[Senate Hearing 106-941]
[From the U.S. Government Publishing Office]
S. Hrg. 106-941
TERRORISM: VICTIMS' ACCESS TO TERRORIST ASSETS
=======================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
on
EXAMINING PROPOSALS TO FURTHER AMEND THE FOREIGN SOVEREIGN IMMUNITIES
ACT (FSIA) AND RELATED TERRORISM ISSUES, FOCUSING ON EFFORTS TO HELP
FAMILIES OF THE VICTIMS OF INTERNATIONAL TERRORISM RECEIVE COMPENSATION
__________
OCTOBER 27, 1999
__________
Serial No. J-106-55
__________
Printed for the use of the Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
70-954 CC WASHINGTON : 2001
COMMITTEE ON THE JUDICIARY
ORRIN G. HATCH, Utah, Chairman
STROM THURMOND, South Carolina PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts
ARLEN SPECTER, Pennsylvania JOSEPH R. BIDEN, Jr., Delaware
JON KYL, Arizona HERBERT KOHL, Wisconsin
MIKE DeWINE, Ohio DIANNE FEINSTEIN, California
JOHN ASHCROFT, Missouri RUSSELL D. FEINGOLD, Wisconsin
SPENCER ABRAHAM, Michigan ROBERT G. TORRICELLI, New Jersey
JEFF SESSIONS, Alabama CHARLES E. SCHUMER, New York
BOB SMITH, New Hampshire
Manus Cooney, Chief Counsel and Staff Director
Bruce A. Cohen, Minority Chief Counsel
(ii)
C O N T E N T S
----------
STATEMENTS OF COMMITTEE MEMBERS
Kyl, Hon. Jon, U.S. Senator from the State of Arizona............ 1
Mack. Hon. Connie, U.S. Senator from the State of Florida........ 2
Lautenberg, Hon. Frank R., U.S. Senator from the State of New
Jersey......................................................... 14
Feinstein, Hon. Dianne, U.S. Senator from the State of California 17
CHRONOLOGICAL LIST OF WITNESSES
Statement of Stuart E. Eizenstat, Deputy Secretary, Department of
the Treasury, Washington, DC................................... 21
Panel consisting of Stephen Flatow, West Orange, NJ; Maggie
Alejandre Khuly, Miami, FL; Allan Gerson, senior fellow for
international law and organizations, Council on Foreign
Relations, New York, NY; Patrick Clawson, director for
research, Washington Institute for Near East Policy,
Washington, DC; and Leonard Garment, Washington, DC............ 40
ALPHABETICAL LIST AND MATERIALS SUBMITTED
Clawson, Patrick: Testimony...................................... 49
Eizenstat, Stuart E.:
Testimony.................................................... 21
Prepared statement........................................... 33
Flatow, Stephen: Testimony....................................... 40
Garment, Leonard:
Testimony.................................................... 51
Prepared statement........................................... 53
Gerson, Allan:
Testimony.................................................... 44
Prepared statement........................................... 47
Khuly, Alejandre: Testimony...................................... 42
Mack, Hon. Connie:
Article: ``Victims of Terrorism Still Waiting for Justice,''
USA Today, dated October 25, 1999.......................... 5
Press release from the White House, dated February 26, 1996.. 6
Background briefing by Senior Administrative Officials dated
February 26, 1996.......................................... 6
APPENDIX
Questions and Answers
Questions of Senator Hatch to:
Stephen M. Flatow............................................ 71
Allan Gerson................................................. 73
Patrick Clawson.............................................. 75
Leonard Garment.............................................. 76
Additional Submissions for the Record
Prepared statements of:
Ronald W. Kleinman........................................... 78
Andreas F. Lowenfeld......................................... 82
Roberto Martinez............................................. 86
TERRORISM: VICTIMS' ACCESS TO
TERRORIST ASSETS
----------
WEDNESDAY, OCTOBER 27, 1999
U.S. Senate,
Committee on the Judiciary,
Washington, DC.
The committee met, pursuant to notice, at 10:04 a.m., in
room SD-226, Dirksen Senate Office Building, Hon. Jon Kyl
presiding.
Also present: Senator Feinstein.
OPENING STATEMENT OF HON. JON KYL, A U.S. SENATOR FROM THE
STATE OF ARIZONA
Senator Kyl. This hearing of the U.S. Senate Committee on
the Judiciary will come to order. I would like to welcome
everyone to today's hearing. We will today examine an issue of
great importance to victims of terrorism and their families.
In 1996, Congress passed and the President signed the Anti-
Terrorism and Effective Death Penalty Act, which allowed
American citizens injured in an act of terrorism to bring a
private right of action against the terrorists responsible for
that act.
In February 1996, two aircraft flown by the Brothers to the
Rescue organization were shot down by Cuban MiG aircraft in
international airspace over the Florida Straits. Four people,
including three American citizens, were killed in that attack.
President Clinton provided $300,000 to the victims' families
from Cuban assets frozen in the United States, and he further
called upon Congress to pass legislation ensuring that the
victims would have access to Cuban frozen assets to settle any
claim for damages won in Federal court.
In response to the President's suggestion, Congress passed
Section 117 of the fiscal year 1999 Treasury Department
Appropriations Act, allowing Americans to attach the assets of
terrorists' estates in the United States in order to collect
judgments won against those estates in Federal court. That
legislation allowed the President to issue a waiver to block
the attachment of assets in the interest of national security.
On March 15, a Federal judge upheld a $187 million judgment
against Cuba for its attack against the Brothers to the Rescue
aircraft. The President, however, issued a waiver that will
prevent the families of the victims from attaching Cuban funds
related to telecommunications services that are currently in a
bank account in New York, assets that have been held by the
United States for more than 37 years. These are the same funds
that President Clinton drew upon earlier when he gave $300,000
to the victims' families.
The family of Alisa Flatow has won a similar judgment
against the government of Iran for its involvement in a bus
bombing in Israel in April 1995 that took Alisa's life. Again,
the President issued a waiver that prevents the Flatow family
from attaching certain Iranian assets in the United States.
I am concerned that the President has exercised what was
intended to be a narrow waiver too broadly, and as a
consequence, those who have suffered from acts of terror
resulting in the death of American citizens will not be
adequately compensated and the acts of terror will go
unpunished. This runs contrary to the intent of the Anti-
Terrorism and Effective Death Penalty Act. It runs contrary to
the intent of this Congress when it passed section 117 of the
fiscal year 1999 Treasury Appropriations Act, and I believe it
runs contrary to the concept of justice for the victims of
terrorism.
This year, in response to the concerns of the
administration, Senators Mack and Lautenberg and I proposed a
modification of the waiver, allowing the President to prevent
the attachment of diplomatic property as part of a judgment. I
believe that this modification would have been a prudent step
toward ensuring the protection of American diplomatic property
abroad while still allowing victims of terrorism to attain the
justice that U.S. courts have said that they deserve.
Unfortunately, the President opposed this modification,
insisting on the maintenance of the current broad wavier,
thereby blocking the Flatow family and the families of the
Brothers to the Rescue from receiving justice.
I am pleased that today's hearing will allow this committee
to hear testimony from the perspective of the victims, as well
as the administration. Prior to the time that the ranking
Democrat arrives, I will call upon our first panel of witnesses
to take testimony and then take the opening statement from the
ranking Democrat when he or she arrives.
Our first panel this morning will be Senator Connie Mack of
Florida and Senator Frank Lautenberg of New Jersey, the two
proponents of the amendment to which I spoke. Senator Connie
Mack of Florida.
STATEMENT OF HON. CONNIE MACK, A U.S. SENATOR FROM THE STATE OF
FLORIDA
Senator Mack. Thank you, Senator Kyl. I want to thank the
committee, its staff, Senator Hatch, and particularly you,
Senator Kyl, for holding this hearing today. This is an issue
that several of us have been pursuing for a number of years
now, so thank you for the opportunity to present, if you will,
our case this morning before the committee.
As a nation, we took up this issue in earnest several years
ago. In fact, we joined with the President in passing the Anti-
Terrorism Act of 1996. This law serves as a manifestation of
the will of the President and the Congress to fight and deter
acts of terrorism.
In spite of this good news, or what Americans thought was
good news, the antiterrorism provision is not being implemented
as promised. The President has not only failed to use the
powers he asked for, but he is using the other considerable
powers of the Presidency to block the implementation of the
very law he requested. If you would think for a moment of a
movie you may have seen or an article in the news you may have
read which told the story of the U.S. Government misleading,
mistreating, and manipulating vulnerable Americans, think of
how angry that made you feel.
Today, we have some American families here in the room with
us who have been mislead, mistreated, and manipulated by the
President. In fact, they were twice victimized, first by
terrorism from Cuba and Iran, both designated terrorist states,
and second, by their own government. They were made promises in
their time of need. They were offered comfort and the promise
of justice. But after letting these families fight for several
years to seek justice, and after they succeeded in obtaining
judgments from the courts, the administration has blocked them
at every turn.
The administration questions their patriotism, saying that
their actions, complying with U.S. law, would undermine the
national security of our Nation. The pain of their losses has
been compounded by the betrayal of their own government.
The families before you today will provide the details of
their own stories. The administration witness will tell you
several reasons why they cannot help these families. But I want
the members of this committee to watch for the contradiction
between words and action. Ask yourself how the administration's
actions have contradicted their arguments.
Here is an example. At the White House press conference
after the Brothers to the Rescue shoot-down on February 26,
1996, on national television, the President asked for
legislation. Since this is or may be a contentious issue with
the administration, I want you to see for yourself what the
President said in making his request. Let us take a look at the
videotape.
[A videotape was shown.]
Senator Mack. Let me emphasize what you just witnessed. The
President said, ``I am asking that Congress pass legislation
that would provide immediate compensation to the families,
something to which they are entitled under international law,
out of Cuba's blocked assets here in the United States.''
If you think the President may have been caught up in the
moment and speaking what he did not mean out of the emotion of
the moment, I would submit to the committee a White House press
release dated February 26, 1996, in which the President
requested the same legislation as we just heard him request. My
point there is it was not just the President making this
statement at this press conference, but the entire team
followed up, saying that the legislation should be passed,
asking the Congress, in fact, to do so.
Senator Kyl. Can we put that in the record at this point?
Senator Mack. Absolutely, and I have one other document I
would like to have in the record, as well. It is a transcript
dated February 26, 1996, in which senior White House officials
state to the media that blocked assets are not ever going to be
returned to the Cuban government.
The reason that I have submitted that, as well, is because,
at least in the beginning, the arguments that we were hearing
from the administration is we needed to hold on to these assets
so that we could use them somehow to negotiate with the Cuban
government. I mean, they clearly knew at the beginning and
stated at the beginning they had no intention of these dollars
ever getting into the hands of the Cuban government.
Again, I would ask unanimous consent that they be included
in the record, and I encourage the members of the committee to
ask Maggie Khuly today if the President's actions have
supported the declaration.
[The information of Senator Mack follows:]
[GRAPHIC] [TIFF OMITTED] T0954.001
The White House
OFFICE OF THE PRESS SECRETARY
For Immediate Release
February 26, 1996.
Fact sheet on Cuba
The President has directed his Administration to take the following
steps immediately in response to the Cuban Government's blatant
violation of international law:
Seek rapid international condemnation of Cuba's actions.
The European Union today strongly condemned the Cuban shootdown.
The United States will seek United Nations Security Council
condemnation and press that sanctions be imposed until Cuba provides
compensation to the families of victims and abides by international
law.
The United States will seek condemnation of Cuba by the
International Civil Aviation Organization and other relevant
international bodies.
Move promptly to reach agreement with Congress on the pending
Helms-Burton Cuba legislation so that it will enhance the effectiveness
of the embargo in a way that advances the cause of democracy in that
country.
Request the Congress to pass legislation authorizing payment of
compensation to the families of victims out of Cuban blocked accounts
in New York.
Restrict the movement of Cuban diplomats in the U.S. and tighten
criteria for issuing visas to employees of the Cuban government.
Increase support for Radio Marti to overcome jamming by Cuba.
Indefinitely suspend all commercial charter flights to Cuba.
* * * * *
Background Briefing by Senior Administration Officials
February 26, 1996.
THE BRIEFING ROOM
4:12 P.M. EST
Senior Administration Official: Good afternoon. I'm not going to
take much time from here because I'll wait for your questions in a
moment. But let me just say a few words about the international efforts
that we are making with considerable success to get international
support for worldwide reaction to condemn what the Cubans have done.
We're really very encouraged after a couple of days that around the
world many countries are expressing to us bilaterally and in
international settings their outrage at what the Cuban government did
on Saturday; and the fact that it's recognized, I think, throughout the
world that this was, as the President said a moment ago, a flagrant
violation of international law. Secretary Christopher, who is El
Salvador, not only meeting with the government of El Salvador but with
representatives of several of the Central American governments, is
finding that sentiment in his meetings.
