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Stuart Eizentat
Under Secretary for Economic, Business and Agricultural Affairs

Testimony Before the Commission on Security and Cooperation in Europe
Washington, DC, March 25, 1999

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"Property Restitution in Central and Eastern Europe"

Mr. Chairman, and members of the Commission:

Thank you for the opportunity to testify on the process of restitution of property that was wrongfully seized by fascist and communist regimes in central and eastern Europe. This process has been important to me both personally and officially since 1995, when I was named U.S. Special Envoy on Property Restitution in Central and Eastern Europe, in addition to my duties as Ambassador to the European Union. I have continued with that responsibility as Under Secretary in the Department of Commerce and now at State.

Property restitution is part of Europe's unfinished business. It is part of the job of repairing the damage from two of the 20th century's greatest European disasters. The Holocaust devastated the lives, families and institutions of European Jewry, and the Nazis and their fascist allies destroyed or stole vast amounts of Jewish property. After World War II, the Soviet Army's occupation of eastern and central Europe, followed by the installation of communist regimes, led to massive seizures of both private property and property owned by religious and other community organizations.

Since the fall of communism, nearly every country in eastern and central Europe has begun returning religious community property. Some have restituted a large part of both communal and private property. Some have done very little. The process, as well as the progress, in each country is different, reflecting major differences in their histories and current politics. Most of these countries have democratic parliaments, and they carry out restitution through their own laws and procedures and in accordance with their own particular circumstances. So it is unrealistic to expect them all to follow a single solution.

Nevertheless, the basic principle that wrongfully expropriated property should be restituted (or compensation paid) applies to them all, and their implementation of this principle is a measure of the extent to which they have successfully adopted democratic institutions, the rule of law with respect to property rights, and market economy practices. As these governments seek to join western economic and political organizations, and to integrate their economies more closely with ours, we do expect them to adopt the highest international standards in their treatment of property. Indeed, in 1995 the European Parliament called on central and eastern European countries, including many candidates for membership in the European Union, to adhere to such standards. Adopting such standards would also help these countries attract foreign investors, who want to be assured there is a transparent, fair and just private property system in place.

Mr. Chairman, I propose first to examine first what the U.S. Government is doing in this area, including the results of the Washington Conference on Holocaust-era Assets, and then give you a country-by-country status report on real property restitution in the region.

What the U.S. Government is Doing

The fact that there have been so many changes in territories, minority populations, political systems and legal frameworks in Europe in the 20th Century means that we cannot have a simple, one-size-fits-all policy. It means that our restitution policies must fit the historical context of each country, must take into account the highest local standards of justice, and ideally should contribute to the overall development of democratic and market economy values in each country.

We approach this both bilaterally and multilaterally. In our bilateral efforts, we routinely raise property restitution issues with official visitors of all levels from the countries of the region. Over the years I have been involved in these issues, I have visited some dozen countries in central and eastern Europe, many several times. Last summer I visited Lithuania and Poland, and since then I have visited Ukraine and Bulgaria, and addressed property restitution each time. Ambassador Henry Clarke, my Senior Advisor for Property Restitution, has visited Moldova, Romania, Poland, Lithuania, Bulgaria, Slovakia and the Czech Republic during this period. We have devoted considerable effort to gathering current information on restitution, and our main purpose has been to advocate further steps in private and communal property restitution that appear appropriate for each country.

The State Department and U.S. Embassies in the region focus on both communal and private property restitution. We are especially sensitive to discrimination against American citizens' claims, even when we cannot espouse an individual claim or take a position on its merits. We do this by vigorously advocating fair and expeditious treatment for all such claims as a group -- as, for example, our Ambassador in Slovenia did with the Justice Minister just two days ago. Even though we cannot provide legal advice to a claimant, Embassies and Consulates can and do provide information about the local laws, judicial system, and claim procedures. They maintain a list of local lawyers, and often explain which officials or agencies may be of assistance as American citizens attempt to resolve their claims.

We organized the Washington Conference on Holocaust-era Assets, in early December 1998, with 44 countries and 13 non-governmental organizations to discuss a variety of issues from art and insurance to communal property. The Conference included both a plenary and a working group session on communal property restitution. This was the U.S. Government's first attempt to take a multilateral approach to this subject. It was also the first international conference among governments, with non-governmental organizations participating, on real property restitution. We did not expect to reach a consensus, but we did want to generate an exchange of ideas that would promote the restitution process. Our overall goal of communal property restitution -- justice for those communities persecuted by the fascist or communist regimes, or both -- was not challenged. And for good reason: almost every country in the region has returned at least some communal property to its original owners, out of a sense of justice, and out of recognition of the importance of revitalizing religious groups in a more tolerant and pluralistic age.

