The Cost of Forgiveness

German-Czechoslovak Relations and Reparations

By: Sam Vaknin, Ph.D.

Also published by United Press International (UPI)

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Written April 2002

Updated April 2005

As its disintegration in 1992 has proven, Czechoslovakia may have been merely an artificial multi-ethnic chimera. But it was also an industrial and military powerhouse. In the fateful 1930's, its - mainly heavy - industry was the 7th largest in the world. Even the Germans were awed by its well equipped and well trained army.

The Sudeten was a region of Czechoslovakia bordering on Germany and Austria and inhabited mainly by Germans. The new-fangled country incorporated more than 3 million Germans in what used to be Austrian Silesia. These Germans, once members of the ruling majority in the Austrian Empire - became overnight a minority subjected to subtle forms of discrimination in their new country.

The Germans - a hostile and restless lot - demanded to have an autonomy, which Czechoslovakia refused to grant them. It feared that the Germans will secede and join Hitler's emerging "Great Reich". Such calamity would have deprived Czechoslovakia of important industrial and mineral assets and of its rail links to northern Europe. The Sudeten was also a formidable natural barrier against an imminent German invasion.

Unemployment and inflation further radicalized the Sudeten Germans. Support for Hitler and his pan-Germanic policies increased with every bloodless and bold German victory: the militarization of the Rhineland and the Anschluss (the unification with Austria). The extremist Sudeten German party, led by the Nazi puppet Konrad Henlein, blossomed after 1938.

Henlein sought the dissolution of Czechoslovakia, "this French air carrier in Europe's midst", in Hitler's words. The Germans demanded to exercise the right to self-determination enshrined in numerous international treaties. The status of the German language was a major issue as was the local participation of Germans in the police forces and army. Hitler instructed Henlein: "You must always demand so much that you cannot be satisfied."

"Spontaneous" demonstrations, protests, and riots erupted all over the Sudetenland. The Czechoslovaks were cast by Hitler and the West as intransigent racists, bigots, and bullies. The economies and armies of France and Britain were pitifully unprepared for war. Western leaders were traumatized by the great conflagration of 1914-8. They were reflexive appeasers and pressured Czechoslovakia into making one unpalatable concession after another.

Britain and France bullied Czechoslovakia by annulling their mutual defense pacts. Bonnet, France's Minister of Foreign Affairs advised the Czechoslovaks not to be "unreasonable". Otherwise, he warned, France will "consider herself released from her bonds". Halifax, the British Foreign Minister, enlightened his Ambassador in Paris about the "importance of putting the greatest possible pressure on Dr. Benes (Czechoslovakia's president) without delay".

The Sudeten Germans have, in the meantime, established militias and clashed with Czechs in mixed towns. An "independent" British mediator - Lord Runciman - was dispatched to arm twist the Czechoslovaks. His instructions were to prevent war at all costs. "We will use the big stick on Benes" - thus Cadogan, permanent under-secretary in the British Foreign Office.

Henlein kept raising new demands or reviving old ones. On September 4, 1938, an exhausted President Benes accepted all German demands. This was rejected by both Henlein and Hitler as "too late". Even a pro-German idea of referendum in the Sudetenland was rebuffed by Hitler.

Finally, the French and the British presented this ultimatum to democratic, multiethnic Czechoslovakia, on September 22, 1938 - Quoted in "On the Origins of War and the Preservation of Peace" by Donald Kagan:

"One - That which has been proposed by England and France is the only hope of averting war and the invasion of Czechoslovakia.
Two - Should the Czechoslovak Republic reply in the negative, she will bear the responsibility for war.
Three - This would destroy Franco-English solidarity, since England would not march.
Four - If under these circumstances the war starts, France will not take part; i.e., she will not fulfill her treaty obligations."