As the President indicated, the European Union just offered a very
strong statement of condemnation of the Cuban action. Ambassador
Albright, last night in an emergency session of the U.N. Security
Council, again found considerable support for the proposition that the
Cubans had violated international law and their behavior was outrageous
and inappropriate. And Ambassador Albright is also beginning, in a
preliminary fashion, discussions at the U.N. Security Council about
further measures that could be taken in the form of sanctions. Those
conversations have not developed to a large extent, but she is
beginning those discussions in New York.
And finally, the United States is seeking condemnation of the Cuban
action in the international civil aviation organization in Montreal
where, again, the initial reports from this morning--because in many of
these international organizations it was not possible to have such
discussions in a formal way until Monday morning--has indicated a good
degree of support.
Now, I think I'll let my colleague talk about some of the bilateral
measures that the President announced, and he will take your questions.
Senior Administration Official: Thanks. Good afternoon.
The question that was raised by these incidents on Saturday is
whether our relations with Cuba should change as a result of the
downing of two unarmed civilian aircraft, and the answer is,
absolutely, yes.
One of the things that we will be doing as Congress comes back this
week is moving to make some proposals about how we could reach
agreement on the Helms-Burton legislation that will further tighten the
U.S. embargo against Cuba.
As you know, the administration has said from the beginning of
debate about Helms-Burton that we shared the objectives of promoting a
peaceful democratic transition, but we had serious doubts about whether
all the provisions of the bill were capable of addressing that goal.
And we're going to move very quickly in the next two days to make clear
to the Congress some specific ways in which we think we could improve
the legislation. I think it's fair to say the President wants to
achieve a compromise on Helms-Burton, and we'll try to find a way to do
that that advances our interests.
We are also, as my colleague indicated, going to insist through
international forum that Cuba both reject its position that it is
entitled to shoot down aircraft, civilian aircraft, and to compensate
the victims. But we're not going to wait for the Cuban government to
acknowledge its responsibility. We will take the frozen assets that we
have had in the United States blocked for Cuba for some time and
provide a mechanism by which the families can receive compensation if
they wish. We'd need legislation to do that, and so we'll make a
proposal to Congress, a means to do that.
We have the ability to restrict the movement of Cuban diplomats
here in the United States, and we will be moving to do that this week,
to make it clear that they are restricted only to certain kinds of
activities that are essential for their functions here. And we will
also be tightening the criteria that we use for admitting employees of
the Cuban government to the United States. We have provisions already
in executive authority that allow us to deny entry to any employees of
the Cuban government or members of the Communist party, and we will be
interpreting that very strictly.
We will increase financial support for Radio Marti, which will
allow the radio station, which is listened to by an important segment
of the Cuban population, to reach even further into Cuba and to
overcome the expensive jamming that the Cuban government engages in to
try to block the signal. And we will be able to do that also relatively
quickly.
And finally, probably within a matter of hours, we will be moving
to suspend all commercial charter flights to Cuba. Obviously, the
action that the Cuban government engaged in in shooting down unarmed
aircraft does not encourage us to permit further flights to Cuba. And
so we will now cut off all U.S.-based charter flights to Cuba starting,
probably as I say, within a very short period of time.
Why don't we stop there and invite questions.
Question. On Helms-Burton, Republicans are saying today that they
don't need to compromise with the President, that they now have the
votes to pass it. Would the President veto the Helms-Burton legislation
in its current form?
Senior Administration Official: Well, I've just indicated that the
President has said that he wants us to find a good compromise on Helms-
Burton. We're going to try to do that. Senator Dole has said that that
is one thing that he would like to see happen.
So I would hope that on reflection members of Congress would rather
have a piece of legislation that has the support and the signature of
the President than something that is used for demonstration purposes
and never has any possibility of becoming law.
So I hope, as the time passes and they see what we have to offer,
that we'll be able to reach some sort of compromise.
Question. What parts of the bill do you object to?
Senior Administration Official: Well, it's no secret that from the
beginning of the conversations about Helms-Burton with the Congress,
Title III, the title that deals with property, asserting the
establishment of a right of action in the U.S. court system for those
U.S. citizens who have had property expropriated in Cuba before or
after they were U.S. citizens is the problem, the part of the bill that
bothers us the most and the part of the bill that the Congress has
always insisted on not changing. And that is, in fact, the issue on
which the bill was hung up in the Senate the last time.
So I think it's fair to say that that will be a focus of
concentration for both sides in trying to work out a compromise.
Question. So what's the difference between before and after the
shooting? If you objected to that provision then and you object to it
now, what's the difference?
Senior Administration Official: Well I hope the difference is on
the part----
Question [continuing]. Object to it less?
Senior Administration Official: No, I think the difference is on
the part of Congress. I would hope that Congress would want to engage
in sending a message of bipartisan repudiation to Cuba and not engage
in posturing with a bill that neither serves U.S. interest nor, in
fact, the purpose of being tough on Cuba.
Question. Is the objection to that is that it would violate
extraterritoriality provisions of international law?
Senior Administration Official: That it would give the Cuban
government a tremendous propoganda victory; undermine precisely the
international support that we have been developing over the last year,
which led to the condemnation widespread last week of the violations of
human rights around the arrests of Concio Cubano; now, today, with the
condemnation by the EU of the shooting down of the airplane. It's clear
that the more we reduce Castro's international acceptance, the better
off we are in our attempt to promote a peaceful transition.
Question. On two separate occasions the United Nations has voted to
urge the United States to get rid of the embargo. What makes you think
that the United Nations is now going to support what the United States
wants to do, and if it does, that they won't condition it to lifting
the embargo against Cuba?
Senior Administration Official: Let me make an additional comment
on Helms-Burton, and then I'll get to the question. The difference in
what the President has instructed us to do today is to be very
forthcoming in trying to obtain passage of Helms-Burton. I think up
until this point you will know that we have said there are certain
parts of it we like, there are certain parts of it we don't like. But
the President has given a real impetus to those in the Executive Branch
dealing with the Congress on this issue to actively find a forum that
is acceptable to both us and to the Congress.
On the question I just received, I think that there is a
significant difference in what we can report from the conversations in
New York, both with members throughout the United Nations and in the
Security Council, despite the differences. And, of course, there have
been differences between the United States and a majority of members of
the United Nations over overall policy towards Cuba, or the techniques
that the United States believe are appropriate for bringing pressure on
Cuba.
Nonetheless, this example of a flagrant violation of international
law by any standards is meeting with enormous sympathy and support. And
for that reason we have every reason to hope and expect that the
President's statement, or even a resolution that will come out of the
Security Council, will not make reference to the embargo.
Question. Are you also grounding the Brothers to the Rescue and
their planes?
Senior Administration Official: The FAA has had a long-term
investigation under way, not only against Mr. Basulto, but other
pilots, Brothers to the Rescue. In fact, their cases are under appeal,
and we have underway a review by FAA of what further actions should be
taken as a result of the clear safety threat that's represented by this
unlawful action of the Cuban government on Saturday.
So we anticipate that there will be further action, but I can't be
more specific today.
Question. So the edict on the commercial traffic doesn't have
anything to do with the light plane----
Senior Administration Official: No, that's on commercial charter
flights. That's right. This would be----
Question. This action has been going on by these Cuban emigres
since '91--about 3,000 trips. Each one of these tried to evoke us into
war. Are you going to let that continue?
Senior Administration Official: Well, as a nation of laws, we have
great difficulty in restraining people from breaking the law, just
because they--ma'am, would you like me to answer your question?
Question. Yes, I would.
Senior Administration Official: We have great difficulty in
exercising prior restraint against people for what we think they might
do. I'm sure you would like us to keep that a part of our
constitutional system. That means we have to proceed lawfully and
carefully against people, and it's difficult when people want to
violate the law. In fact, just because we would say that people can't
take off airplanes legally doesn't mean they can't violate it. But we
will be doing things that we think will have the result of lowering the
risk for U.S. aircraft in this area.
Question. On that point, does the U.S. regard the pilots and crew
of those two airplanes as totally innocent victims?
Senior Administration Official: There is no justification under
international law for shooting down an unarmed civilian aircraft. It
doesn't matter where it is. It's the nature of the aircraft and what it
is doing. And this is a clear violation of international law. There is
no justification.
Question. Even if the crews ignored a specific radio transmission
warning them to stay out of a certain area?
Senior Administration Official: Absolutely. Cuba has no right to
shoot down civilian, unarmed aircraft.
Question. What is the amount of money in frozen Cuban assets in the
U.S.?
Senior Administration Official: There's something around $100
million.
Question. And how much compensation could these families be likely
to expect based on actuarial settlements or----
Senior Administration Official: That's exactly what you said. It's
an actuarial problem that when one looks at the life expectancy of
these people--I don't want to get into the grim details of people who
have lost their lives and their families are grieving right now. The
point of this is not compensation to the families. (The point of this
is that this is Cuban government money that will never go to Cuba. It
is never going to be seen by the Cuban government.)
Question. To what extent--how does the suspension of the charter
flights----
Question. Can you talk to us a little bit about how many people
have been going since October on charter flights? Can you tell us
whether or not Cuban families--Cuban family members can still go back
automatically once a year whether academics; whether other researchers,
human rights activitists can go just by going now through Mexico or
through Canada? Or are they going to have to now apply to the Treasury
Department again and have a specific license? What does this do for
travel to Cuba?
Senior Administration Official: Well, first, journalists' licenses
will continue, but you won't be flying from Miami any longer. The point
of the stopping of the charter flights is specifically to the violation
of international law committed by the Cuban government in the shooting
down of the planes. We don't want U.S. planes flying into Cuba.
But we had a clear discussion and examination of the kinds of
pressure that our so-called ``track two'' program has been putting on
the Cuban government domestically. And it was the feeling of all of the
advisors of the President and, ultimately, the President himself that
in fact we have the Cuban government on the defensive. Some of these
outrageous acts against Concilio are a demonstration that what we are
doing is working, and we will continue that.
But, frankly, I would hope that Cuban Americans and many others who
are concerned about Cuba would question whether they should be flying
into Cuba from any place in the world right now.
Question. How many people have gone since October on these charter
flights? How much loss of revenue does this mean, and does this mean
that as a Cuban American or human rights person or an academic, all you
have to do now is just go to a third country to get to Cuba? And will
you automatically have a license from the Treasury Department to
travel?
Senior Administration Official: No, there are no automatic
licenses, except for U.S. government officials and the once-a-year
humanitarian license that exists for Cuban American families. There
have been increases in the charter flights from Miami, as those of you
who have followed this are witness to. We aren't sure how much of it
was due to a backlog that we had of many people who had applied for
licenses and had not been able to receive them, how much it is people
who used to go illegally without asking for a license from third
countries and now all of a sudden are showing up in Miami where there
was more access.
It is always difficult to enforce an embargo if people won't comply
with it, particularly the Cuban-American community itself. And that's
why we hope there will be voluntary compliance by Cuban Americans with
this provision. But the basic licensing structure that was put in place
on October 6th still exists. We believe that the program of support for
the Cuban people is, in fact, having important effects inside Cuba. We
are not going to abandon the human rights groups and dissidents and
other independent groups that have, in fact, developed in response to
this greater contact with the people of the United States.
Question. How many flights does this affect?
Question. --will see more refugees coming? Have you gamed out that
scenario, as to what would happen?
Senior Administration Official: I don't want to get into future
plans either about migration or military issues. But we're always
thinking about the worst that could happen, as well as hoping for the
best.
Question. Could you be a little more specific about numbers, sir?
Question. How many flights, how many people have been going since
October?
Senior Administration Official: I'd be happy--we could try to get
that information for you, but I don't have the total number since
October. There are about 120,000 to 140,000 people that travel from the
United States to Cuba in a given year. I think that's probably for 195,
in fact. This is not a huge number of people. It's significant, but not
huge.
And how much of that has been since October, I can't say. There was
an ariticle in the Miami Herald that perhaps my colleague would be
happy to give you copies of that has more specific figures than I had
ever seen.
Question. Can I ask you a question, though, about----
Senior Administration Official: Yes. Since I gave you a plug at
least.
Question. I appreciate that. The pro-engagement policy on track two
that remains intact. The United States continues to seek people-to-
people contact to build----
Senior Administration Official: Yes. There's no question that this
outrageous action by the Cuban government on Saturday and a parallel
action against the Cuban people on the island rounding up dissidents
puts a chill in the overall relationship--and should. But we continue
to believe that we have to reach out to the Cuban people around their
government, especially when it demonstrates more and more to the
international community its illegal and unethical actions with regard
to human life.
Question. The Cuban American delegation, a visit to the White
House, what is their opinion of the----
Senior Administration Official: Well, I'm sure that they'll provide
their views directly to you. They've never been shy about expressing
themselves. (Laughter.)
Question. Well, what----
Senior Administration Official: I had a brief meeting upstairs with
people, and I'm going to see a larger group of Cuban Americans at the
State Department in an hour or so. And I'd rather reserve comment until
I receive the full weight of their views.
Question. What do you know about this----
Question. --restrictions actually punishes more the people than the
Cuban government?
Senior Administration Official: Well, that's a basic problem that
we face in dealing with Cuba--that you have a government that's willing
to hold 11 million people hostage in defense of its own behavior. And
so we believe, and I think the President expressed himself very
clearly, that he wanted these measures focused as tightly as possible
on the Cuban government.