In my remarks on communal property to the Washington Conference, I outlined a series of principles and "best practices" appropriate for restitution of communal property seized originally by the Nazis or their fascist allies, generally from Jewish communities, or later expropriated by communist regimes without compensation. While not all of these practices have been adopted in all countries, they give us a broadly applicable set of concepts which countries should consider.

Since this hearing is addressing restitution of both communal and private property, there is a longer list of principles and best practices we would like to see adopted.

This is admittedly a long list, and perhaps no country has fulfilled every principle perfectly. But it is not a theoretical list either: every one of these "best practices" has been adopted somewhere as an important feature of the restitution process. Taken together, they clearly illustrate that property restitution is an integral part of the economic and political reform now underway in central and eastern Europe. It reflects, and contributes to, the development of democratic and pluralistic institutions. By establishing new legal protections for private and other non-state ownership, property restitution helps establish a sound basis for a market economy.

We recognize that the basic legal processes involved in restitution take time, some claims can be very complex, and where there are serious disputes it takes even longer to resolve them. It is safe to assume that any restitution case involving valuable property is likely to be complicated. Jewish property may have been confiscated twice. Documentation may be lost. There are probably rival claimants. There may be different options possible for restitution, compensation, privatization or retaining state control. Each country will insist on working through these complexities within its own legal framework and political context.

Nevertheless, we feel strongly that these principles should be adopted now. Moreover, countries that have embarked on this difficult task should not allow the process to languish, but should press on to bring it to an honorable conclusion. Justice will not become easier as time passes; we have already seen too often that justice delayed can be justice denied.

I am pleased to say that multilateral attention to the process of property restitution in Europe was not a one-shot event. The Polish Government is planning to host an international conference on communal property restitution in November of this year. We know from our own experience that holding a conference on such a complex and potentially controversial topic is not easy, and we commend the Polish Government for undertaking this task and making this contribution to the future of Europe.

While the United States is fortunate not to have suffered the massive expropriations of central and eastern Europe, we also have a role to play in determining what happened to moveable assets seized by Nazis, some of which came under our control. Just last week I attended the initial meeting of the Presidential Advisory Commission on Holocaust Assets in the United States, chaired by Edgar Bronfman. It has two tasks: to conduct original research on the collection and disposition of Holocaust era assets that came under the control of the U.S. Government after 1933, and to review research being conducted more broadly in the public and private sectors. We find that the Commission will not be able to conclude its work by the end of 1999, and therefore will be asking Congress to extend its mandate to the end of the year 2000.

Recent Developments in Central Europe

Bulgaria, which I visited in early February, has returned substantial amounts of communal and private property since the early 1990's, although the administrative processes have been difficult and efforts of the courts to resolve complex cases have sometimes taken years. Many important properties remain in dispute, notably those belonging to the Jewish community and the Catholic and Orthodox Churches. For example, in 1996 I testified before this Commission that the Bulgarian Supreme Court had upheld a finding that 49% of the Rila Hotel should be returned to the Jewish community. This has not happened. Subsequent changes in Bulgarian legislation, including a new law on privatization adopted at the request of the IMF, and challenges to the original court decision have further delayed settlement of this issue. We are continuing to pursue this issue aggressively.

Agricultural land redistribution from collective farms to former owners is still underway, following changes in the law to permit the former owners to reclaim their original land rather than shares allocated by the farm directors. Forest and farmland can only be returned to Bulgarian citizens; non-Bulgarian citizens can (and do) receive other property, but if they are not permanent residents they must dispose of the property.

The 1997 "Luchnikov" law established a broad, nondiscriminatory procedure to compensate former owners for property which could not be returned (for example, because buildings had been destroyed or rebuilt after the expropriation). The period for claims under this new procedure ended in November 1998, overwhelming district governments with applications. As a result, the deadline for appeals in cases where the authorities fail to reply has been extended to the end of 1999.

Croatia's Law on Compensation for Property Taken During Yugoslav Communist Rule permits only people who were Croatian citizens when the law was passed (January 1, 1997) to receive restitution or compensation. The Department has objected to this discriminatory legislation at the highest levels of the Croatian government, and during the fall of 1998 we attempted to negotiate a solution to ensure that U.S. citizens could apply. In my letter to Foreign Minister Granic, I pointed out that the continued inability of U.S. citizens to receive equal treatment risks discouraging U.S. investment. Unfortunately, American citizens remain unable to file claims under this law. We will continue to work on resolving this inequity.