Benes accepted this ultimatum. Hitler demurred. Now he demanded that German troops occupy parts of Czechoslovakia to protect rioting Sudeten Germans from Czechoslovak retribution. In the Munich Conference of the leaders of the West these demands were essentially accepted and Czechoslovakia was no more. Hitler conquered it, in stages, and assimilated it in the German Reich.

The infamous British Prime Minister, Neville Chamberlain made this radio address to the British people in the heat of the crisis on September 27, 1938:

"How horrible, fantastic, incredible it is that we should be digging trenches and trying on gas masks here because of a quarrel in a far-away country between people of whom we know nothing ... However much we sympathize with a small nation confronted by a big and powerful neighbors, we cannot in all circumstances undertake to involve the whole British Empire in war simply on her account. If we have to fight it must be on larger issues that that."

Between 1940, while still in exile in London, and 1946, when Czechoslovakia was reconstituted, president Benes issued a series of decrees, later made law by the Czechoslovak provisional national assembly. The decrees mandated the expulsion of 2.5 million Germans and tens of thousands of Hungarians from Czechoslovakia, expropriating their land and stripping their citizenship in the process. A few German males were subjected to forced labour.

The laws were never repealed and, technically, are still in force. Statutes of restitution enacted after the 1989 Velvet Revolution apply only to property confiscated by communists after the 1948 coup. The Czechs and Slovaks are still afraid of a flood of claims by relatives of the refugees.

Hungary's prime minister, Orban, repeatedly called on Prague and Bratislava to rescind the decrees. They are incompatible with EU membership, he thundered. The EU seems to unofficially agree with him. Officially, Gunther Verheugen, the EU Commissioner for Enlargement said that the decrees were issued long before there was a European Union and, therefore, should have no effect on EU-Czech relations. The European Parliament disagrees. It has called upon the Czech Republic in 1999 to revoke the laws and it has ordered its foreign policy commission to scrutinize the legality of the decrees.

The German Chancellor, Schroeder, cancelled a trip to the Czech Republic in March 2002. Joschka Fischer, the German foreign minister, said the decrees were the biggest obstacle to bilateral relations - despite a 1997 joint declaration that seemed at the time to have resolved the differences.

The decrees became an election campaign issue in these four central European countries. An association of Sudeten Germans based in Austria is preparing to sue the Czech government in a Czech court, aiming to, as they put it "rectify damages resulting from the decrees' infringement on human rights".

Another, US-based group, is contemplating a similar move, according to "Forward Magazine". A lawsuit was filed by Sudeten Germans located in Germany against the German authorities for failing to act to countermand the Benes Decrees.

Czechs are not unanimous about the decrees either. A former presidential advisor, Jiri Pehe, told Radio Free Europe/Radio Liberty:

"I think that from the whole package of decrees, [parliament] should repeal those decrees which massively violated human rights and were essentially undemocratic, because not all the decrees issued by President Benes were like that. Decision making through decrees in the first months after the war was a legitimate component of the Czech legal order. To that end, the decrees were ratified by the provisional parliament."

A group of prominent Czechs, including Bishop Vaclav Maly, is circulating a "Stop Nationalism" petition, urging politicians not to exploit the controversy in the run-up to the June elections.

But the Czech Republic's former - and possibly future - outspoken prime minister, Vaclav Klaus, suggests to embed the decrees in the country's accession agreement with EU in order to render them tamper-proof. Zeman, the current Czech premier labeled the Sudeten Germans "Hitler's fifth column" and "traitors" in an interview in an Austrian magazine.

The reparations demanded by the Sudeten Germans ever since they filed a petition with the UN in 1975, potentially amount to tens of billions of US dollars. They cover confiscated bank accounts, annulled insurance policies, land, property, artifacts, and compensation for slave labour and wrongful deaths.

It is an irony of history that the struggle of the Sudeten Germans is greatly aided by the recent successful settlement of claims of - mostly Jewish - holocaust victims.

