nonbelligerent during World War II traded with or provided help to Nazi Germany and the Allies.

Country: ARGENTINA

Contributions to Germany: Base for espionage, smuggling, propaganda

Contributions to Allies: Meat; shipping

****

Country: PORTUGAL

Contributions to Germany: Industrial diamonds, platinum, cork, foodstuffs

Contributions to Allies: Tungsten; protection of Jews

****

Country: SPAIN

Contributions to Germany: Tungsten, iron ore, industrial diamonds, platinum; Blue Division was a Spanish military unit that helped Germany on the Eastern Front

Contributions to Allies: Rescue of Allied pilots; preclusive sales of wool; tungsten, food

****

Country: SWEDEN

Contributions to Germany: Iron ore, ball bearings, wood products; allowed transfer of arms and troops through its territory; gave naval escorts through the Baltic Sea

Contributions to Allies: Rescued Jews and Allied pilots

****

Country: TURKEY

Contributions to Germany: Chromite (the chief ore of chromium); gave Germany access to the Dardanelles (a narrow strait in northwest Turkey of strategic and commercial importance)

Contributions to Allies: Preclusive sales of chromite; protected Jews

****

Country: SWITZERLAND

Contributions to Germany: Food, arms, industrial products; financed the German war machine; allowed transfer of goods, arms and troops

Contributions to Allies: Was an Allied listening post; diplomatic representation; protected some Jews and some POWs; rescued Allied pilots

Researched by TRICIA FORD / Los Angeles Times

Source: Report by State Department