The Czech Republic probably has had the sharpest internal conflicts over Catholic Church property restitution of any country in the region. 175 monasteries and other properties were returned to Catholic orders under laws passed in 1990 and 1991, but the current government is generally opposed to Catholic property restitution. In February 1999 a national commission was formed to address church-state relations, including property restitution, for all faiths, but the churches and the government disagreed sharply over its composition even before it could meet.

Most Jewish communal property in the hands of the Czech national government and the city of Prague has been returned, amounting to about one-third of the community's priority list of 205 properties they want restituted. Most of the remaining two-thirds, which have not been restituted or compensated, are Jewish communal properties held by other local authorities or turned over to third parties. These properties were not covered by the 1994 federal decree which returned property held by the national government, because only a new law would have the power to require local authorities to restitute the property.

A separate national commission has been formed, to examine property restitution issues arising from the Holocaust, including both individual and community real property and other assets held by victims of the Nazis. Restitution in this context seems to enjoy greater government support and we are hopeful that this commission will create a breakthrough in restituting Jewish assets.

In February the government opposed a bill in Parliament which would have removed the citizenship requirement for private property claims, but it also introduced legislation to permit dual citizenship for Czech Americans. We will continue to press the Czech government to permit American citizens to claim their former property.

When Estonia became independent, the government returned confiscated property belonging to Christian denominations, but the small pre-war Jewish community had rented most of its communal facilities. One parcel of land was restituted, and the government assisted the Jewish community to acquire the building on that property. Estonian private property owners have been able to reclaim their property if they filed before the deadline, irrespective of present citizenship.

Hungary was an early leader in passing and implementing legislation for private and communal property restitution and compensation. Several thousand religious community property claims have been resolved through negotiation or by government decisions, and about $100 million has been paid in compensation. 818 properties remain under negotiation between the government and the Catholic Church. In October 1998 the Jewish community waived claims to about 150 properties in exchange for annual support payments from the government (which other religious organizations also receive); the Jewish community has actually received four or five buildings in restitution and is negotiating for another 10 to 15.

Private property has been restituted under a 1992 law, amended in 1997, which has no citizenship or residency requirement. Hungarian Holocaust victims even receive a modest monthly pension from a foundation that receives government compensation for heirless private Jewish property.

Recently the relationship between the Jewish Community and the Hungarian government has seriously deteriorated, as result of a law providing about $136 to the heirs of those who died in the Holocaust. This very small figure compares to about $4500 paid to heirs of those convicted and executed for political crimes. Jewish organizations have asked Jewish beneficiaries to reject the compensation, and about 1000 of the 67,000 checks sent to Jews in Hungary and other countries have been returned.

Latvian law provides for the restitution of confiscated property to former owners or their heirs. The law does not discriminate on the basis of citizenship or residency. If the original property cannot be returned, local authorities offer another property or compensation in the form of vouchers. Most communal property cases, Jewish and Christian, have already been adjudicated and property rights restored, although a few long-standing cases are still being negotiated. Private properties now occupied by economically productive facilities have been particularly difficult to resolve. Claimants are frequently reluctant to accept alternative properties when their value is difficult to establish.

Lithuania has restituted both private and religious property, but the government has not always turned over buildings awarded to religious communities by the courts. For example, during my visit last summer the Jewish community gave me a list of nine properties which courts had awarded to them which were still occupied by government agencies. The Catholic community has been more successful in having property returned to it than the Jewish community, which is badly splintered. As in other countries, the Jewish community cannot afford to repair or maintain all of the religious property they have received, which includes 26 synagogues.

Until now, the definition of religious property has excluded communal property for secular use. I was very pleased to learn, just last week, that the government has sent a draft law to parliament, which would greatly expand the kinds of communal property that could be restituted. It would include social facilities, schools and sports clubs, and would be applicable to all ethnic and religious groups in Lithuania. We have long urged such a broader definition of communal property and very much hope it will receive prompt approval by the parliament.

The Lithuanian government is considering the establishment of a special foundation, which would receive property and funds for use of the Jewish community, and to provide protection for cultural monuments.

Lithuanian law provided for the restitution of private property only to Lithuanian citizens, and the deadline for filing claims has passed. A requirement for permanent residence was dropped. Some Lithuanian-Americans were able to reclaim their former citizenship, a number of successful claims were made in Lithuanian courts, and others are pending. Statistics on the overall number of properties returned are not available.