US House of Representatives Resolution 562 dated October 13, 1998 - in support of these claims - calls upon "countries which have not already done so to return wrongfully expropriated properties to their rightful owners or, when actual return is not possible, to pay prompt, just and effective compensation, in accordance with principles of remove restrictions which limit restitution or compensation persons who reside in or are citizens of the country..."

As early as 1952, West Germany has enacted the Federal Indemnification Law (BEG). Other laws aimed at compensating the victims of the holocaust followed in 1953, 1956, and 1965. Austria has similar legislation on its books. But, contrary to popular mythology, these laws were shamefully stingy and heartless. They have mostly lapsed now.

Survivors were given small monthly sums to amortize health care and medical costs. Eligibility criteria were so strict and application procedures so convoluted that a cottage industry of restitution lawyers and advisors has sprung up.

Some victims still receive monthly allowances from the German social security fund. The slave labour of a few workers is even recognized for the purpose of accumulating pension benefits. A tiny group of mothers receive symbolic child rearing benefits. The State of Israel support the vast majority of these crippled and traumatized people from funds it allocates under its Invalids and Nazi Prosecution Law.

Despite the fact that the holocaust occurred mainly in central and eastern Europe, holocaust survivors behind the iron curtain were ineligible for German compensation. A "Hardship Fund" was set up in 1980 and paid 5,000 DM to 180,000 claimants from these countries. But Jews residing in the region are still not eligible to any other kind of aid - 13 years after the downfall of communism.

In response to repeated complaints, the German government has set up a Central and East European Fund (CEEF). It pledged to contribute to CEEF $180 million in 4 annual installments starting in 1999. By end 2001, the Fund has paid c. $150 million to more than 17,000 survivors, with maximum monthly benefits of $120.

All told, the Germans allocated $220 million to victims from Poland and less than $470 million to survivors from Russia and Ukraine combined. More than 4.5 million people perished in these three countries - exterminated in camps such as Auschwitz. At least 10,000,000 people served as slave laborers between 1933-1945, enriching a clutch of German firms and senior Nazis in the process. About 2,000,000 of them are still alive.

It took decades of negotiations - and a re-unified Germany - to secure funds for formerly ineligible survivors. The Article 2 Fund was established in 1993. The very few who fulfill the myriad, cumulative, conditions, receive less than $250 a month. Germany claims that since it has provided 12 west European governments with "global compensation" funds between 1959 and 1964, their subjects are not eligible either.

Austria set up its compensation fund in 1995, conveniently well after most of the victims died. The maximum indemnity Austria pays is $6000 per person. In a typically cynical fashion, Austria auctioned off art looted from the Jews in 1996 and used the proceeds to compensate the victimized former owners through its Mauerbach Fund.

The governments of formerly Nazi-occupied territories proved sometimes to be more generous than the perpetrators. Denmark and the Netherlands financially support disabled victims to this very day. Norway established in 1999 a $58 million fund for its few remaining Jews. Even Switzerland founded, in 1997, Shoa - a $183 million fund for 310,000 Needy Victims of the Holocaust.

The corporate and banking sectors were next.

Following intensive public pressure by Jewish organizations - and a thinly-disguised anti-Semitic backlash - funds to compensate slave laborers were set up by various firms (Siemens, Volkswagen). Allianz, BASF, Bayer, BMW, DaimlerChrysler, Deutsche Bank, Degussa-Hüls, Dresdner Bank, FrieDrive Krupp, Hoesch-Krupp, Hoechst, Siemens and Volkswagen and 50 other wartime exploiters - boosted by matching funds from the German federal authorities - grudgingly and reluctantly formed a "Foundation Initiative of German Firms: Memory, Responsibility and Future." The Foundation has $5 billion to distribute to slave laborers and their descendants.

In August 1998, Switzerland's two major banks, UBS and Credit Suisse, agreed to set up a $1.25 billion fund to settle claims by holocaust survivors and their relatives. The red-faced Swiss government threw in $210 million. It seems that banks - from the USA to Switzerland - were in no hurry to find the heirs to the murdered Jewish owners of dormant account with billions of dollars in them.

