AUSTRIA'S GOVERNMENT AND JEWISH COMMUNITY REACH

UNCLAS SECTION 01 OF 02 VIENNA 001776

SIPDIS

SENSITIVE

DEPARTMENT FOR EUR/OHI AND EUR/AGS

E.O. 12958: N/A
TAGS: KNAR PHUM PGOV AU
SUBJECT: AUSTRIA'S GOVERNMENT AND JEWISH COMMUNITY REACH
AGREEMENT

REF: A) 94 VIENNA 4396 B) VIENNA 1482

THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED.


1. (SBU) SUMMARY: On May 25, the Austrian Jewish
Community (IKG) and the GOA announced that pending
questions regarding the IKG's restitution claims had been
resolved. In addition, a solution was on the way to
address the IKG's demands for the ongoing financing of
the community. IKG President Muzicant will now withdraw
as amicus curiae in the Whiteman case, which is
apparently the sole remaining impediment to legal peace
as per the 2001 U.S.-Austrian Washington Agreement on
Holocaust property issues. The IKG will also withdraw
its 777 claims under General Settlement Fund (GSF),which
will have the effect of increasing the pool of funds
available to other Holocaust victims with claims against
Austria. The GOA hopes to be able to start payments from
the GSF in early 2006. Please see action request for
EUR/OHI in para 9. End Summary.

IKG-GOA Agreement
--------------


2. (U) Following a meeting of the General Settlement
Fund (GSF) board of trustees, the GOA and the IKG
announced on May 25 that the IKG will receive an
additional 18.2 million Euro as restitution payment. In
return, the IKG will withdraw its 777 claims under the
GSF. The source of the 18.2 million Euro is the surplus
from the Reconciliation Fund for the compensation of
former forced and slave laborers, as agreed by that
fund's board of trustees in December 2004 (ref a). In
addition, the IKG will receive additional support from
the Interior, Education and Social Affairs Ministries for
the financing of its security needs and social
infrastructure. In return, the IKG will withdraw as an
amicus curiae in the Whiteman case, which is holding up
legal peace required for payments from the GSF to begin.

Whiteman Case
--------------


3. (SBU) IKG Executive Director Erika Jakubovits told
Emboffs on May 25 that the IKG will now instruct its
lawyer to file a brief to withdraw from the Whiteman
class action case. In the brief, the IKG will present
the benefits for the class as a result of the IKG's
agreement with the GOA. Jakubovits was hopeful of
convincing the class of claimants, as well as the court,
of these benefits. In a May 25 TV interview, IKG
President Muzicant said he would do "everything in his
power" to reach legal peace. Muzicant stressed that the
agreement provides a real basis for the existence and the
future of the IKG in Austria. Jakubovits also noted
that, in addition to the 18.2 million payments for the
IKG's restitution claims, the GOA has committed itself to
support projects for a school and an old-age home, and to
defray the IKG's substantial security costs.

IKG Request to USG
--------------


4. (SBU) Jakubovits asked for support from the USG for
two proposals: Regarding the exchange rate for the 210
million US Dollars to be paid out by the GSF, the IKG
suggests that, for payments to claimants, this amount be
converted according to the exchange rate valid at the
time of the conclusion of the Washington Agreement, i.e.
January 17, 2001. This reinterpretation of the
Washington Agreement would provide another compelling
argument for dismissal of the Whiteman case. Jakubovits
also suggested that in-rem restitution of publicly owned
property according to the Washington Agreement could be
implemented before legal peace.

Seeking ways to accelerate payments under the GSF
-------------- --------------


5. (U) In a public statement, Parliamentary President
Andreas Khol, who chairs the GSF board of trustees,
expressed the hope that payments to claimants could start
in March 2006. Khol emphasized that the GSF was doing
everything to accelerate the processing of claims.
Should it not be possible to finish processing at the
beginning of 2006, Khol, as well as MFA Legal Adviser
Hans Winkler, indicated that the Fund would look for ways
to make advance payments, at a minimum in the Equity-
Based Category where a relaxed standard of evidence
applies. GSF Secretary General Hannah Lessing noted that
the Fund will consult with legal experts during the week
of May 31 regarding the possibility of making advance
payments.
Anderman Case
--------------


6. (SBU) Regarding the Anderman class action, an MFA
Legal Affairs officer confirmed Legal Adviser Hans
Winkler's announcement last week that in the GOA's view,
the Anderman case had lapsed, since the plaintiffs had
not filed an objection to the dismissal within the
prescribed deadline. IKG Executive President Jakubovits
agreed with this interpretation.

Altmann Case
--------------


7. (SBU) Regarding the arbitration agreement on the
claim to six Gustav Klimt paintings currently in the
possession of the Austrian Gallery, the MFA confirmed
that, under the terms of the arbitration agreement, Maria
Altmann has undertaken immediately to withdraw her
lawsuit in California. The two arbitrators appointed by
Altmann and the GOA, Professor Walter Rechberger and Dr.
Andreas Noedl, respectively, are to appoint a head of the
panel by the end of May. Should they fail to agree by
then, the president of the constitutional court is to
appoint the head. All Bloch-Bauer heirs have jointly
concluded the arbitration agreement (in contrast to the
California lawsuit, where the majority of heirs did not
join Altmann). The panel is to render a decision by Nov.

1. The agreement stipulates that parties will be bound
by the Arbitration Panel's decision. If the Panel rules
in favor of Altmann, the agreement provides for
restitution of the paintings. (The GoA would then
probably try to negotiate a purchase of the paintings,
since they do not want them to leave Austria.)


8. (SBU) COMMENT: The IKG-GOA agreement is a major
breakthrough and reflects the resolution of a
longstanding conflict over financial issues. (In effect,
it closes the chapter opened by Muzicant on January 17,
2001 when he declined to endorse the Washington
Agreement.) Together with the arbitration agreement in
the Altmann case, it provides positive momentum which may
contribute to a resolution of the Whiteman case -- and
may also serve to accelerate substantially payments from
the GSF.


9. (SBU) ACTION REQUEST (FOR EUR/OHI): In connection
with the current efforts to speed up processing of claims
filed with the GSF, MFA again approached us on May 23,
asking the USG to reconsider its position on financing
the activities of the USG-nominated member of the GSF
Claims Committee, Professor Vivian Curran (ref b). It
appears that the Austrian government is seeking a gesture
to indicate that the current U.S. administration remains
fully committed to the process launched through the
January 2001 Washington Agreement. Embassy realizes that
a direct payment from the State Department to the
University of Pittsburgh in compensation for the loss of
Prof. Curran's services is not possible. However, we
could envision taking some other action - perhaps through
Public Affairs programs, such as academic exchanges -
that would indirectly address GoA concerns. Please
advise.

BROWN