Poland has established four separate commissions to process claims of the Catholic, Lutheran and Orthodox Churches, and the Jewish community. About 1800 Catholic properties have been returned or compensated, and another 800 are still under consideration. Thousands of Jewish communal properties served Poland's 3.5 million Jews before the Holocaust, but tragically only a few thousand Jews remain in Poland.

Negotiations have been underway for at least a year between the World Jewish Restitution Organization (WJRO) and the Union of Jewish Congregations in Poland to form a foundation to assist with the reclaiming and managing of these properties. Despite agreement on many points, those negotiations have not yet concluded successfully. So far, the Jewish community has applied for about 250 properties. As time passes without outside help, it is becoming less likely that all of the Jewish communal property can be reclaimed before the deadline in 2002. When I was in Warsaw last summer, I urged both sides to find acceptable compromises and conclude the agreement, and have discussed this several times with officials of the WJRO since then.

The Polish government has been preparing draft legislation for the restitution or compensation for private property, or "reprivatization," but the draft has not yet been presented to parliament. We have been assured on several occasions that it will permit Polish-Americans to file claims for property they or their families owned.

Romania's Parliament has debated new legislation for property restitution in recent months, and it remains a major domestic political issue. Private property claims face a chaotic legal situation in the courts. The government has found it difficult to return limited amounts of communal property to religious and ethnic communities by decree, because partial solutions raise questions of fairness. The Greek Catholic or Uniate Church, which was banned by the communist government, has large and serious claims against both the government and the Romanian Orthodox Church. Romania badly needs comprehensive, nondiscriminatory laws and procedures for restitution of private and community-owned buildings and urban property.

Restitution of farmland has advanced the most: it has reversed collectivization and amounts to a major agricultural reform. On February 25, the Romanian Senate passed a draft law for privatization and/or restitution of state-owned farmland, not including forests, which awaits action by the lower house of parliament. This measure, like earlier measures dealing with collective farms, would entitle former owners to receive up to 50 hectares.

Slovakia has made progress in returning communal property to Jewish and Christian organizations, including about 60% of Catholic claims. State organizations have not always vacated the buildings that were legally restituted, and many claims remain in dispute before the courts. Property built upon by the state is not restituted, and no mechanism for compensation is available for the original owners, at least so far.

The Jewish community opened a new home for the elderly in November 1998, in a large building in downtown Bratislava that had been restituted and then reconstructed. The reconstruction was financed in part with compensation by the Czech and Slovak governments for gold taken from Slovak Jews in 1940. The gold had been melted down by the Nazis, captured by the Allies at the end of World War II, held by the Tripartite Gold Commission, and returned to Czechoslovakia at the end of the Cold War. The nursing home was also financed in part with a grant from the Conference on Jewish Material Claims. But many Jewish properties are in poor condition and beyond the means of the community to restore.

Slovak citizenship is a requirement for private property claims, but we believe Slovak-Americans were generally able to reclaim their citizenship and their property within the deadline.

Restitution of property seized by Yugoslavia's communist government remains one of the most divisive issues in Slovenia. In July 1998, under pressure to reduce a backlog of problematic cases, the parliament amended the 1991 denationalization law. However, some of these amendments appeared designed to protect vested interests. In October 1998, the constitutional court annulled several of them, including one which would have barred the Catholic Church from benefiting from restitution of "feudal" property. The court also struck down differential treatment of Slovenes versus non-Slovenes, for those who were Yugoslav citizens at the time of expropriation, and it permitted those who lost Yugoslav citizenship in the wake of World War II to benefit from the law. Yet the restitution process remains stalled. We look to Slovenia to demonstrate its commitment to the rule of law and to private property rights with concrete progress on restitution.

Countries Which Were Part of the Former Soviet Union

Unlike the countries occupied by the Soviet Army during and after World War II, much of the expropriation of property in Russia, Ukraine and Belarus took place in the early years following the Russian Revolution, including the 1920's and early '30's. The rationale was much the same -- Marxism-Leninism, repression of religious activity, and centralizing control -- but in these countries there is little political pressure for reversing the expropriations. People may view the expropriations as unjust, but they are not viewed as imposed by a foreign power, and they are no longer part of the living memory of most of the population.

None of these countries has addressed private property seized in the Russian Revolution. While there may be cases in which a court or administrative procedure has awarded the return of a home or other personal property, in general there are no laws or broadly applicable procedures for restituting private property seized so long ago.