A settlement was reached only when legal action was threatened against the Swiss National Bank and both public opinion and lawmakers in the USA turned against Switzerland. It covers owners of dormant accounts, slave laborers, and 24,000 refugees turned back to certain death at the Swiss border - or their heirs.

A high level international commission, headed by Paul Volcker, a former chairman of the Federal Reserve Board, identified 54,000 accounts opened by holocaust victims - not before it inspected 350,000 accounts at an outlandish cost, borne by the infuriated banks, of $400 million. A similar - though much smaller ($45 million) settlement was reached with Bank Austria and Creditanstalt of Vienna. Another $2 billion are claimed from 9 French banks.

Five major insurance firms - Allianz AG, AXA, Generali, Zurich and Winterthur Leben - formed an International Commission on Holocaust Era Insurance to deal with unresolved insurance claims of holocaust victims. Assicurazioni Generali went ahead and set aside $12 million in a compensation fund. But the claims may total $1 to 4 billion.

Surprisingly, calls for the restitution of Jewish real-estate, property, bank accounts, insurance policies, and art works confiscated by the Nazis and their collaborators are fairly recent. The International Committee on Restitution took until 1999 to appeal to the Austrian government to restore assets to their rightful Jewish owners.

Governments from Austria to France and from Belgium to the Netherlands appointed commissions to investigate Jewish claims. The United Kingdom has posted to the Internet a list of tens of thousands of assets confiscated - mostly from refugee Jews - under the 1939 Trading with the Enemy law.

More than $60 million were set aside by 18 governments in the 1997 London conference on Nazi gold. A French commission, chaired by Jean Matteoli, a resistance fighter, identified $1 billion in expropriated Jewish property, including 40,000 apartments and hundreds of thousands of works of art.

According the World Jewish Congress, Germany and Poland confiscated $3 billion of Jewish property each (in 1945 values), Romania and France - $1 billion each, the Czech Republic and Austria - c. $700 million each. Hungary saw $600 million appropriated and the Netherlands - $450 million. Russia still holds 200,000 looted works of art. Plundered pieces by Monet and van Gogh, among others, were identified and restored to their Jewish owners all over the world - from Boston to Berlin.

Matters are more complicated in eastern Europe where the concept of property rights is novel and communist confiscations followed Nazi ones, hopelessly complicating the legal situation. Moreover, victims and survivors of waves of ethnic cleansing have recently lodged claims with post-communist governments. Macedonians from the Aegean part of Greece, recently repatriated Kosovars, Serbs expelled from Croatia, Croats exiled from Serbia, Hungarians everywhere - are all studying the Jewish example and its precedents thoroughly.

The Bulgarian ministry of finance has just announced that it will pay reparations to some of the 350,000 Turks forcibly expelled from Bulgaria to Turkey during Zhivkov's communist regime in 1984-89. The Haskovo City Council demanded compensation for 550 bulldozed houses.

The government - which includes in its coalition the ethnic-Turkish Movement for Rights and Freedoms (DPS) - agreed to cough up the funds. The accommodation of such demands for compensation by an ethnic minority is unprecedented. It could be the harbinger of massive, politically destabilizing, claims, expensive court battles, and multi-billion dollar settlements.

This tidal wave is not confined to Europe. Aborigines in Australia, descendents of slaves in the States, Japanese-Americans incarcerated during WWII are all suing. "The Economist" wrote in its review of Elazar Barkan's "The Guilt of Nations":

"Negotiations over these claims are not really about the past, but the future. However they are resolved, they give victims, usually the poor and dispossessed, a voice and a reason to believe that they have a stake in their society. And such negotiations force the better-off to recognise their obligations to those beneath them in the pecking order. A society which can face the ugly episodes in its own history, and agree a way to repudiate them, is also a society capable of setting moral standards for itself, of constraining its own worst instincts, and of aspiring to a better future."

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