Between the Alps and a Hard Place (2 page)

By the time the West had become conscious of the fact that their conflict with Yugoslavia was a real war, of what the enemy was willing and able to do, and of what it would take to counter that—in other words, to take it seriously—the Yugoslavs had
created “facts on the ground” and drawn the Americans into endless negotiations about them.

This book presents the lessons of the Swiss experience in World War II to an audience that has become accustomed to unrealistic images of war, and that risks learning war's deadly seriousness the hard way.

Note on translations
: Unless otherwise noted, all translations herein, including documents and publications in Switzerland's three languages—German, French, and Italian—are by this author. Although I use materials in all three, I prefer the two minority languages because German has never pleased my Latin tongue.

 

B
ETWEEN JUNE 1995 AND AUGUST 12, 1998, a stream of news reports, congressional hearings, and semi-official committees of accountants and historians swirled around accusations that, contrary to what the world had thought for a half century, Switzerland had really been an ally of Nazi Germany in World War II. Worse, until now Switzerland had managed to hide its Nazi profits, including money that Jews fleeing the Holocaust had deposited in Swiss banks and that the banks kept from their heirs, as well as gold torn from the rest of Europe—indeed gold torn from the very teeth of gassed Jews. Edgar Bronfman and his subordinates at the World Jewish Congress demanded billions of dollars in reparations, to be administered by organizations they controlled. Various parts of the U.S. government, led by President Bill Clinton, supported demands that the Swiss government pay up, lending substance to the threat of U.S. economic sanctions on Switzerland. Significantly, U.S. officials were careful never to make the threats officially.

The Swiss public reacted with resentment of everything American. Then on August 12, 1998, the two largest Swiss banks, Union Bank of Switzerland and Swiss Bank Corporation, plus Credit Suisse, agreed to pay $1.25 billion protection money to be allowed to continue to operate in the world's financial center, New York City. At that very moment, the fine points being debated by committees of historians, as well as the assessment by auditors under former U.S. Federal Reserve Chairman Paul Volcker of whether this or that unclaimed account might have belonged to Holocaust victims, became uninteresting. The winners dropped their righteous anger and got down to the business of scrapping over the take.

The term that best describes the anti-Swiss campaign of 1995–1999 is “pseudo event.” A generation ago Librarian of Congress Daniel Boorstin coined it in his monumental book
The Image: A Guide to the Pseudo Event in America
.
¹
Once upon a time, wrote Boorstin, real events had been reported because they had happened. Nowadays, pseudo events exist only to the extent that anyone succeeds in getting them reported. The artificial character of the controversy over Switzerland's newly discovered villainy becomes obvious the instant one realizes that absolutely no new information emerged. In 1996 then-Senator Alfonse D'Amato (R-NY), who did his best to spread the accusations, admitted as much, saying that even though the whole matter had been reviewed exhaustively a long time ago, it was new to him.
²
Alas, the past is full of things unknown to those who have not made the effort to learn them.

In fact, every last scrap of information in the charges, defenses, and countercharges had been placed in archives a half century ago after being thrashed out by the people who had
experienced that part of the war. In short, the authors of the campaign resurrected parts of an old story to support judgments diametrically opposite to the judgments of the original protagonists.

To us, the degree of valor or villainy of the Swiss fifty years ago is less significant than that the Clinton administration and its allies bent the reality of a chapter of history to suit one of their party's constituents. Compromising America's standing in the world by franchising foreign policy to interest groups has become all too commonplace. More important, focusing attention on a historical event to serve current private interests dumbs down our understanding of how the world works. Both the attacks and the defenses focused on Swiss behavior rather than on the vital context of the war—looming inflation caused by Germany's extortion prices, Germany's nonpayment for industrial goods, the run on gold in the domestic Swiss market from around the globe, and so on. The controversy has thus detracted rather than contributed to our understanding of the art of policy-making under duress.

The experience of Switzerland, a free-market democracy trapped for four years between the Alps and the Nazis, is full of lessons about mixing military deterrence with economic incentives, and balancing the internal politics of a diverse country with the international balance of power. The Swiss experience also drives home the age-old lesson that the capacity of any country to influence another is proportionate to its capacity to harm or to protect the other. American statesmen in World War II knew these lessons. But their grandchildren who play with images are largely ignorant of them.

The least important lessons concern the anti-Swiss campaign itself. These are largely about the state of American politics at the end of the twentieth century. In short, the only real event was that another coalition of powerful Americans had mounted another campaign using the power and prestige of the United States government to funnel money into its own hands.

A shrewd observer could see that the campaign against Switzerland was a pseudo event because those who waged it did not really mean what they said. Some, including U.S. officials, spoke as if the Swiss people, with whom the United States had always been friendly, had really been enemies all along. They broadly hinted at economic reprisals unless the Swiss paid a heavy sum—not to the U.S. Treasury, on behalf of the public, but to certain
private
organizations. But, if the charges of a covert alliance with the Nazis were true, the remedy—paying to the World Jewish Congress and other private organizations a fraction of one percent of Switzerland's yearly gross domestic product (GDP)—surely was too light. If Switzerland had
really
been an accomplice to some of this century's worst crimes, if we had
really
just found out that the Swiss had been in on Hitler's schemes, the proper course of action would have been to treat Switzerland as a treacherous enemy. But no one introduced a bill in Congress to these ends. Nor did the U.S. government make
or even formally study
making such a serious charge. Nor did any department of government even consider renouncing the 1946 U.S.–Swiss agreement that settled the claims arising out of World War II, much less did any department consider economic warfare against Switzerland.