And I think if you look at these measures you will see that they
are significant and that they do just that--they hit the Cuban
government more than the Cuban people, which we think is important.
Question. Were there charter flights allowed from Miami before
October, so is this a narrow--in the narrow sense, a roll-back of that
October easing, or was that----
Senior Administration Official: Well, there were charter flights,
there have been charter flights allowed for a long time between the
United States and Cuba. The number of people who were licensed to use
them was quite restricted--yourselves, journalists, yourselves,
government officials, academic researchers--a relatively small number
of people.
In October, a larger number of--a larger group of categories was
permitted, as well as this once-per-year exemption for Cuban-American
families with emergencies. So the authorization of charter flights has
existed for quite some time. That now stops totally. Whether there's
demand or not, there are no charter flights indefinitely from Miami or
any other place.
Question. How does that affect Cuba's pocketbook?
Senior Administration Official: In the short term, it should have a
dramatic impact. It should reduce revenues to the Cuban government
significantly, especially if those people who cannot fly from Miami
decide to voluntarily exercise restraint and not go to Cuba. It could
send a very important message.
Question. You seem to be using ``commercial'' and ``charter''
interchangeably. What you really mean is a charter flight.
Senior Administration Official: Commercial charter flight, yes.
Question. And how much money is the President asking for Radio
Marti?
Senior Administration Official: I'd rather not give you a specific
number. It's not--we're talking about millions, a couple of million
dollars per year. We're not talking about tens of millions of dollars
per year.
Question. And what's that supposed to accomplish, specifically?
Senior Administration Official: Well, Radio Marti is--if you have
gone to Cuba--I can't remember if you have--you know, if you ask
people, a lot of people get their main source of news from Radio Marti.
In fact, that's the way they heard about the incident on Saturday. It
took a long time for the Cuban government to say anything about it
publicly.
Cuba engages in jamming, more and more expensive jamming all the
time. And this increased power and widening the band width allows the
signal to reach more parts of the island for more hours during the day
than before. It provides information. It provides support for on-island
groups. It provides information about how to start your own business,
how to be--have an independent lawyers' group. There's lots of
information that's provided by Radio Marti that's very important for
democracy promotion.
Question. Specifically, the money will be used to increase power
and widen the band?
Senior Administration Official: That's right.
Question. But you're still allowing the money transfers and
telephone service--money transfers, telephone service, communications?
Senior Administration Official: Let me be clear about that. Money
transfers is different from everything else you've mentioned. The only
reason for which anyone in the United States can send remittances to
Cuba is to pay visa fees or for humanitarian exemption. If you know
anyone who is sending money to Cuba, not in one of those two
categories, with a prior license, please call the Treasury Department
and report them. They're violating the law.
For the rest of track two, for contact--people-to-people contact,
for yourselves, for journalists, for academic researchers and so on,
you will still be able to obtain a license to go to Cuba as you were
after October 6th.
Question. What sanctions do you want the Security Council to pass?
Senior Administration Official: Well, there are two actions that
Ambassador Albright is pursuing--Security Council. As I mentioned, the
first, which she initiated last night, was to get a statement by the
President of the Security Council expressing the unanimous view of the
15 members that a flagrant violation of international law has occurred.
Subsequent to that, she will begin discussions with the members of
the Security Council about a broader sanction regime. And without
giving specifics, because we have not made any firm decisions.
We'll be looking at sanctions which are appropriate to the lawless
act of the Cuban government affecting Cuban airlines, travel by air in
and around Cuba. Those are the kinds of categories of sanctions----
Question. Restricting Cuban aviation internationally?
Senior Administration Official: Those are the kinds of categories
that we'll be looking at on the sanctions front.
Question. --diplomatic relations?
Senior Administration Official: One at a time, please.
Question. Are the Russians being helpful or unhelpful in this----
Senior Administration Official: The only conversation with the full
counsel took place last night, because the business meeting which was
scheduled today is proceeding on other grounds. But I can say that all
of the members of the Security Council, including, of course, the
Russians, were very concerned at the obvious serious breach in
international law; that was very much of the spirit of the discussion
last night that Ambassador Albright reported.
Question. Excuse me. Why aren't you going to the OAS among the
other----
Senior Administration Official: Because we think that the Security
Council is a higher-profile organization and we're looking for
condemnation not only within the hemisphere, but throughout the world,
and that's why the Security Council is the first focus for this.
Question. What sort of warning, if any, did we get from the Cuban
Interest-Section here about the probability or possibility,
specifically, that something could have occurred on this particular
date, that based on Cuban somehow, you know, knowledge or infiltration
of their Brothers to the Rescue that they had any indication that there
might be provocative flights on that day?
Senior Administration Official: Well, they want to amplify this,
because he, of course, follows the cable traffic, too, that we all look
at. For some time, the Cuban government, of course, has expressed its
concern about flights which they regarded as violations of their
territory; whether or not these flights took place, whether or not the
flights were in every case as alleged by the Cubans' actual violations.
What we have done constantly since these flights began some time
ago is to say two things: First of all, that there's a legal action
that the United States is pursuing, and that's what my colleague and
others have talked about. We are a country of laws; it's much more
complicated to pursue people by virtue of their intentions in this
country compared to Cuba. But the United States takes these potential
violations of international law very seriously. And, second point, that
the Cubans have to be mindful of the fact that there is international
law that applies to the way they handle these flights if they choose to
react, and we counseled restraint and we pointed out very forcefully
over a period of many months what we believe their obligations to be.
Question. Did they give us any warning of an anticipation of an
attack of a flight on this particular day?
Senior Administration Official: There was, to my knowledge, no
specific warning except that they have been constantly on alert because
flights of this sort have been coming for some time, as you know.
Question. Did the government warn the Cubans that there was a
flight imminent on this day?
Senior Administration Official: No, the--it depends on what you
mean by warning. I think you have seen reports that the FAA files a
flight plan routinely that it receives for all aircraft, not just small
private aircraft that fly in the vicinity of Cuba, and prior flotillas
that had had some air overflight associated with them that were
announced in advance and publicized in great detail. We had made
specific public warnings, both to those participating in the flotilla
and to the Cuban government to exercise restraint, not violate
international law. But nothing like that second thing occurred on
Saturday.
Question. The Cuban government this afternoon said that they have
now picked up debris in their territorial waters from these two planes,
and challenge the United States to come up with any debris in
international waters. The President, when he made a statement, again
talked about these planes having been downed over international
airspace. How do you reconcile these two things?
Senior Administration Official: One side is right and the other
side is wrong. That's how I reconcile them. We're right and the Cuban
government is wrong, and we will be happy to present this information
to any international forum so that they can make their own evaluation.
Senior Administration Official: Yes, I think we did present a
briefing last night to the Security Council of everything that we had.
And as my colleague indicated, if other international organizations or
the Cuban government, for that matter, wants to be informed in whatever
detail they desire about the information we have, we're prepared to
present it there, as well.
Question. What about the renegade pilot that they say they have?
Question. Have you made all this information public, or is there
further documentation on it?
Senior Administration Official: Yes. I mean, basically, the
background briefing that occurred--what was it, Saturday--Saturday----
Question. Does that include photos?
Senior Administration Official: There are various electronic
reading of what took place. But, essentially, yes, we have made this
all available.
Question. Were these same planes warned in the morning not to--and
went back in the afternoon? Has that been acknowledged?
Senior Administration Official: We are aware of the Cuban
government assertion that there were planes in this area earlier in the
day. We have no information to indicate that that is the case. But I
can't get into much more detail about it than that.
Question. What about the pilot that they say they've now got from
Brothers to the Rescue?
Senior Administration Official: Well, we eagerly anticipate his
information, and we suspect it will not be--it will be supportive to
the Cuban government's case. Let me just respond that way.
Question. Well, do you have information that Brothers to the Rescue
has a missing pilot other than from the downed flights?
Senior Administration Official: We don't have any--there are no
missing pilots, there was no one picked up in the water, there was no
one who landed in Cuba on Saturday that we aren't aware about. But we
are aware that there may be a member of Brothers to the Rescue--a
former member of Brothers to the Rescue in Cuba at this time.
Question. A defecter? He defected?
Question. How do you think this will impact the immigration accord
in that if we accuse this of being a government that has no regard for
the rule of law and at the same time send refugees who are fleeing that
country back to that country?
Senior Administration Official: Well, we expect that it will have
no effect on the Cuban government's fulfillment of the immigration
agreement. It's something that is working in the interest of both
countries. That's why we monitor returned refugees, returned rafters
ourselves directly, because we do not trust in the behavior of the
Cuban government and we have had a small number of problems with people
who have been returned as a result of this policy. But by and large,
it's worked to save lives and protect immigration flows in a safe and
orderly fashion.
Question. Why did the Clinton administration rule out a military
response at this point? Was it seriously discussed?
Senior Administration Official: There were all options examined by
the President's advisor and by the President. And I think the phrase
you used, ``at this time,'' is what was indicated in the President's
statement, that he felt that this package of measures that he announced
today was an appropriate response, but we continue to watch the
situation.
Question. Does this incident render the administration's Cuba
policy a failure?
Senior Administration Official: No, despite what--think I saw you
at 7:00 this morning say that a senior official had said that. The
United States is receiving more support internationally for its policy
from other governments, as the journalists here are quick to point
out--a rarity in U.S.-Cuba policy. We've seen the development on the
island for the first time in 30 years of an umbrella organization of
all human rights groups, including those who support Helms-Burton and
oppose Helms-Burton; and an equally amazing phenomenon, the development
in Miami and New Jersey of widespread support group for those on island
activities.
I think that the regime in Cuba is acting desperate, precisely
because it doesn't know how to cope with a policy that emphasizes
peaceful, democratic transition, support for independent actors on the
island, and has made it clear that we want to see a peaceful transition
on Cuba--apparently a transition that the Cuban government has no
interest in.
Thank you.
End.
4:32 P.M. EST
Senator Mack. Let me suggest two images to keep in mind as
you listen to the testimony today. First, the President by his
own words and by signing the laws passed by Congress encouraged
the families to take the terrorists to court. Second, picture a
black stretch limousine pulling up in the front of the Federal
courthouse, a gaggle of Justice Department attorneys rolling
out and entering the court, not to take sides with the
families, but with Castro's agents. I cannot imagine a greater
hypocrisy.
Let me tell you what Judge King, the U.S. District Court
judge who heard the case, said about the President's actions.
And again, I would underscore, this is a Federal judge who is
saying this, not some political operative. ``The court notes
with great concern that the very President who in 1996 decried
this terrorist action by the government of Cuba now sends the
Department of Justice to argue before this court that Cuba's
blocked assets ought not to be used to compensate the families
of the U.S. nationals murdered by Cuba. The executive branch's
approach to this situation has, at best, been inconsistent. It
now apparently believes that shielding a terrorist foreign
state's assets are more important than compensating for the
loss of American lives.''
For the past 2 years, I, along with Senator Lautenberg,
have sought to work with the administration on this issue.
Stuart Eizenstat, a most competent and dedicated government
official, has offered to work with me on three different
occasions. In fact, I anticipate he may offer again today. But
after waiting so long, I must say with due respect, there must
be action for me to believe his words. To be frank, all that I
have noticed to date is a lack of response on behalf of the
administration, and I sense no sincerity on their part at all.
That is why yesterday we introduced a bill to address this
in justice. It completes the work of the Anti-Terrorism Act of
1996. Currently, President Clinton waives the legal right of
American victims of terrorism to obtain damages from blocked
terrorist assets in the United States. This bill will support
the victims' rights to the blocked assets while providing full
authority for the President to protect diplomatic property. The
way forward is to seek to set a bar by which all victims of
terrorism are treated equally under the law.
Finally, Mr. Chairman, the President made promises to the
families, encouraged them to seek justice, calling their
efforts brave and courageous. He pledged to fight terrorism and
signed several laws supporting the rights of victims to take
terrorists to court.
But ultimately, he has chosen to protect terrorist assets
over the rights of American citizens seeking justice. This is
simply not what America stands for. Victims' families must know
that the U.S. Government stands with them in actions, as well
as words. Thank you very much, Mr. Chairman.
Senator Kyl. Thank you very much for that compelling
testimony, Senator Mack.
Senator Feinstein has agreed to allow Senator Lautenberg to
proceed with his testimony and then she will make her opening
comments. Senator Lautenberg of New Jersey.
STATEMENT OF HON. FRANK R. LAUTENBERG, A U.S. SENATOR FROM THE
STATE OF NEW JERSEY
Senator Lautenberg. That is very kind and I appreciate it.
Thank you, Mr. Chairman, for enabling us to present this
testimony this morning and for hearing this matter.
I appreciate the opportunity to testify before the
Judiciary Committee this morning to talk about the Justice for
the Victims of Terrorism Act, which I introduced yesterday with
my friend and colleague, Senator Mack. I at the outset want to
say that we share a common interest in preventing and deterring
terrorist acts against American citizens abroad, as well as at
home. But I hope that as we review this, we will not make what
I think, frankly, is an onerous comparison between the
President's intention as I heard it. We want to get to the same
objective, Senator Mack and I. I will say that I intend to hold
the administration as closely as I can to our effort to see
that victims of terrorism are heard, understood, and
compensated for the terrible things that happen to them and
their families.