Of course this does not mean that the taking of this property was legitimate -- quite the contrary. In 1933, the Soviet Union agreed to provide to the U.S. partial compensation for property seized from U.S. citizens up to that time. Shortly before the collapse of the Soviet Union, we were negotiating with it over the remainder of the compensation. Our claims to amounts still owed by the Soviet Union's successor states remain outstanding.

In the cases of Russian Revolution expropriations other than those where the U.S. has espoused claims, we would welcome restitution or compensation where this is possible, and where it would not cause some new injustice. But the passage of time necessitates that there will unfortunately be historical limits to real property restitution.

Nevertheless, the post-communist revival of religion in the region has brought about the return of substantial numbers of churches, synagogues, cemeteries and other religious community properties.

Belarus has returned substantial amounts of Christian communal property even without a specific law on restitution, although few statistics are available. The largest church, the Russian Orthodox, has apparently not had significant difficulty obtaining restitution. The Catholic Church has also not had a major problem receiving almost all its former cathedrals; it controls some 280 buildings altogether. Only the Belarusian Ministry of Culture has been slow in returning concert halls and libraries. The sharply reduced Jewish population of some 100,000 has not done so well. While it is not clear whether the Jewish community has received five properties or 14, clearly it has received far less than the 100 properties it has claimed.

In Russia, hundreds of buildings controlled by the federal government have been returned to religious communities under a Presidential Order of April 23, 1993. Estimates of properties returned at the regional or municipal level range up to several thousand. The large majority have gone to the Russian Orthodox Church, reflecting the relative strength of that religion prior to 1917, when it was not easy for other religions to erect buildings, and its relative negotiating influence in recent years. Synagogues and some other Jewish community properties have also been gradually returned, with cooperation in some regions and disputes in others.

Ukraine has returned some places of worship to all of the major religions, except the Lutheran Church, but all religious communities have encountered problems in reacquiring valuable churches or synagogues that are being used for other purposes, such as concert halls. Returned buildings are generally for the exclusive use of the religious community rather than for ownership, which has seldom been transferred. Last July, President Kuchma issued a presidential decree protecting all cemeteries from misuse or privatization.

Ukraine as yet has no legislation to permit the restitution of secular property that belonged to religious groups, such as schools, community centers or other facilities. However, there is a draft law before Parliament, which would significantly broaden the categories of property owned by religious communities that could be restituted. On February 22, President Kuchma responded to appeals from virtually all religious groups by instructing the State Property Fund to take measures to ban the privatization of property formerly owned by religious communities, which they feared would preclude its eventual restitution.

Moldova, most of which was not part of the USSR between the two World Wars, has no general statute on restitution, but a mixture of laws, decrees, judicial decisions and local practices. One law for rehabilitation of politically repressed or exiled persons includes restitution of confiscated property, and this law has been extended to religious communities as well as individuals. It does not have citizenship or residency requirements.

Moldova has returned practically all of the properties of the Moldovan Orthodox Church, mainly through administrative means. The small Jewish community has received property in Chisinau for its current needs, but this amounts to only a tiny fraction of its property before the Holocaust. There are synagogues in Chisinau and six other towns.

The Moldovan government does not consider claims of former owners when distributing agricultural land through its privatization program. Forests are public lands and not subject to restitution.

The countries that were part of the Russian Empire, and then went through the Russian Revolution, have for generations observed different concepts of private and public property than the United States or Western Europe. Each society -- especially each democratic society -- must establish basic standards of justice for itself, and those standards must be realistically achievable to some degree, and not perceived as hopeless. The concept of returning places of worship and related religious properties has been broadly accepted throughout Europe, even in countries where that means looking back to the time before 1917. Those countries which experienced the Russian Revolution have not chosen to turn the clock back to 1917 for restitution of private property. We, as outsiders, need to take those standards into account, even as we urge them to adopt Western standards of ownership. We do expect, as these countries continue their transition to market economies, that they will adopt ownership standards compatible with the rest of the world economy.

Mr. Chairman, the restitution of property is part of a larger process of obtaining a reasonable measure of justice for the victims of Europe's major human disasters of the 20th Century. Justice for the people of eastern and central Europe is long overdue. This is especially true for those who were "double victims" of both fascism and communism. Having had justice delayed for so long, they are also entitled to expect that democratic governments will move as promptly as possible to bring closure during their lifetimes. This will not be easy, and we cannot do it alone. Restituting real property, or moveable property such as art, or financial assets such as insurance, will require the efforts of many honorable and courageous people in many countries. I am pleased that the Commission on Security and Cooperation in Europe is focussing on this issue again, and I invite your questions.

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