News Analysis — World trade helped sustain Nazi effort: Probe expands beyond Swiss to other WWII

NEW YORK — A long-awaited report on the role of six so-called neutral nations in the Nazi war effort means Switzerland no longer stands alone under the microscope.

But have Swiss government and banking officials been let off the hook?

The second installment of a U.S. State Department report examines trade in war materiel by Sweden, Portugal, Spain, Turkey and Argentina, as well as by Switzerland.

That trade "helped to sustain the Nazi war effort," indicates the report, released this week.

The first report, issued last year, focused on the amount of looted gold that made its way from Nazi Germany to the Swiss central bank during World War II. That study provided blistering evidence of how Switzerland profited from bankrolling the Nazi war machine.

The Swiss government, focus of intense international criticism since revelations surfaced two years ago about its financial wartime dealings and handling of Holocaust-era assets, angrily denied last year's conclusions.

This week it welcomed the new report — also created under the guidance of Stuart Eizenstat, the U.S. undersecretary of state for economic affairs — "as a further contribution to clarifying events" related to the conduct of neutral nations during the war.

The latest study, beyond providing details about financial dealings between the Nazis and six neutral nations, extensively addresses what it calls the "complex phenomenon of neutrality."

The Swiss Federal Council, Switzerland's cabinet, pointed out that the new report "mentions many positive aspects of Switzerland's conduct" during the war.

Critics of Switzerland's wartime dealings with the Nazis, however, see the study's implications quite differently.

"Moral responsibility is spread to other neutral nations" as a result of the latest report, said Elan Steinberg, executive director of the World Jewish Congress, which has spearheaded international efforts to get the Swiss to confront their wartime past. "But financial liability is increased for Switzerland."

Steinberg's assessment was based on the report's estimate that $300 million in gold looted by the Nazis was transferred to the five other neutral nations.

"Three-quarters of that — or more — went through Switzerland," he said.

That could increase the liability of the Swiss National Bank because, under agreements reached after the war, the country that first received looted assets — not those to whom the assets were subsequently transferred — is responsible for their return.

But Swiss officials disagree with Steinberg's assessment.

The Eizenstat report "contains no new findings," said Caroline Heimo, spokeswoman for the Swiss Embassy in Washington. Pointing to the Swiss National Bank's decision to provide some $75 million to a fund for Holocaust victims, she said her government's "course is the right one."

The issue of potential liability is significant in light of recent calls by Jewish officials for Switzerland to agree to be part of a global settlement of all Holocaust-era claims stemming from the country's actions during the war.

Two sets of lawyers — one representing Holocaust victims, the other representing Switzerland's three largest private banks — and the WJC have been holding settlement talks in recent weeks under the aegis of the U.S. State Department.

But the Swiss government has so far refused to join the commercial banks in the talks.

For his part, Eizenstat said at a briefing Tuesday that the Swiss government and central bank should "take to heart" the report's findings, and called for further diplomatic discussions about restitution.

In addition, the House Banking Committee was scheduled to hold another in a series of hearings about Holocaust-era assets. The role of Switzerland is likely to figure prominently in those hearings once again.

Although it does not refer to the issue of liability, the latest Eizenstat report upwardly revised the amount of gold Switzerland purchased from the Reichsbank, Germany's central bank, during the war.

Ironically, the revision was based on the findings of an international panel of historians whose work had been commissioned by the Swiss government.

The panel, known as the Bergier Commission, estimated that Switzerland purchased from the Nazis some $440 million in gold — about $4 billion in today's dollars — of which $316 million had been looted.

In its report issued last year, the U.S. State Department had estimated that Switzerland had purchased as much as $414 million in gold from Germany, of which between $185 million to $289 million had been looted.

At Tuesday's briefing, Eizenstat cited the Bergier Commission's estimates, saying that the latest figures "now give us a higher and more definitive range of the total of looted and non-looted gold that flowed through Switzerland."

After the war, Switzerland returned to the Allies, in accordance with a 1946 accord reached in Washington, only $58 million in looted Nazi gold.

The latest figures could increase pressures for the postwar accord to be reopened.

But the Swiss government firmly refuses to reopen the accord, according to Heimo at the Swiss Embassy in Washington.

"It is not at all in anybody's interest to start reopening international treaties because then you would have to reopen all of them," she said.

Eizenstat appeared to concur. "It's more important to focus on the current cooperative process and to resolve issues through cooperation and consultation," he said.

Among the other key findings of the report:

*The so-called "Melmer Account" — named for the SS officer in charge of the gold that had been stripped from concentration camp victims and resmelted — was worth more than $40 million in today's dollars.

That was double the amount of earlier estimates.

*Two private German banks, Deutsche Bank and Dresdner Bank, sold gold from the Melmer Account to Turkey to supply Germany with the hard currency needed to purchase war supplies.

That finding could complicate an $18 billion lawsuit filed against the two banks Wednesday by Holocaust survivors, according to an Associated Press report. It could also result in other calls for compensation to Holocaust victims and their families.

*The wartime Nazi puppet state of Croatia, led by what was known as the Ustashe regime, may have looted as much as $80 million in gold from Jewish victims. The report called on the Vatican to open its archives to help provide an "accounting of the gold and valuables" taken from the victims of the Ustashe regime.

*Details were given on the trade in vital war materiel — iron ore, ball bearings, tungsten, timing devices and anti-aircraft guns — supplied to Nazi Germany by Sweden, Spain, Portugal, Argentina, Turkey and Switzerland.

Those findings, while not breaking any new historical ground, call into question whether the six nations should indeed be regarded as "neutral."

The report goes to great lengths to examine the complex issues of geography, history and political leanings that affected each of the six nations, concluding that neutrality was not a "monolith concept" during the war, and that "there was no such thing as a uniform or absolute neutrality" for any wartime nation.

While concluding that "each of the wartime neutrals made a substantial contribution to the economic foundations of the Nazi war effort," the report also cited their contributions to the Allies. It mentions how these nations together offered refuge to more than "250,000 Jews fleeing the Holocaust.

Eizenstat addressed the issue during his briefing, saying the neutrals' actions were "acceptable by the standards of the time."

Yet, as a section called "From History to Justice" makes clear, the report expresses the hope that an honest examination of the past will prompt the present generation "to help right the wrongs and to deal with the injustices suffered by the victims of Nazi aggression."