But I do not think that one can say with impunity that the
President of the United States, President Clinton, is willing
to subordinate the victims' rights to a grander scheme for
improving international relationships, not at all. There may be
a difference in approach. I confess that I have not always been
satisfied with the response that we have gotten from
administration people, but the fact is that there is a response
to terrorism which has been strengthened substantially, and we
all see it many ways. We all saw it, whether it was in
Afghanistan, or Senator Kyl, you and I serve on the
Intelligence Committee and we know that there is substantial
effort being developed to try to protect our citizens against
acts of terrorism. We both are, I think, vigorous in our
support of that.
In 1996, as was noted by Senator Mack and you, Mr.
Chairman, Congress passed and President Clinton signed into law
anti-terrorism legislation giving American victims of state-
sponsored terrorism the right to sue the sponsoring state. We
deliberately created a narrow exception to the foreign
sovereign immunity protections that our laws afford to other
countries. The exception was deliberately narrow, and any
country sued under the 1996 law must be on the State
Department's list of terrorist states, and only victims of
terrorism and their families may file a suit.
Our goal then and our goal now is to allow American victims
of terrorism to seek some measure of justice in U.S. courts and
to make state sponsors of terrorism pay for the injury and
death and devastation that terrorism causes.
The victims of terrorism, including the people you are
going to hear from today, have put the 1996 law to good use,
and I am particularly proud to have worked with Steve Flatow,
whose 20-year-old daughter, Alisa, was killed when a
Palestinian suicide bomber attacked a bus in the Gaza strip in
1995, a day that I entered Israel on a trip that I was on and
had come from Egypt to Israel to learn of the tragedy that
befell the passengers on the bus that was attacked. It was
awful. We made decisions as a result of that to fight even
harder than we had against terrorism and to make sure--we did
not think then about compensation, but we thought then about
striking back in meaningful ways, and one of the ways to strike
back is to make sure that these countries pay for their
involvement in terrorist activities.
Mr. Flatow won a U.S. court judgment against Iran. In
another case, the families of the Brothers to the Rescue pilots
won a judgment against the government of Cuba. But these
terrorist states have yet to pay a dime, and the reason is that
Iran and Cuba and other rogue states targeted by the 1996 law
tend to have few, if any, assets in the United States other
than the assets that the Treasury Department has frozen under
our sanctions law.
But we can solve that problem by releasing some of these
frozen assets to let victims of terrorism collect what they
fought for and won in our Nation's courts. Now, I know that you
are going to be hearing from Deputy Treasury Secretary
Eizenstat this morning, who is, as Senator Mack said, someone
who has earned the respect and admiration of all who know him
in the pursuit of his assignments, many that he has taken on on
behalf of our Government and our people. But I want to address
some of the issues that he may raise.
First, I do share the administration's view that the legal
status of foreign embassies must be respected because American
embassies around the world rely on reciprocal protection. Even
at times when we do not get it, nevertheless, that is the rule
of international law and we do have to respect it. However, one
must note that Iran abused the rights of our embassy in
Teheran. That aside, this bill would allow the President to
exempt the premises of foreign diplomatic missions in the
United States from attachment in these terrorism cases.
Second, I have heard complaints that the first victims to
gain judgments against foreign terrorist states would end up
getting all of the frozen assets, leaving none for future
cases. But unfortunately or not, that is the way American civil
law treats all assets that are part of a court judgment, and
frankly, I agree with that, because perhaps by satisfying those
claims, we can deter terrorist acts in the future.
The Treasury Department has suggested using the Crime
Victims Fund to satisfy these court judgments, but that
proposal misses the point. Foreign countries that sponsor
terrorism should have to pay a price for the toll that
terrorist attacks take on families like the Flatows and the
Brothers to the Rescue families. Making terrorist states pay
that price will help deter them from engaging in terrorism in
the future.
Finally, I understand that the State Department would like
the frozen assets of terrorist states, like Iran and Cuba and
Libya, to remain available in efforts to improve relations, as
bargaining chips in efforts to improve relations with those
countries. However, any reconciliation would require those
countries to make good on their obligations to American victims
of terrorism. So the U.S. court judgments would have to be
satisfied in any case. The only question is, do we satisfy them
now or do we make the victims of terrorism, like the Flatows
and the others, wait years longer.
Waiting is not the answer. They have conducted their
process according to the law and have seen declarations made by
our court system that coincides with our view that terrorism
did occur as a result of foreign countries, Iran, Cuba's,
involvement, and awarded these claims accordingly. It is not
fair to the victims for them to continue to wait and it would
dilute the punitive and deterrent effect of our antiterrorism
laws.
The bottom line is that this law would not stand in the way
of America's foreign policy. Rather, I think it would
strengthen our nation's strong stand against terrorism directed
at American citizens.
Mr. Chairman, before I close, I would just like to say
again that President Clinton has stood up against terrorism
around the world and here at home. He has directed efforts to
tighten airport security, impose sanctions against nations that
support terrorists, outlaw money laundering and financial
support for terrorists, and provided law enforcement agencies
with the latest technologies to combat terrorism, and he has
responded decisively, as I earlier mentioned, to Bin Laden's
attacks on our embassies. I suspect the administration policy
and this legislation is being set more by the legal departments
and the bureaucracy, and I hope that the President will sign
this legislation when it reaches his desk.
I close by thanking the committee once again for your
attention to this bill. I hope that the committee will approve
this bill in a timely fashion so that we can finally arrive at
some justice for the victims of terrorism. I thank you.
Senator Kyl. Thank you, Senator Lautenberg.
Senator Feinstein, whose reputation is one of the most
significant advocates for victims in the U.S. Senate, has
joined the panel. Senator Feinstein, would you like to make an
opening statement?
STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM THE
STATE OF CALIFORNIA
Senator Feinstein. Thanks very much, Mr. Chairman. Let me
begin by thanking you for holding this hearing and let me thank
both Senators Mack and Lautenberg for being here and for your,
I think, very excellent comments.
Essentially, the question on everyone's mind is this. If
the U.S. Government holds frozen assets of a foreign terrorist
nation and a U.S. court awards monetary damages to victims of
that terrorist nation, then why can the victims not recover
from the frozen assets? I think that is clearly the question
before us. There really is no other option for them. They
cannot go to the country at issue and demand payment.
I want to talk about just one person, largely because he is
today a California resident and because I have followed his
case with some interest in the newspaper. In 1985, David
Jacobsen was residing in Beirut, Lebanon. He was the chief
executive officer of the American University of Beirut Medical
Center. Shortly before 8 o'clock in the morning on May 28 of
that year, he was crossing an intersection with a companion. He
was assaulted, subdued, and forced into a van by two or three
assailants. He was pistol-whipped, bound, gagged. He was pushed
into a hidden compartment under the floor in the back of the
van.
He was held by these men, members of the Iranian-backed
Hezbollah, for 532 days, nearly 1\1/2\ years. He was held in
darkness. He was blindfolded. He was chained by his ankles and
wrists. And he wore nothing but undershorts and a t-shirt. He
said in the past that he was allowed to see some light just
twice in those 17 months. The food was meager. Sometimes the
guards would spit on his food before handing it over. He was
subjected to regular beatings. He was often threatened with
immediate death. He was forced to listen as fellow captives
were killed.
As a result of this physical and mental torture, he has
been under continuous treatment for post-traumatic stress since
his release in November 1986, nearly 13 years ago. Last August,
he was awarded $9 million by a U.S. Federal court. The judgment
was against the government of Iran, and pursuant to a bill that
Congress signed in 1996 allowing victims of foreign terrorism
to recover against terrorist nations, the bill was, of course,
encouraged by the current administration. To date, he has
collected nothing. He cannot go to Iran to ask for the verdict,
and our own Government, frankly, has not helped him.
Now, I, too, have great respect for Mr. Eizenstat and I am
very interested to hear his comments on the four basic points
that I understand the administration reserves against any kind
of payment of these frozen assets.
The first, as I understand it, is leverage, and I
understand the administration claims that allowing recovery
from frozen assets would diminish their leverage in negotiating
with Cuba for foreign policy concessions. However, I might
argue that that leverage is worthless if the U.S. Government is
going to protect those assets from victims of human terrorism.
Second, the administration, I believe, has argued, with
respect to Cuba only, that it would be unfair to allow victims
of terrorist acts to jump to the head of the line and collect
frozen assets when thousands of displaced Cubans have been
waiting for more than 30 years to recover lost property or
other wrongs. This argument might have some merit with regard
to Cuba, but not necessarily for other terrorist states.
The third argument I believe they make is protection of
United States diplomatic property abroad. This argument had
some merit under past law, since we would have reason to fear
reprisals if we were to allow victims to seize embassies or
other diplomatic property here. However, the Mack-Lautenberg
bill now allows such physical property to be exempted by the
President. Only liquid assets would be available to victims. So
I would be interested in the administration's response on that
point.
And fourth, violation of established treaties and accords.
I believe the administration argues that this bill would force
us to violate certain international treaties and could result
in American taxpayers picking up the tab for required payments
to foreign nations. I would like to hear more about these
arguments at the hearing.
Basically, I do not think these arguments--these are the
only four that I have heard to date. I do not have Mr.
Eizenstat's comments. Perhaps he will make more today. But I do
not think any of them overcome or outweigh a legal Federal
court decision held against the governments that committed the
acts of terrorism. Now, particularly, I do not think any of us
doubt that Hezbollah is a government-sponsored terrorist
organization. Therefore, it would seem logical that a Federal
court verdict against a country for an act carried out by a
government-sponsored terrorist organization, that the plea for
those frozen assets is a just one, clearly now a legal one with
the Federal court decision, and should be recognized as such.
Of course, this raises the question of the use of the waiver by
the administration in these cases.
So I think both Senators Mack and Lautenberg do an enormous
service in presenting this legislation at this particular point
in time. I think we have had enough court verdicts now which
really call into question the policy of a waiver, certainly
based on the four points that I have elucidated so far that the
administration has pressed, and it will be interesting to hear
if they have additional cases to bring before us today.
I thank you both very much for being here. If you have any
comments, perhaps the chair would recognize you.
Senator Kyl. Thank you, Senator Feinstein.
Senator Mack.
Senator Mack. Just briefly, because I know that the
committee wants to get to the other panelists, but first of
all, Senator Feinstein, thank you very much for those comments.
I just want to respond to one of those four arguments that you
stated that the administration has raised, one specifically
having to do with Cuba.
Again, I have responded to all four of them at different
times, but I just want to make this point. With respect to
there being a lot of Cubans, Cuban-Americans today, who have
claims against or have charges against the Cuban government, if
you will recall, we passed the Helms-Burton law a few years ago
and title III of that allowed for individuals who have
experienced losses as a result of the taking of property. There
was an avenue for them to pursue justice, if you will, through
title III of Helms-Burton.
Most individuals who have claims against Cuba for the
taking of properties have an avenue through that law. I will
tell you, though, that again, the President has waived title
III ever since it has become law, so that even that avenue has
been denied to Cuban-Americans to receive some form of
compensation for those who are trafficking in properties.
So there is more recourse. This is not the only recourse
that is open with respect to collection.
Senator Feinstein. Thank you. I think that is an excellent
point.
Senator Lautenberg. If I might, and I, too, add my thanks
to you, Mr. Chairman, and Senator Feinstein, for your support
in these actions that we are taking. I do not want to in any
way suggest that we ought to be less than as aggressive as we
can be to make these countries pay. I do, however, say this,
that the administration may view things differently, and we are
going to hear from Stuart Eizenstat shortly, on the approach to
things.
While I will not, again, defend their opposition to getting
compensation for the victims, I am forced as we talk here to
think back about times when it was inconceivable that we would
ever communicate with countries who brutalized and tortured and
murdered our people when they were captured in wars, one of
which I fought in, World War II, and the enemies of that time
with whom we fought back so vigorously. I never apologized for
dropping the atomic bomb. I was a soldier. I was in Europe on
my way then to Japan after the war in Europe closed down, and I
was happy that we did what we did to end that war.
Therefore, it recalls for me that at times when you deal
with these terrorist countries, whoever they are, and as much
hatred as we develop for them, for the acts that they have
committed against innocent people, we do have to trust in some
form a government's judgment in how you resolve conflict, and
the best way to resolve conflict is to bring these people into
an orbit that has them dealing civilly, humanely with their
citizens.
So while, again, I want to press on and I want to make sure
that compensation is given to these people who have been
victimized, we have to listen, even if we do not agree, to the
argument that is made on behalf of perhaps eventually getting
to a peaceful situation.
I would rather, as much as I despise things that are going
on in Iran, I would rather have them stop making atomic and
nuclear weapons and join the family of civilized nations. So if
there is a bargaining chip that can be used, we have to decide
how the chip is played. And if it is not from the terrorist
countries themselves, then perhaps this country has to step in
and compensate our citizens for the fatalities that fell on
them. Thank you.
