In a highly anticipated report on the fate of Nazi gold, United States Government historians have concluded that much of the looted wealth was routed through Switzerland to pay other neutral nations for vital supplies that sustained Hitler's army in the last years of World War II.
The report, to be issued on Tuesday, also doubles the American estimate of how much gold was in a Nazi account that received deposits of wedding rings, teeth fillings and other personal possessions of Holocaust victims.
But the report also spells out for the first time the crucial role that looted gold -- from individual victims and from the central banks of countries invaded by Germany -- played in securing a huge share of Nazi war needs purchased from Portugal, Spain, Sweden and Turkey.
A draft of the report obtained by The New York Times, sections of which were obtained from several agencies involved in its preparation, concludes that Portugal and Spain provided Germany with ''almost 100 percent'' of the essential minerals needed to produce ''machine tools and armaments, especially armor-piercing shells.'' But the draft stops short of concluding that their help prolonged the war.Continue reading the main story
Even before the final 200-page report is published, it has set off arguments and debate both inside and outside the Government. Jewish groups and others engaged in legal battles with the Swiss Government and the country's three major banks say they are concerned that the State Department is trying to appease Switzerland by spreading the guilt for dealing in what has come to be known as Nazi gold.
American diplomats have been trying for a year to defuse Swiss anger over a May 1997 report that, in graphic detail, described how Switzerland aided Hitler and stymied efforts to recover the Nazis' stolen gold after Germany's surrender.
While the new report repeatedly praises Switzerland for its efforts during the last year to confront its own history, Clinton Administration officials say their main goal was to complete the historical record about how the looted gold was spent.
Drafts of the report suggest that as State Department officials fine-tuned their conclusions there was considerable internal debate over how to deal with Switzerland. An early draft of the introduction prepared by Stuart E. Eizenstat, the Undersecretary of State for Economic Affairs, referred to the Swiss as ''courageous'' for conducting a ''searching national debate'' about their country's wartime role.
The final version deletes the word ''courageous.''
That may prove an important deletion. Since the American report went to press, Switzerland's Government-run central bank defiantly announced that it would not join negotiations to compensate Holocaust survivors for stolen gold deposited in its vaults -- even though Switzerland's own historical commission, in a report last week, concluded that the Swiss National Bank knowingly accepted stolen gold from the Nazis worth billions in today's dollars.
The Administration's report breaks new historical ground in several areas. Roughly $300 million in looted Nazi gold, worth $2.6 billion today, was used to pay Portugal, Spain, Sweden and Turkey for war materiel. The report concludes that ''three quarters of this amount was transferred from Germany through the Swiss National Bank.''
While the report steers clear of saying so, that finding appears to increase enormously the potential liability of the Swiss National Bank in the current dispute about compensation for Holocaust survivors. Under postwar agreements, countries that first received stolen assets from Nazi Germany were financially responsible for their return, not those to whom the assets were later transferred.
In another finding, historians now believe that more than $40 million, measured in today's dollars, was in the infamous ''Melmer Account.'' The account, named for the German S. S. officer who administered it, contained gold bars made from the smelted tooth fillings, wedding bands and other personal effects taken from Holocaust victims -- and sometimes swept out of the death camp ovens.
Previous estimates were around $20 million, but the account itself is believed to have contained only a fraction of the full amount looted from individuals. The reassessment was based on newly found records in a private collection in Vienna and on corporate records recently reviewed at Degussa, the German precious-metals concern that smelted Nazi loot into gold bars during the war.
The report also says that two major German banks, Dresdner Bank and Deutsche Bank, sold gold from the Melmer Account in Turkey to supply Germany with hard currency. Neither bank has been named in the class-action suit against Swiss banks, nor has either one been involved in negotiations over compensation of victims. But this finding seems likely to involve those banks, which have substantial operations in the United States, in the compensation debate.
Swiss officials have looked forward for some time to the publication of the report, whose title -- ''U.S. and Allied Wartime and Postwar Negotiations with Argentina, Portugal, Spain, Sweden and Turkey on Looted Gold and German External Assets'' -- suggests that the focus is on how others tilted ''neutrality'' toward Nazi Germany. The Clinton Administration is also setting up a Presidential commission to examine assets that may have been hidden in American banks.
Elan Steinberg, a top executive of the World Jewish Congress, said on Friday that while he has yet to see the report, ''we are concerned because Swiss officials have repeatedly told us that the upcoming report was designed to take pressure off them.'' But he said the secretary general of the World Jewish Congress, Israel Singer, had been told by Mr. Eizenstat that ''this is not the case.''
Mr. Steinberg, whose group is a central player in the negotiations to force Swiss banks to make restitution to Holocaust victims and their survivors, concludes that ''the irony is that the report would seem to assess greater financial responsibility on Switzerland than was first thought.''
The report concludes that unlike Switzerland, most of the other ''neutral'' countries -- especially Sweden -- fulfilled their postwar agreements to pay back looted gold and a portion of other assets in their possession at the end of the war. While the report refers to American negotiations with Switzerland to insure the return of the vast majority of the gold as a ''debacle,'' it does not advocate enforcing an accord reached in 1946, a step that would cost Switzerland billions of dollars.
Swiss officials are desperately trying to avoid a reopening of that agreement. But on Friday, Senator Alfonse M. D'Amato, the New York Republican whose hearings two years ago began the torrent of revelations about Nazi gold, said that the United States should ''reopen the 1946 accords, with a view toward achieving an agreement by which Switzerland would restore all the looted gold it received.''
The core of the new report is a chapter-by-chapter recitation of how the ''neutrals'' aided both Hitler and the Allies, and profited handsomely by playing the needs of one off of the other. Turkey's gold reserves, for example, went from 27 tons before the war to 216 tons by the end.
But it also raises harsh questions about their actions after Germany's defeat. ''If neutrality was defended during the war as a way of self-defense,'' the report concludes, ''why was there so little cooperation with the Allies after the war in returning looted Nazi assets'' for the benefit of refugees and the reconstruction of Europe?
At the end of the war, less than $20 million of the $240 million in looted gold acquired by the neutrals, other than Switzerland, was returned. Switzerland returned only $58 million of the booty it retained, which the Swiss historical commission now believes exceeded $300 million.
The report faults the United States for not pressing hard enough -- in part because of concerns about not offending nations deemed important to building alliances against the Soviets -- though it notes that the Treasury Department urged the Truman Administration to take a far harder line. It was overruled.
But the hardest questions remain for Switzerland, which turned over only $28 million in German assets, other than gold, out of $250 million to $750 million that it possessed at the end of the war.
''The approach of the new millennium offers a clear window of opportunity to act,'' Mr. Eizenstat's report concludes, calling on all of the nations involved to speed up efforts to come to ''a moral accounting of this lingering ledger of grief.''Continue reading the main story