A Crazy Quilt of Victim Compensation

Congress several years ago agreed to pay hundreds of millions of dollars to a small group of Americans who were injured or killed at the hands of foreign terrorists. The payments were the product of this perverted logic: that compensating the victims would punish the terrorists--even if American taxpayers made the payments.

Now Congress is at it again, proposing to provide a few politically well-connected victims of terrorism--none of whom are related to the Sept. 11 terrorist attacks--with millions of dollars in the name of fighting terrorism. It is time to stop this practice before it gets even more out of hand.

The precedent of paying victims of terrorism was set when the family of Alisa Flatow, a 20-year-old American student killed in 1995 by a terrorist bomb in Israel, sued Iran in an American court.

The legal theory of the Flatow case was that Iran, as a financial sponsor of the culpable terrorist group, was legally responsible for her death. This same theory was used later by others, such as journalist Terry Anderson, who had been taken hostage by another terrorist group.

Normally, by law in almost all countries, governments cannot be sued for anything except for their business-related dealings. But Congress in 1996 passed a law to carve out an exception for designated terrorist states so that Flatow and similar victims could go ahead with their lawsuits. Because Iran refused to respond to the Flatows’ suit, her family won a $247-million default judgment against Iran. A few other victims of such terrorist acts also filed similar suits and also obtained large judgments against Iran.

Iran was not about to pay, of course, and the plaintiffs also could not collect the judgments by seizing Iranian assets in the U.S. Although Congress in 1998 passed legislation allowing for such seizures, President Clinton, “in the interest of national security,” prevented it in the Flatow case. For one thing, seizing foreign assets would have made American assets abroad vulnerable to similar seizures. Also, some feared that the U.S. might be held responsible anywhere for the acts of any group to which it had given covert aid.

In addition, the United States wanted to preserve the option of freezing foreign assets to use them as bargaining chips, as it had done to good effect two decades ago in the Iran hostage crisis.

To avoid the problems that the proposed legislation would create, Congress and the administration opted to have the American taxpayers make good on a few specified plaintiffs’ multimillion-dollar judgments, including the Flatows’. The United States paid more than $300 million to just five plaintiffs with existing judgments against Iran. Although Congress ordered the American government to try to recoup this money, there was not a realistic chance of that.

Not surprisingly, other victims of foreign and domestic terrorism have since asked: Why not us? More claims have followed, some of them tied to Sept. 11 compensation programs, even though the claimants were not victims of the crimes that day. Among those who could benefit are hostages held in Iran from 1979 to 1981; the victims of bombings of the Oklahoma City federal building in 1995, the American embassies in Africa in 1998 and the World Trade Center in 1993; and the victims of last year’s anthrax attacks. This expensive, unfair and irrational system of compensation must be reined in.

One way to do that is to defeat legislation that is waiting in a conference committee, having passed the House and Senate, that would allow specified claimants to recover compensation from the U.S. and would allow those who had judgments against such states as Iran to seize assets--even universally protected embassy and consular properties (and remember our reaction when Iran seized our embassy) to be used to pay judgments.

This legislation would have disastrous consequences. It would subject the United States to retaliation and financial exposure, impair the president’s ability to enter into agreements and treaties and leave important foreign policy matters in the hands of tort plaintiffs and their lawyers, rather than with the government, where they belong.

Because we have established a plan to compensate the Sept. 11 terrorist victims, an argument can be made that the U.S. government should compensate all civilian victims of foreign terrorists who are targeted because they are Americans. But these compensation schemes should be fair and rational and divorced from a judicial tort system that results in staggering awards from the U.S. Treasury to just a few victims and their lawyers and that threatens to interfere with our foreign policy.