Senator Kyl. If I could make a quick comment before the two
of you leave the dias, it seems to me that, Senator Lautenberg,
what you have just said suggests to me that the first step in
the path for a country to become part of the family of nations
is to acknowledge the rule of law. It seems to me, second, that
this country has done everything--that the Senate has done
everything that we can for this country to pursue and abide by
the rule of law in this case, by using a mechanism that was
available to us, passing a law, pursuant to the President's
request that we do so, that enabled a family to take advantage
of our judicial processes, that it did so, that a Federal court
judge rendered a decision which is recognized by the law of our
land as a valid judgment.
As you pointed out in your testimony, under that system, it
allows these people to be the first in line to collect on their
judgment, so that everything has occurred except the final
step, and that is making those funds available. The President
has exercised a waiver which all of us, the four of us who have
spoken here, have indicated we believe was much narrower than
the President interpreted it as being.
If I could just indulge Senator Mack for just a moment, my
understanding is that the first and only objection at the time
to the initial legislation was that it did not provide a waiver
for diplomatic property and that the legislation or the
amendment that you proposed to the appropriation bill this year
as a follow-on to last year's appropriation bill corrected that
deficiency, that it allowed a waiver for diplomatic property
and that that waiver is also included in the legislation that
you and Senator Lautenberg have introduced now, is that
correct?
Senator Mack. That is correct.
Senator Kyl. So today, the President could exercise a
waiver to protect all diplomatic property. Is that the only
waiver, then, the only waiver authority that the President
would have under this legislation?
Senator Mack. That is my understanding. Again----
Senator Lautenberg. Narrowly defined, as well. We will not
take any commercial result from the use of those properties and
exempt those. It has to be very narrow. We are not talking
about consulates that service passports and relations for
people who live in this country. We are talking about the
embassy and the functions that they perform. If they rent it
out as office space, we want to use those funds.
Senator Kyl. So, then, the only thing standing between
these families and recovery under the law of the United States
would be the adoption of the legislation that you have proposed
here today and the signing into law of that legislation.
Senator Mack. Let me make a point. The President could
choose to use the waiver strictly for the purpose--under
present law, he could have chosen to have said that he was
going to use that waiver to protect diplomatic properties and
allowed Treasury to execute a license.
But I think that both Frank and I believe that it is
important that we really clarify this thing legislatively, that
it is very clear that it is a narrow waiver so that in the
future, if there are other victims of terrorism that go to
court, receive a judgment, and try to collect, that it is very
clear that the only use of that waiver is for a narrow use and
for protection of diplomatic property.
Senator Kyl. I take another point that Senator Lautenberg
made, which is that if you are going to negotiate with a
country to bring that country into the family of nations, the
first thing you would do is clear up the past accounts, to
settle with the victims of terror. This would be step number
one in that process, so there is no reason not to go forward
with it.
Thank you very much for your testimony. We appreciate it.
Senator Mack. Thank you very much.
Senator Lautenberg. Thank you.
Senator Kyl. Now, if I could invite Stuart Eizenstat to the
panel. We thank you, Mr. Eizenstat.
Our second panel this morning consists of Deputy Secretary
of the Treasury Stuart E. Eizenstat. He has served in that
position since July 19, 1999. From June 1997 until July 1999,
Mr. Eizenstat served as Under Secretary of State for Economic,
Business, and Agricultural Affairs. Mr. Eizenstat has also
previously served as Under Secretary of Commerce for the
International Trade Administration, and as the U.S. Ambassador
to the European Union.
Mr. Eizenstat, we welcome you to the committee today.
STATEMENT OF STUART E. EIZENSTAT, DEPUTY SECRETARY, DEPARTMENT
OF THE TREASURY, WASHINGTON, DC
Mr. Eizenstat. Thank you, Mr. Chairman. I very much
appreciate the opportunity.
Let me begin by expressing the administration's and my own
personal sympathy to victims of international terrorism,
particularly these families, an evil that this administration
has taken world leadership in combating. People like the
Flatows and the families of the Brothers to the Rescue deserve
government support in their demand to be compensated for their
grievous losses, and we are dedicated to working with the
Congress to achieve this goal by setting up a commission to
recommend proposals to help families of the victims of the
international terrorism receive compensation.
This, however, must be done in a way that is consistent
with our national interests, is not done piecemeal with a race
to the courthouse, and does not touch blocked assets or
diplomatic property to achieve this end.
Mr. Chairman, I personally met in Miami with the families
of the Brothers to the Rescue members in the office of El
Diario. It is a day I will never forget. It is one that
personalized for me the brutality of the Castro regime. I have
also met on several occasions with Mr. Flatow in my office and
in the State Department, who lost his daughter in a bomb attack
in Gaza. Having had children in Israel who were subject to the
same threat, I particularly empathized with Mr. Flatow.
I was touched by the depth of the suffering as well as
impressed by the strength and determination of the families to
seek justice for their loved ones. We understand the
frustrations that have led the sponsors of this legislation to
introduce it. The plaintiffs have suffered grievously at the
hands of terrorists and should be compensated by those
responsible.
As part of our efforts to combat terrorism, we impose a
wide range of economic sanctions against state sponsors of
terrorism in order to deprive them of the resources to fund
acts of terrorism to effect their conduct. Because of these
measures, terrorist-list states engage in minimal activity in
the United States, and in most cases, the only assets available
are either blocked or diplomatic property.
With all respect, Mr. Chairman, and knowing that we want to
achieve the same goal, we believe that the legislation before
us is fundamentally flawed for the following reasons.
First, blocking assets of terrorist states is one of the
most significant economic sanctions tools available to any
President in dealing with terrorist countries. This legislation
would, unfortunately, undermine the President's ability to
combat international terrorism by permitting the attachment of
blocked property, thereby depriving the United States of a
critical source of leverage, such as we used to gain the
release of our citizens held hostage in Iran.
Second, it would cause the United States to violate our
obligations to protect diplomatic property of other countries
and thereby put our own diplomatic property around the world at
risk.
Third, it would benefit one small group of Americans over a
far larger group. Those with judgments in court since the FSIA
amendments of 1996 would benefit over others, many of whom have
waited for decades to be compensated by Cuba and Iran, both for
loss of property and loss of lives of their loved ones, and
would leave no assets for their claims or others that may
follow.
Fourth, it would breach the longstanding principle that the
U.S. Government has sovereign immunity from garnishment,
thereby preventing our Government from making good on its debts
and potentially causing U.S. taxpayers to incur substantial
financial liability.
And fifth, it would direct courts to ignore the separate
legal status of states and their agencies and
instrumentalities, overturning Supreme Court precedent and
basic principles of corporate and international law by making
state-owned corporations liable for the debts of the state.
This would also expose U.S. investors in such enterprises
abroad to retaliation.
Attachment of blocked or diplomatic property, Mr. Chairman,
would jeopardize our national security and seriously prejudice
a number of important national interests: The preservation of
our asset-blocking program to combat threats to our national
security, our legal obligations to protect diplomatic property
of foreign states, avoiding gross inequities by similarly
situated U.S. nationals with claims against foreign
governments.
Permit me briefly to take each of these up. Our efforts to
combat threats to our national security posed by terrorism-list
countries rely upon our ability to block their assets. These
blocking programs permit Presidents at any time to withhold
substantial benefits from countries whose conduct we abhor and
to offer a potential incentive to such countries to reform
their conduct. Our blocking programs provide us with a unique
form of leverage over countries that engage in threatening
conduct.
Presidents have blocked property and interests in property
of foreign states and foreign nationals that today amount to
over $3.4 billion, Republican and Democratic Presidents alike.
The leverage provided, Mr. Chairman, by these blocked assets is
central--central--central--to our ability to protect important
U.S. national security and foreign policy interests.
I myself was personally involved in one of those, and that
is the Iran hostage crisis from 1979 to 1981. Our blocking of
Iranian assets was a critical bargaining chip to resolve the
crisis, almost $10 billion in assets that the President had
blocked shortly after taking of our embassy.
Likewise, in the case of Vietnam, the leverage provided by
the some $350 million in blocked assets played an important
role in persuading Vietnam's leadership at the time of
normalization to address our concerns, including a full
accounting of POW's and MIA's from the Vietnam War, as well as
accepting responsibility for over $200 million in U.S. claims.
In addition, blocked assets have helped us to secure
equitable settlements of claims of U.S. nationals in countries
from Romania and Bulgaria to Cambodia in the context of
normalization of relations.
Our blocking programs cannot function if blocked assets are
subject to attachment and execution by private parties, as the
proposed legislation would permit. Private rights of execution
against blocked assets would permanently rob the President of
the leverage blocking provides.
The Brothers to the Rescue families and the Flatow family,
in effect, through their attachment, would leave no remaining
assets of terrorism-list governments in the President's
control, thereby denying this President and any future
President an important source of leverage and seriously
weakening a President's hands in dealing with the threats to
our national security.
The legislation would also cause the United States to
violate our obligations under international law to protect
diplomatic property and would undermine the legal protections
for that property on which we rely every day to protect the
safety of our diplomatic property and personnel abroad.
We appreciate very much, Mr. Chairman, some of the changes
that you made to 118, but that still leaves attachable consular
property, diplomatic residences, and consular bank accounts.
The failure to permit the President to protect such properties
would seriously impair our own interests because we have more
diplomatic property and personnel abroad than any other country
in the world, and we would be more at risk than any other
country if the protections of diplomatic and consular property
were eroded. If we flout our obligations, we can expect other
countries to target our diplomatic property when they disagree
strongly with our policies or actions.
In the specific case of Iran, attachment of Iran's consular
and diplomatic properties could also result in substantial
taxpayer liability, and that is because Iran's diplomatic and
consular properties in the United States are the subject of a
claim brought by Iran against the United States before the
Iran-United States Claims Tribunal.
In addition, there is yet a third problem, and this is
among and between American nationals. The proposed legislation,
Mr. Chairman, would frustrate equity among U.S. nationals with
claims against terrorism-list states. It would create a winner-
take-all race to the courthouse, arbitrarily permitting
recovery for the first or first few claimants out of limited
available resources, leaving others similarly situated stranded
with no recovery at all.
The Alejandre and Flatow cases do not represent the only
claims of U.S. nationals against Cuba and Iran. No other
claimants would be able with this legislation to recover, and
that would seriously prejudice their interests.
In the case of Cuba, if I can just show this chart, Mr.
Chairman, the U.S. Foreign Claims Settlement Commission has
certified 5,911 claims of U.S. nationals against the government
of Cuba, totaling approximately $6 billion with interest,
dating back to the early 1960's. These include not only
property claims, but wrongful death claims of people
assassinated by the Cuban government. These claimants have
waited over 35 years and have received no compensation for
their losses. It would be unseemly to deprive them of an
opportunity to recover by giving someone else the opportunity
who had received a judgment.
The same situation, Mr. Chairman, applies with respect to
Iran. In addition to the Flatow case, the plaintiffs in the
Beirut hostage case, David Jacobsen, Joseph Cicippio, Frank
Reed, and their families, collectively have won judgments
against Iran totaling $65 million arising from their having
been held hostage in Lebanon. Similar suits against Iran,
including one brought by Terry Anderson for damages related to
his captivity, are currently pending in the Federal District
Court.
Mr. Chairman, as this chart shows and this indicates, the
assets that were, in effect, transferred at the time of the
hostage release at the end of the Carter administration and the
beginning of the Clinton administration, some $10 billion, but
it indicates there are still some $500 million in claims by
both private U.S. citizens and the U.S. Government against Iran
in the Iran-United States Claims Tribunal.
Against this background in which outstanding claims far
exceed available funds, the proposed legislation would simply
permit the first claimants to reach the courthouse to deplete
all the available assets, leaving nothing for others similarly
situated, indeed, others who had filed claims years, and indeed
decades, before these. This is fundamentally unfair. Equitable
resolution of all outstanding claims of terrorism-list states
has to be accomplished systematically to ensure fairness to all
parties, not in a piecemeal fashion envisioned by the proposed
legislation.
There is also a garnishment provision, and permitting
garnishment of the payment of tribunal awards against the
United States will result in U.S. taxpayers paying twice,
because it does not extinguish the claim. We are still liable,
once when a private claimant garnishes the payment, and then a
second time when Iran would attempt to enforce the still
unsatisfied award against us abroad.
Let me conclude with this, and that is the 1996 amendment
waiving sovereign immunity and creating a judicial cause of
action for damages arising from the acts of terrorism has not
met its purposes of providing compensation to victims and
deterring terrorism. A system that is to date left no recovery
option, other than one that conflicts so fundamentally with
both U.S. national interests or international obligations and
elemental fairness among and between claimants, is not an
acceptable system. We are anxious to work with Congress to
address this difficult problem. We would like to formulate, Mr.
Chairman, with you, and I know your deep interest in this and
with Senator Lautenberg, Senator Mack, and others, a short- and
long-term approach to address these concerns. We also need a
careful and deliberative review of the issue.
