Swiss issue reflects gap between Jews, State Dept.

The United States issued a scathing report last year suggesting that Switzerland helped prolong World War II by trading extensively with Nazi Germany.

But the State Department believes that to everything there is a season, and that pressure tactics and accusations have ceased to be productive.

Now more than ever, that view places the administration at odds with many of the key Jewish players who have been pressing the issue.

The administration is also now at odds with local governmental bodies, which Jewish groups have seen as an influential tool in pursuing their case.

Indeed, following the collapse of talks between Swiss banks and Jewish representatives aimed at settling Holocaust-era claims, a commission of state and local finance officials early this month cleared the way for punitive measures against the banks — including outright boycotts.

The World Jewish Congress, which has spearheaded the campaign for Switzerland to make amends, gave a green light to the move.

Although the differences between the ways the State Department and Jewish groups view the standoff with Switzerland have long been apparent, they have become more pronounced in recent weeks as frustrations have mounted over the lack of progress.

In walking the difficult line between Jewish and Swiss negotiators, the State Department, which has been brokering the talks, has had to juggle two concurrent interests.

The State Department has sought to bring "maximum justice to Holocaust survivors in the minimum period of time while causing the least possible tensions in our relationship with Switzerland," according to Bennett Freeman, a senior adviser to Stuart Eizenstat, the administration's point man on the issue.

Some Jewish leaders are sensitive to the State Department position.

"We have to be very realistic and understand that the State Department exercises the foreign policy of the United States and that its first priority" in dealing with a crisis "is to find the light at the end of the tunnel," said Rabbi Abraham Cooper, associate dean of the Simon Wiesenthal Center.

"The fact that it's not always going to be parallel to the Jewish community shouldn't come as a shock."

But in the wake of the collapse of settlement talks, some Jewish players have had a difficult time masking their frustration and disappointment that the State Department has not served as a greater advocate for Holocaust survivors.

"The State Department, having condemned the immorality of neutrality, has to ask itself, `How is it playing the role of a neutral between Swiss banks and Holocaust survivors?'" one Jewish source said. "The Swiss government is not neutral in supporting its banks. Why is our State Department neutral when it comes to supporting its Holocaust survivors?"

Privately, some Jewish sources go further in suggesting that the State Department has favored the Swiss side.

In response, the State Department rejected "any suggestion that we are letting concerns for good relations with Switzerland alone diminish our determination to do the right thing on Holocaust-assets issues," said Freeman.

"It was not our role to favor one side or the other," he said, adding, "We were brought together by both parties expressly to facilitate and not to arbitrate."

He added that similar concerns of favoritism have been expressed by some on the Swiss side "who feel that the State Department has become synonymous with the World Jewish Congress, which is also not the case."

Roger Witten, the lead lawyer representing Swiss banks in the talks, declined to address the State Department's role, saying only, "Such commentary about the State Department's performance and motives is quite inappropriate and demeaning."

The source of some of the frustration on the Jewish side stems from the way settlement talks played out in their final weeks, and particularly from a June 3 letter Eizenstat sent to Israel Singer, the WJC general secretary, who has been involved in the negotiations.

A letter designated "privileged communication" obtained by JTA informs the WJC that Eizenstat, the U.S. undersecretary of state for economic affairs, received a "firm and concrete offer from the banks for settlement of the class-action litigation."

A source involved in the talks said the negotiators understood that to mean that a long-awaited offer in the range of $1.35 billion to $1.85 billion had been conveyed to Eizenstat.

"I have received the banks' firm assurance that their offer will be conveyed to you and the plaintiffs at the June 5th meeting in New York," Eizenstat wrote. "I am confident that their assurance can be relied upon."

The offer, however, turned out to be around $600 million, a number that one member of the Jewish negotiating team termed "insulting."