This, then, was just another instance of the semi-official use of American power to transfer cash from not-so-favored parties
to powerful officials' favored private constituents, who then recycle some of the money back to the officials who made it all possible. A basic feature of pseudo events is that they serve the interests of their creators. Edgar Bronfman's World Jewish Congress, the principal creator of the campaign outside of government, was also among its beneficiaries. As for President Clinton and Senator D'Amato, Edgar Bronfman paid them in advance with major political contributions. In sum, contemporary American politicians play with humanitarian and moral outrage as they do with other deadly tools of statecraft.

On April 23, 1996, Senator D'Amato opened a hearing of the U.S. Senate Banking Committee he chaired, claiming, “We have in our possession recently declassified documents that shed new light” on Switzerland's role in World War II.
³
D'Amato claimed that the money deposited in Swiss banks in the 1930s by Jews like the father of one of his constituents, Greta Beer, amounted to “[h]undreds of millions of dollars of assets . . . monies under the direction of the Nazis being hidden away in Switzerland, we'll get to that.”
⁴
The only evidence for this nonsensical statement was a hearsay report from 1945 that cited someone saying that he had deposited $28 million in a Swiss bank. The Swiss government claimed that only $32 million in unclaimed assets remained in major banks in 1996.

The only documentation D'Amato cited was an article in the
Wall Street Journal
that had broken no new ground but rather had reported charges the World Jewish Congress had made against Switzerland.
⁵
The emotional component at the hearing came from the elderly Mrs. Beer, who said her father had told her before the war that he had deposited a lot of money in a Swiss bank. She didn't know how much or in which bank, much less had she ever seen a passbook or an account number. Pitifully,
she recounted that after the war, she and her mother had gone from bank to bank, and that no bank had come up with any money.
⁶
What
monsters
, asked D'Amato, would oppose justice for a sweet old lady like Mrs. Beer? (And how shameful should someone note that D'Amato had proved nothing.) Shame too on the bank employees who refused to hand money to a stranger walking up to the window with a story about a dead depositor.

Then came the threat, and it involved more money than the combined total of what families such as the Beers ever possessed. Edgar Bronfman testified that

Having transformed suggestions into facts and accusations into proof, Bronfman asserted: “I speak to you today on behalf of the Jewish people. With reverence, I also speak to you on behalf of the six million who cannot speak for themselves.”
⁷
Then, having taken onto himself all that power and moral authority, Bronfman took on the right to dispose of what he called the rightful patrimony of the victims of Nazism. D'Amato spoke of “hundreds of millions” of dollars, while Bronfman spoke of “billions.” The money, said Bronfman, would go to survivors of the Holocaust,
as well as to individuals and institutions, museums and writers who would keep alive the memory of the Holocaust. The survivors were few and dwindling, while the latter categories would become long-term political supporters of those who would provide their livelihoods with Swiss money.

Note that at this point Bronfman and D'Amato intended the money to come from the Swiss government—that is, from Swiss taxpayers. Why should the Swiss people have paid any attention to these demands, much less felt the need to comply? Because behind the demands was the threatening insistence of the Clinton administration. The threat was first delivered by Ambassador Stuart Eizenstat, U.S. special envoy for property claims in Central and Eastern Europe, U.S. undersecretary of commerce, and a friend of President Clinton.

Eizenstat reported to the Senate that his purpose was to achieve openness in reporting about unclaimed accounts in Swiss banks, to make sure that heirs got what was properly due them and that heirless assets were distributed to poor elderly Jews in Eastern Europe. Who could object? But Eizenstat also reported that his practical job was to add the authority of the U.S. government to the claims of Mr. Bronfman's organization, through “government to government conversations and facilitation with international and local organizations.”
⁸
The practical meaning was that, until Bronfman
et al.
were happy with Switzerland, the U.S. government wouldn't be happy either. D'Amato underlined this as he concluded Eizenstat's testimony: “I have every confidence that we will have a full court press led by you on behalf of the Administration.” This full court press included U.S. Ambassador to Bern Madeleine Kunin's countless interventions as well as a speech to the Swiss parliament by Secretary of State Madeleine Albright.

Note that Ambassador Eizenstat's formal job description—to promote “the nondiscriminatory, transparent, and just resolution of claims arising out of properties confiscated during and after the Second World War by the Nazis and their sympathizers or by the communist governments in Central and Eastern Europe”—did not include Switzerland at all. Nevertheless, his pressuring of the Swiss included commissioning a voluminous U.S. government report that bears his name and served as the basis for campaigns against Switzerland and other Western European countries.