Therefore, we suggest that Congress and the administration
commit to a joint commission to review all aspects of the
problem, to recommend to the President and the Congress
proposals to find ways to help these families receive
compensation and a way consistent with our national interests
and international obligations. A fundamental principle for this
joint commission would be the need to inventory outstanding
claims and develop an effective and fair mechanism for
compensation of victims of terrorism.
We would suggest that the commission present alternatives
to statutes that would make blocked assets available for
attachment, but we are committed to working together with you
to find legislative and nonlegislative means for addressing
these issues. We would also look forward to making sure, so
this is done expeditiously, Mr. Chairman, and the people who
have waited a very long time do not have to wait longer, to
begin working on a commission so it can be constituted soon and
be charged with making its recommendations within 12 months
after its constitution.
Thank you again for giving me the opportunity to appear,
and I look forward to your comments and questions.
Senator Kyl. Thank you, Mr. Eizenstat. Let me begin by
refreshing your recollection as to what the President asked us
to do. He said, this is on February 26, 1996, on national
television, ``I am asking that the Congress pass legislation
that would provide immediate compensation to the families,
something to which they are entitled under international law,
out of Cuba's blocked assets here in the United States.''
Now, are you telling us that he was not sincere or that he
had not checked with you lawyers first to realize that we could
not do what he was asking us to do?
Mr. Eizenstat. I believe that he was entirely sincere, Mr.
Chairman, and the way that that sincerity was demonstrated was
that he determined that he already had authority under the
Trading with the Enemy Act, under which Cuban assets were
blocked, to make an immediate ex gratia payment to deal with
the tremendous trauma during the same year in which this
disastrous affair had occurred. He in no way was encouraging an
act which would have provided a private right of action.
Indeed, when the amendment in 1996 was proposed to the
antiterrorism legislation, the administration indicated its
grave concern with such suits.
Senator Kyl. Did the President sign that legislation?
Mr. Eizenstat. He did, and the reason he signed it is
because he thought that the overall Act, which he had proposed
and which was a key feature of the administration's fight
against antiterrorism, had enough provisions in it that merited
signature, notwithstanding the very real concerns that we had
with this particular provision.
Senator Kyl. Now, the $300,000 that he provided, that was a
humanitarian gesture. That was not intended to be full and
complete compensation, was it?
Mr. Eizenstat. It was intended as a humanitarian ex gratia
payment, yes, sir.
Senator Kyl. Otherwise, he would not have called on the
Congress to provide for immediate compensation to the families,
which he said they were entitled to under international law.
Mr. Eizenstat. He felt that this was the appropriate
response to make. It could be done quickly and without
implicating the national security and equity concerns that I
have raised.
Senator Kyl. Did the President ever tell the families and
the Flatows that their investment of time and emotional energy
was inconsistent with U.S. national interests and it interfered
with this administration's policy toward Cuba and Iran?
Mr. Eizenstat. I am not aware of personal conversations
that he had with them, but I can tell you about my personal
conversations with them.
Senator Kyl. Did you ever tell them to cease their
litigation?
Mr. Eizenstat. I will tell you that what I did is I have
spent dozens and dozens and dozens of hours trying to help on
this. I met Mr. Flatow and his lawyer, Mr. Peerless, on several
occasions. We turned over thousands of pages of documents to
Steve and to Mr. Flatow's counsel to try to help them locate
nonblocked assets. We identified some bank accounts where they
could potentially get funds. We have turned every stone
possible over to try to help them find assets that did not
implicate these problems. We have given them documents that
were under our control because of our concern. I have on two or
three occasions met with Mr. Flatow, and as I mentioned, the
meeting that I had with the families to the Brothers to the
Rescue, and I can remember exactly the room in the El Diario
building on the second floor, was one that, to me, was one of
the most emotional meetings I have ever had.
We want to be able to help them, and what I am suggesting,
Mr. Chairman, and I do not mean this in any way to suggest that
we are sort of pushing this off to a commission, because I have
been around Washington for over 20 years and a lot of times,
you just push problems off to a commission. What we are
suggesting is two things. We are talking about trying to
develop short- and long-term solutions.
The problem, if we can take this in addition to the Flatow
problem and the Brothers to the Rescue problem, what are we
going to do with Terry Anderson and his suit? What are we going
to do with the Jacobsens? What do we do with these 5,911
people? What we need is a systematic, systemic way of dealing
with Americans who are injured or killed by acts of terrorism.
That is why we think we need a commission.
Senator Kyl. Have you told the Andersons and the Jacobsens
that they are wasting their time in pursuing their claims in
court?
Mr. Eizenstat. I do not think it is for the U.S. Government
to tell private litigants how they should spend their time. But
what we are suggesting now is that there has to be a systematic
and systemic way, because, frankly, if this attachment were to
occur, as this legislation would permit, Mr. Anderson would
have nothing to attach if he won his judgment. Neither would
the Jacobsens.
Senator Kyl. Mr. Eizenstat, what I am troubled with is,
going back to the President's statement, it is totally
inconsistent with your testimony. Now, you said he was sincere,
but it sounds to me like this is an after-the-fact, it is an
afterthought, your testimony is, saying, oh, my gosh, look what
the President said. We cannot do that. What he said was, one,
immediate compensation, not waiting for some commission to try
to figure out something, to which they are entitled under
international law. You said, no, international law does not
permit this garnishment and so on. Three, out of Cuba's blocked
assets, and you are saying, no, we should not let them get this
compensation out of Cuba's blocked assets because we need to
use that for leverage. Now, the President said, get it out of
blocked assets. You are saying, no, we cannot get it out of
blocked assets. Please explain.
Mr. Eizenstat. Yes, sir. First of all, the President did
not suggest that legislation be passed which would have all the
negative implications that I have suggested. He did not suggest
that suits be brought and he did act within the same year to
provide payments, and he made them, sir, out of blocked assets,
out of blocked Cuban assets.
Senator Kyl. If I can just interrupt you for a second, you
have made the argument here that we cannot pursue blocked
assets, that that would interfere with U.S. national security
interests. It was almost a direct quotation.
Mr. Eizenstat. That is correct----
Senator Kyl. But the President called for compensation out
of Cuba's blocked assets here in the United States.
Mr. Eizenstat. What he did is on a one-time ex gratia
payment, not as intended, and at a time of great emotion and
great pain, he made a one-time gesture, a humanitarian gesture,
out of blocked assets. That was not intended to create a
precedent, and I think the best evidence----
Senator Kyl. But then he called upon us to pass, and I am
quoting now, ``I am asking that Congress pass legislation that
would provide immediate compensation to the families, something
to which they are entitled under international law, out of
Cuba's blocked assets here in the United States.'' He was not
saying, now I have, out of the goodness of my heart, taken
$300,000 out of these blocked assets, but, of course, it would
be contrary to our national security interest to take any more.
No. He did not say that. He said, I am asking you, Congress, to
pass legislation that will provide immediate compensation out
of those blocked assets. You are now coming here saying, we
lawyers have taken a look at this and we think it would be
inimical to U.S. national security interests to do that.
Mr. Eizenstat. Yes, sir, I understand your point, and let
me respond again in two ways. No. 1, the President did act. He
acted under the Trading with the Enemy Act and he made a one-
time payment out of blocked assets as a humanitarian gesture.
No. 2, Strobe Talbott, our Deputy Secretary of State, sent
a letter to the Congress as soon as we had the opportunity of
looking at the 1996 amendment and expressed, not in 1999 with
Stu Eizenstat, in 1996 expressed our grave concern with very
similar legislation and made many of the points that I am
making now.
And again, there is simply no doubting that this would
enormously complicate our major sanction against terrorist
countries and the major leverage we have and used in Vietnam,
with the Iranian hostages, and which we would use in a post-
Castro era, which I hope comes much sooner than later. This
would be very important leverage for us to have.
But there is the additional point of the equity. What do
you say to the 5,911 people who have waited for 35 years for
recovery, including several families whose families were
assassinated? What do you say to the Jacobsen family, that they
simply did not get to the courthouse quickly enough?
So that is why we would like to work with you to develop a
systematic and systemic approach to this problem and not have
an unseemly race to the courthouse in which similarly situated
American citizens are disadvantaged, and indeed, some are not
even similarly situated. Some have prior claims.
In the 1970's, Mr. Chairman, these 5,911 people, including
the families whose family members were assassinated, did not
have the opportunity to bring suits. It was not open to them at
that time because this amendment did not exist. But they have
legitimate claims. They went through whatever legal process one
could go to to get their claims, and our own commission, the
Foreign Claims Settlement Commission, sifting through thousands
of claims, certified these 5,911 claims as legitimate claims.
Again, in a post-Castro era, what we would hope to do with
this $166 million is to trade it, in effect, as leverage so
that Cuba compensates these claimants, or returns, even better,
the expropriated property that they are still holding, or if
they do not, that we take that $166 million and we distribute
it immediately to those 5,911 claimants and to the Brothers to
the Rescue.
Senator Kyl. So you agree with the White House briefers who
said on February 26, 1996, that Cuba will never get the blocked
assets?
Mr. Eizenstat. We believe--yes. We believe that these
blocked assets should be used, Mr. Chairman, as leverage for
the purposes that I have indicated.
Senator Kyl. I am going to turn to Senator Feinstein. I
just----
Mr. Eizenstat. What actually happens in a negotiation,
obviously, I cannot tell. But our basic goal is to use this, as
we have done under so many Presidents for so many decades, as
leverage in the event in a post-Castro era there is a
normalization of relations.
Senator Kyl. With all due respect, I find your attempt to
explain the difference between the President's request of the
Congress and your position now to be unsatisfactory. I think
that our Government's treatment of these people now amounts to
very cruel and cavalier treatment of the victims, and it seems
to me that it puts us in the position of hiding behind
legalisms in a situation in which we ought to be promoting the
rule of law and justice and that justice is not being served in
this case.
I am going to submit some additional questions for the
record, to which I would appreciate answers as soon as you can
get them to us.
At this point, I turn to Senator Feinstein.
Mr. Eizenstat. If I may, just on your last point, I do not
see how it promotes the rule of law when we would be required
under the legislation to undercut international legal
obligations to protect property and thereby subject our own
property to seizure. It seems to me that that undercuts the
rule of law.
Senator Kyl. Senator Feinstein.
Senator Feinstein. I have great respect for your
intelligence, but I am a lot simpler person than you are. I
think for a state to sponsor terrorism is just plain wrong. I
see nothing wrong with having the assets of a country go to
reimburse victims of that. I do not believe our policy against
terrorism works very well. I do not believe we protect our
diplomatic embassies. I mean, we have had ample evidence of
that. So I do not really think the five points that you have
elucidated here, in reality, work.
I might say that I have always believed that when somebody
does not know what to do, you appoint a commission. I mean,
mayors have done that, governors have done it, Presidents do
it. This is an issue over money, and either the money is going
to come from us or it is going to come from the responsible
government.
I mean, I just do not understand this convoluted rationale
that----
Mr. Eizenstat. Senator Feinstein, I have had the pleasure
of knowing you for many years. There is nothing convoluted
about this. It is about as straightforward as a straight arrow
and I am going to, please, explain that.
I know that you have a family in the State of California,
the Jacobsen family.
Senator Feinstein. Right.
Mr. Eizenstat. They would not get a plugged nickel, because
in this race to the courthouse that this legislation would
sanction, all the assets available, even if they could be
taken, would be depleted. Now, that cannot be a fair solution.
How is it possible that it is fair to treat American citizens
similarly situated and simply allow a race to the courthouse?
That is not fair at all.
Senator Feinstein. Can you make these judgments? I mean, is
this not up to a judge to make those judgments, if a judge,
looking at the whole situation, makes a judgment?
Mr. Eizenstat. The judge only made the judgment of how much
they are entitled to. He cannot make the judgment about whether
or not they have any assets to recover against, and the fact
is, there would not be any assets. They would be taken.
The problem and the reason we need a systemic solution is
that the claims--let us take the $247 million award that the
Flatow family got. It exceeds the amount of assets. There would
not be anything left.
With the Brothers to the Rescue, what do you say to the
families who have been waiting since the 1960's to recover?
Senator Feinstein. Well, maybe what you do is you apportion
some proportion of assets in terms of a token payment, but at
least it is a recognition that governments cannot get away with
sponsoring terrorism. I do not see any abatement of terrorism
in the world today because of our great policies here.
Mr. Eizenstat. At the end of the road, we have a variety of
things we obviously try to do with respect to terrorist
countries. But I think that it is very clear that one of the
strongest--you know, we put the boycotts in, we try to get our
allies to help us on sanctions. Some are better than others.
But what we try to do----
Senator Feinstein. Most of the sanctions hurt innocent
people.
Mr. Eizenstat. I have testified about the problem of
sanctions, as you know. But one of the best, most important,
and most effective weapons we have against terrorist countries
is the capacity to block their assets and then hold that for
leverage. If this had occurred in 1978 or 1979 and the Flatows
had been able to recover, we might not have been able to get
some of the hostages out. We used those blocked assets as
leverage to get the hostages out. In Vietnam, we used the
blocked assets to be able to get information on MIA's. With
respect to our normalization with Cambodia and some of the
former East Bloc Communist countries, when we normalized, we
used that. We would intend to use these blocked assets as
leverage, as well.
With respect to Iran, essentially, the major properties
were returned as part of the hostage deal. They were returned
in 1981 and what remains is under the Iran Claims Tribunal and
it is subject to the Algiers Accord, diplomatic and consular
properties and other properties which are in litigation. We
cannot give that back because it is part of the Algiers Accord.
Senator Feinstein. I guess, you know, terrorism is a very
visceral thing and it does not abide by law. I am not sure that
one can always fight terrorism with law. I think there comes
also a visceral response. I have a hard time when people go to
Federal court, they have experienced horrendous situations,
they get a judgment, we have assets, and then you are saying,
well, theoretically, we might use this money for this or that
or the other thing, and I do not doubt they are all good
causes. But maybe you strike a blow against terrorism that is
meaningful by saying all these blocked assets essentially go to
reimburse people who have suffered because your government
sponsors terrorism. Maybe these countries stop sponsoring
terrorism. Maybe that is naive on my part, but nonetheless,
whatever we are doing does not seem to make any kind of
demonstrable change.
Mr. Eizenstat. I think we all are frustrated by the
difficulty of dealing with terrorist countries. We all want the
maximum leverage. But if the United States of America, as the
principal critic of those who flaunt international principles
and values and human rights, ends up taking actions which
violate the Vienna Convention on diplomatic property, which
violate other international obligations, which undercut the
Algiers Accord, that sets a very poor example at a time when we
are contending that others are acting contrary to international
norms. We have to be the upholder of those norms if we are
going to have any moral voice to deal with these situations.
Senator Feinstein. Well, a lot of people believe we
violated international law by attacking Kosovo, too. I mean,
there is a different point of view there.
But let me ask you this. If you are concerned about these
assets, there not being enough in the assets to recompense
people, supposing we put a cap on the legislation before us of
a limited amount of money that would be available to a victim
from these assets, $1 million, $2 million, whatever it might
be, so that it would not take all of the assets, would you then
support the legislation?
Mr. Eizenstat. It would still basically have the
fundamental flaws that we indicated in terms of violating our
international obligations and the leverage that these frozen
assets have over the terrorist countries and that we would
intend to use. So we would still have grave difficulties.
But we are willing to sit down sincerely to deal with this
problem, and we think the commission is necessary for a long
term. But I said in my testimony, we are willing to look at
short-term and long-term solutions and we would welcome the
opportunity to sit down with you and explore a variety of
options that do not implicate some of the problems I mentioned,
but that could potentially provide some measure of justice to
the families. We are----
Senator Feinstein. Can you name one of those options? You
probably know them better than anyone else.
Mr. Eizenstat. Well, we are looking at a variety of things
and we would like the opportunity perhaps to sit down and
discuss them. I can tell you sincerely, we have had several
interagency meetings at which we have explored all sorts of
options, all sorts of options, and we are trying very hard to
come up with something. We are sincere in this. We want to see
the Brothers to the Rescue families and the Flatow families
compensated. We want that to happen, and we would like to try
to work with you on that at the same time as we set up this
commission and look at the long term.
Why do I say that? Not because I am trying to push it off
and not deal with the particular problem at hand. I said in my
testimony, we are willing to look at short-term and long-term
solutions. But, unfortunately--unfortunately--with the kind of
terrorist-list states that we are dealing with, there will be
another case tomorrow and the day after tomorrow and the day
after that, and if we do not develop something, you would not
want us to have this hearing a year from now with Terry
Anderson and Terry Anderson is going to face no assets,
nothing. Nothing is available to him. What do you say to him?
Senator Feinstein. Well, he faces that situation now.
Mr. Eizenstat. He does. But then you have created a race to
the courthouse, and the same with the Jacobsens. They have got
a judgment. They have got a judgment. So we would like to----
Senator Feinstein. What you are saying is families give up.
There is no sense in going to court.
Mr. Eizenstat. What we are saying is we would like----
Senator Feinstein. There is no sense in trying to get
justice because your government is not really going to support
you.
Mr. Eizenstat. No, ma'am. What we are saying is, if I may
say so, this government does support American citizens. We try
to protect them against terrorism, and when they are the
victims, we do everything humanly possible to provide them
relief and benefits. That is why the President acted with the
Brothers to the Rescue. That is why I spent hours and hours and
hours trying to help Mr. Flatow's attorneys identify
properties, and if I may so, at the potential expense of the
Jacobsens, because they did not ask.
What I am suggesting is we need a systematic approach.
Whatever short-term solutions, and we will try to work with you
on those, we obviously--I mean, it is just patently obvious
that we need a long-term approach to deal with this situation
because there are not enough assets. These countries do not
have that much assets. In the case of Iran, we transferred all
of the assets basically to Iran and what is remaining is a
relatively smaller amount in the claims tribunal, pursuant to
the Algiers Accord that President Carter and President Reagan
completed.
So we are dealing with a problem that is going to recur. We
have got real live people, like Terry Anderson, like the
families of the Jacobsens and Reeds and Cicippios, who are also
waiting for judgment. We have 5,911 people who have been
waiting for 35 years to get a bloody red cent out of the
Cubans. We need to do something that more systemically deals
with this problem, rather than just say, you filed a suit. You
can have a hearing. You are going to get recovery. Then we are
left with other people holding the bag.
Senator Feinstein. Thank you, Mr. Chairman.
Senator Kyl. Thank you, Senator Feinstein.
It seems pretty clear to me that the way to go here is to
satisfy the judgments that have been entered, to the extent
they can be satisfied, and then require as a condition to the
kind of diplomatic relationships that we would hope to have
with these countries in the future compensation for the other
people that have judgments against their country. That is the
only way they are going to get compensated, unless the U.S.
Government comes up with the money.
I just continue to be struck by the fact that you contend
two other things, one, that diplomatic property has to be
protected. We have provided for a waiver for diplomatic
property in the legislation. And that it is a violation of
international law to provide for compensation out of blocked
assets. But the President said, again, ``I am asking that the
Congress pass legislation that would provide immediate
compensation to the families, something to which they are
entitled under international law, out of Cuba's blocked assets
here in the United States.''
Either the President did not know the law when he said that
or his agents, yourself included, are not complying with his
desire that these people be satisfied in accordance with
international law out of blocked assets here in the United
States. I suspect that what has happened here is that the
President, to make a point that he would like to help these
people, made a statement which later his lawyers say he should
not have made, that it is more complicated than that, Mr.
President.
If that is the case, then I would like a candid statement
to that effect. But we have got double-talk here, not a
repudiation of what the President said, but a clear
contradiction to what he said in your testimony. I think before
we can have a rational discussion about how to resolve the
problem, we have to have a candid acknowledgement as to what
the case is. Are people entitled to compensation out of blocked
assets under international law or not? If it cannot happen----
Mr. Eizenstat. A couple of points, Mr. Chairman. I do not--
--
Senator Kyl [continuing]. Then the President should not
have requested us to pass that kind of law.
Mr. Eizenstat. A couple of points. I do not engage in
double-talk.
Senator Kyl. Pardon?
Mr. Eizenstat. I do not engage in double-talk.
Senator Kyl. Well, I have yet to receive a satisfactory
answer, then, as to how the President could ask us to provide
for compensation out of blocked assets, something to which they
are entitled under international law, and your testimony that
says, no, international law forbids us from doing that.
Mr. Eizenstat. Yes, sir. You mentioned that you had taken
care of the problem of diplomatic property, and I do
appreciate, I really do appreciate the fact that you made an
effort at that. However, with your change, you do not cover
consular property. You do not cover diplomatic residences. You
do not cover consular bank accounts. And in addition, your
legislation would also add something that is not in section
118, and that is you would deal with all assets of any agency
or instrumentality of a foreign state and those would be
subject to attachment.
Now, this is an extraordinary situation because you would
be punishing innocent co-investors in a state-owned enterprise
who have no connection whatsoever to the terrorist act. It
would also subject on a reciprocity basis many U.S. investors
who are engaging in publicly-owned facilities abroad. So this
expands the problem to some extent, and again, the legislation
does not deal at all with the blocked property issue.
In terms, again, of the President's statement, I have tried
to explain as best I could that the President did, in fact, do
what he suggested. He did act with respect to the Trading with
the Enemy Act. He took monies out of a blocked account and made
an ex gratia humanitarian payment.
Senator Kyl. Thank you very much for your testimony.
Mr. Eizenstat. Thank you. I appreciate very much the
opportunity, Mr. Chairman.
[The prepared statement of Mr. Eizenstat follows:]
Prepared Statement of Stuart E. Eizenstat
Mr. Chairman, Ranking Member Leahy, and Members of the Committee:
Good morning. I am here to discuss the Administration's position on
proposals to further amend the Foreign Sovereign Immunities Act
(``FSIA'').
Let me begin by expressing the Administration's and my own personal
sympathy to victims of international terrorism--an evil that this
Administration has taken world leadership in combating. It is the
responsibility of the United States Government to do everything
possible to protect American lives from international terrorism. People
like the Flatows and the families of the Brothers to the Rescue deserve
government support in their demand to be compensated for their grievous
losses. The Administration is dedicated to working with the Congress to
achieve this goal by setting up a commission which would recommend
proposals to the President and to the Congress to help families of the
victims of international terrorism receive compensation. But this must
be done in a way that is consistent with our national interest, is not
done in a piecemeal fashion, and does not touch blocked assets or
diplomatic property to achieve this end. The commission would also
review all other aspects of the problems presented by acts of
international terrorism.
International terrorism is an all too common evil in today's world,
affecting the lives of too many Americans. In my capacity as the
President's Special Representative for Cuban Democracy, I met in Miami
with the families of the ``Brothers to the Rescue'' members who were
shot down by Cuba. It was an unforgettable experience and one that
personalized for me the brutality of the Castro regime. I have also met
on several occasions with Mr. Flatow, who lost his daughter Alisa in a
bomb attack in Gaza. I was touched by the depth of suffering, as well
as impressed by the strength and determination of the families to seek
justice for their loved ones. We understand the frustrations that have
led the sponsors of this legislation to introduce it. These plaintiffs
have suffered grievously at the hands of terrorists and should be
compensated by those responsible.
However, it should come as no surprise that the states involved
here--states that we have publicly branded as sponsors of terrorism--do
not view the United States as a cordial environment to conduct
financial transactions. As part of our efforts to combat terrorism, we
impose a wide range of economic sanctions against state sponsors of
terrorism in order to deprive them of the resources to fund acts of
terrorism and to affect their conduct. Because of these measures,
terrorism-list states engage in minimal economic activity in the United
States. In many cases, the only assets that states which sponsor
terrorism have in the United States are either blocked or diplomatic
property. Such property is not legally available for attachment and
execution of judgments, for very good reasons involving the security
and interests of the entire nation, which I will describe in detail.
As much as we join the sponsors of this bill in desiring to have
victims of international terrorism compensated, it would be unwise in
the extreme to ignore these reasons and forgo the interests of all our
citizens for this purpose.
The legislation before the Committee today, though born of good
intentions, is fundamentally flawed. The legislation would have five
principal effects, all of which would be seriously damaging to
important U.S. interests.
First, blocking assets of terrorist states is one of the most
significant economic sanctions tools available to the President. This
legislation would undermine the President's ability to combat
international terrorism and other threats to national security by
permitting the attachment of blocked property, thereby depriving the
U.S. of a source of leverage, such as was used to gain the release of
our citizens held hostage in Iran.
Second, it could cause the U.S. to violate our obligations to
protect diplomatic property of other nations, and would put our own
diplomatic property around the world at risk.
Third, it would benefit one small group of Americans over a far
larger group of Americans. Those with judgments in court since the FSIA
amendments of 1996 would benefit over others, many of whom have waited
decades to be compensated by Cuba and Iran for both the loss of
property and the loss of the lives of their loved ones, and would leave
no assets for their claims and others that may follow.
Fourth, it would breach the long-standing principle that the United
States Government has sovereign immunity from garnishment, thereby
preventing the U.S. Government from making good on its debts and
potentially causing the U.S. taxpayer to incur substantial financial
liability.
Fifth, it would direct courts to ignore the separate legal status
of states and their agencies and instrumentalities, overturning Supreme
Court precedent and basic principles of corporate and international law
by making state-owned corporations liable for the debts of the state.
As The Washington Post observed in a recent editorial, ``Victims of
terrorism certainly should be compensated, but a mechanism that permits
individual recovery to take precedence over significant foreign policy
interests is flawed.'' The proposed legislation would indeed seriously
compromise important national security, foreign policy, and other clear
national interests, and discriminate among and between past and future
U.S. claimants. For the reasons which I will explain in detail during
the course of my remarks, the Administration strongly opposes the
proposed legislation.
ATTACHMENT OF BLOCKED AND DIPLOMATIC PROPERTY
I want to begin by explaining the Administration's grave concerns
with the provisions of the legislation that seek to nullify the
President's waiver of last year's Foreign Sovereign Immunities Act
amendments and thereby permit attachment of blocked and diplomatic
property.
Let us be entirely clear: attachment of blocked or diplomatic
property would compromise our national security and would seriously
prejudice a number of important national interests. These interests
include:
Our interest in the effective functioning and preservation
of our asset blocking programs to combat threats to our
national security and to the safety of American citizens
abroad;
Our legal obligation to protect the diplomatic property of
foreign states, regardless of the status of our relations with
those states, and our clear national interest in upholding the
international legal regime that protects U.S. diplomatic
property and personnel abroad; and
Our interest in avoiding laws that would create gross
inequities in the amounts of compensation received by similarly
situated U.S. nationals with claims against foreign
governments.
I will address each of these concerns in turn.
elimination of the effectiveness of our blocking programs
The ability to block assets represents one of the primary tools
available to the United States to deter aggression and discourage or
end hostile actions against U.S. citizens abroad. Our efforts to combat
threats to our national security posed by terrorism-list countries such
as Iraq, Libya, Cuba, and Sudan rely upon our ability to block the
assets of those countries.
Blocking assets permits the United States to deprive such countries
of resources that they could use to harm our interests, and to disrupt
their ability to carry out international financial transactions. By
placing the assets of such countries in the sole control of the
President, blocking programs permit the President at any time to
withhold substantial benefits from countries whose conduct we abhor,
and to offer a potential incentive to such countries to reform their
conduct. Our blocking programs thus provide the United States with a
unique and flexible form of leverage over countries that engage in
threatening conduct.
The Congress has recognized the need for the President to be able
to regulate the assets of foreign states to meet threats to the U.S.
national security, foreign policy, and economy. In both the
International Emergency Economic Powers Act and the Trading with the
Enemy Act the Congress has provided the President with statutory
authority for regulating foreign assets. On the basis of this authority
and foreign policy powers under the Constitution, Presidents have
blocked property and interests in property of foreign states and
foreign nationals that today amounts to over $3.4 billion.
The Supreme Court has also recognized the importance of the
President's blocking authority, stating that such blocking orders
``permit the President to maintain the foreign assets at his disposal
for use in negotiating the resolution of a declared national emergency.
The frozen assets serve as a `bargaining chip' to be used by the
President when dealing with a hostile country,'' Dames & Moore v.
Regan, 453 U.S. 654, 673 (1981).
The leverage provided by blocked assets has proved central to our
ability to protect important U.S. national security and foreign policy
interests. The most striking example is the Iran Hostage Crisis from
1979-1981. The critical bargaining chip the United States had to bring
to the table in an effort to resolve the crisis was the almost $10
billion in Iranian Government assets that the President had blocked
shortly after the taking of our embassy. This was a decision in which I
was involved as President Carter's Chief Domestic Adviser. Because the
return of the blocked assets was one of Iran's principal conditions for
the release of the hostages, we would not have been able to secure the
safe release of the hostages and to settle thousands of claims of U.S.
nationals if those blocked assets had not been available. This
settlement with Iran also resulted in the eventual payment of $7.5
billion in claims to or for the benefit of U.S. nationals against Iran.
In the case of Vietnam, the leverage provided by approximately $350
million in blocked assets, combined with Vietnam's inability to gain
access to U.S. technology and trade, played an important role in
persuading Vietnam's leadership to address important U.S. concerns in
the normalization process. These concerns included full accounting of
POWs and MIAs from the Vietnam War, accepting responsibility for over
$200 million in U.S. claims which had been adjudicated by the Foreign
Claims Settlement Commission, and moderating Vietnamese actions in
Cambodia.
In addition, blocked assets have helped us to secure equitable
settlements of claims of U.S. nationals against such countries as
Romania, Bulgaria, and Cambodia in the context of normalization of
relations. These results could not have been achieved without effective
blocking programs.
However, our blocking programs simply cannot function, and cannot
serve to protect these important interests, if blocked assets are
subject to attachment and execution by private parties, as the proposed
legislation would permit. The ability to use blocked assets as leverage
against foreign states that threaten U.S. interests is essentially
eliminated if the President is unable to preserve and control the
disposition of such assets. Private rights of execution against blocked
assets would permanently rob the President of the leverage blocking
provides by depleting the pool of blocked assets.
In the Cuban and Iranian contexts, for example, the value of the
judgments won by the Brothers to the Rescue families exceeds the total
known value of the blocked assets of the Government of Cuba in the
United States, and the value of the judgment won by the Flatow family
or the former Beirut Hostages exceeds the total known value of the
blocked assets of the Government of Iran in the United States.
Attachment of blocked assets to satisfy private judgments in these and
similar cases would leave no remaining assets of terrorism-list
governments in the President's control, denying the President an
important source of leverage and seriously weakening his hand in
dealing with threats to our national security.
In addition, the prospect of future attachments by private parties
would place a perpetual cloud over the President's ongoing control over
blocked assets. This would further undermine the President's ability to
use such assets as leverage in negotiations, even where attachments had
not yet occurred.
Put simply, permitting attachment of blocked assets would eliminate
the use of our blocking programs as a key tool for combating threats
against our national security.
our obligation and interest in protecting diplomatic property
The proposed legislation also could cause the United States to
violate our obligations under international law to protect diplomatic
property, and would undermine the legal protections for diplomatic
property on which we rely every day to protect the safety of our
diplomatic property and personnel abroad. Even though the current
version of the legislation before the Committee provides protection for
a slightly broader range of diplomatic property than previous versions,
it is still fundamentally flawed in its failure to permit the President
to protect properties, including consular properties, some diplomatic
bank accounts, and diplomatic residences, which international law
obligates us to protect.
The United States' legal obligation to prevent the attachment of
diplomatic property could not be clearer. Protection of diplomatic
property is required by the Vienna Convention on Diplomatic Relations,
to which the United States and all of the states against which suits
presently may be brought under the 1996 amendments to the FSIA are
parties. Under Article 45 of the Vienna Convention on Diplomatic
Relations we are obligated to protect the premises of diplomatic
missions, together with their real and personal property and archives,
of countries with which we have severed diplomatic relations or are in
armed conflict. This would include diplomatic residences owned by the
foreign state.
Likewise, under Article 27 of the Vienna Convention on Consular
Relations, the same protection is required for consular premises,
property, and archives. Attachment of any of the types of property
covered by the Vienna Conventions on Diplomatic and Consular Relations
could place the United States in violation of our obligations under
international law. The proposed legislation would only permit the
President to ensure the protection of a narrow portion of the property
covered by the Vienna Conventions, and would thereby place the United
States in violation of our legal obligations.
In addition, the proposed legislation as drafted could cause us to
breach our obligations to ensure the inviolability of missions to the
United Nations, pursuant to the UN Headquarters Agreement and the
General Convention on Privileges and Immunities.
Nor could our national interest in the protection of diplomatic
property be clearer or more important. The United States owns over 3000
buildings and other structures abroad that it uses as embassies,
consulates, missions to international organizations, and residences for
our diplomats. The total value of this property is between $12 and $15
billion.
Because we have more diplomatic property and personnel abroad than
any other country, we are more at risk than any other country if the
protections for diplomatic and consular property are eroded. If we
flout our obligations to protect the diplomatic and consular property
of other countries, then we can expect other countries to target our
diplomatic property when they disagree strongly with our policies or
actions. Defending our national interests abroad often makes the United
States unpopular with some foreign governments. We should not give
those states who wish the United States ill an easy means to strike at
us by declaring diplomatic property fair game.
In the specific case of Iran, attachment of Iran's diplomatic and
consular properties could also result in substantial U.S. taxpayer
liability. Iran's diplomatic and consular properties in the United
States are the subject of a claim brought by Iran against the United
States before the Iran-U.S. Claims Tribunal. I will say more about the
Tribunal later in my remarks. For the moment, let me simply note that,
although we are contesting this claim vigorously, the Tribunal could
find that the United States should have transferred Iran's diplomatic
and consular property to it in 1981. If it does so and the properties
are not available because they have been liquidated to pay private
judgments, the U.S. taxpayer would have to bear the cost of
compensating Iran for the value of the properties. Such an award
against the United States would be enforceable in the courts of any
country, under the laws of that country.
EQUITY AMONG CLAIMANTS
The proposed legislation would also frustrate equity among U.S.
nationals with claims against terrorism-list states. It would create a
winner-take-all race to the courthouse, arbitrarily permitting recovery
for the first, or first few, claimants from limited available assets,
leaving other similarly situated claimants with no recovery at all. In
fact, it would take away assets potentially available to them.
As I noted earlier, the value of the judgments held by the families
of the Brothers to the Rescue victims exceeds the total value of
blocked assets of the Government of Cuba in the United States.
Similarly, even if the plaintiffs in the Flatow case were to succeed in
attaching all of Iran's diplomatic and consular properties in the
United States, these properties would be insufficient to satisfy even
one tenth of the damages awarded in that judgment. In each case,
execution on their judgments would exhaust all of the blocked assets of
these governments in the United States.
However, the Alejandre and Flatow cases do not represent the only
claims of U.S. nationals against Cuba and Iran. No other claimants
would benefit at all from the proposed legislation; indeed this
legislation would seriously prejudice their interests.
In the case of Cuba, the U.S. Foreign Claims Settlement Commission
has certified 5,911 claims of U.S. nationals against the Government of
Cuba, totaling approximately $6 billion with interest, dating back to
the early 1960s. These include the wrongful death claims of family
members of two individuals whom the Cuban Government executed after
summary trial for alleged crimes against the Cuban state. Other claims
relate to the Castro Government's seizure of homes and businesses from
U.S. nationals. These claimants have waited over 35 years without yet
receiving compensation for their losses. This bill will not help them
at all.
The same situation applies with respect to Iran. In addition to the
Flatow case, the plaintiffs in the Beirut Hostage case--David Jacobsen,
Joseph Cicippio, Frank Reed, and their families--collectively have won
judgments against Iran totaling $65 million arising from the three men
being held hostage in Lebanon. Similar suits against Iran, including
one brought by Terry Anderson for damages related to his captivity, are
currently pending in the Federal District courts.
Moreover, given the nature of these regimes, it remains possible
that in spite of our substantial efforts to combat terrorism, foreign
terrorist states will commit future acts in violation of the rights of
U.S. nationals, which may give rise to claims against them. If such
incidents occur, these claimants will also have an interest in being
compensated.
Against this background, in which outstanding claims far exceed
available funds, the proposed legislation would permit the first
claimants to reach the courthouse to deplete all the available assets
of terrorism-list governments, leaving nothing for other similarly
situated claimants. Satisfaction of the judgments in the Brothers to
the Rescue and Flatow cases would come at the expense of all other
claimants against Cuba and Iran, both past and future. This would be
fundamentally unfair.
Equitable resolution of all outstanding claims of terrorism-list
states must be accomplished systematically in order to ensure fairness
to all parties, not in the piecemeal fashion envisioned by the proposed
legislation.
In sum, permitting the attachment of blocked and diplomatic
properties in individual cases, as the proposed legislation would do,
would
Undermine our ability to combat threats to our national
security,
Violate our obligations under international law,
Place our diplomatic properties and personnel abroad at
risk, and
Lead to arbitrary inequities in the treatment of similarly
situated U.S. nationals with claims against foreign
governments.
breaching the sovereign immunity of the united states
Let me turn next to the provision of the proposed legislation which
would permit garnishment of debts of the United States. This provision
would breach the long-established principle that the United States
Government has sovereign immunity from garnishment actions. This
provision is of particular concern because it would result in the U.S.
taxpayer being liable for millions, and perhaps hundreds of millions,
of dollars by prejudicing the position of the United States with
respect to claims pending before the Iran-U.S. Claims Tribunal in The
Hague.
Let me say a few words about the Iran-U.S. Claims Tribunal. The
Iran-U.S. Claims Tribunal is an arbitration court located at The Hague
in the Netherlands. It was established as part of the agreement between
Iran and the United States that freed the U.S. hostages in Iran and
resolved outstanding claims that were then pending between the United
States and Iran. Pursuant to this agreement and awards of the Tribunal,
Iran has paid $7.5 billion in compensation to or for the benefit of
U.S. nationals. The Tribunal also has jurisdiction over certain claims
between the two governments.
The proposed legislation would prevent the United States from
meeting its obligations to pay money to Iran in satisfaction of awards
the Tribunal renders against the United States. Instead, the proposed
legislation would permit private parties to garnish the funds of the
United States Government in order to collect such payments before they
reach Iran. Even without this change in the law, there have been
efforts in the Flatow case to garnish the payment of a $6 million
Tribunal award in Iran's favor.
It is important to understand that allowing private litigants to
garnish amounts we owe Iran under Tribunal awards would not discharge
our liability to Iran to pay such money. For example, if the efforts in
the Flatow case succeed, the Flatow family will receive $6 million, but
the United States will still owe Iran $6 million under the unpaid
award. And because the awards of the Iran-U.S. Claims Tribunal are
enforceable in the courts of any country, Iran can enforce awards
against non-immune U.S. property in other countries if we do not pay
them voluntarily.
Permitting garnishment of the payment of such awards would thus
result in the U.S. taxpayer paying twice: once when a private claimant
garnishes the payment, and a second time when Iran enforces the still
unsatisfied award against us abroad. Because the judgments against Iran
received by these plaintiffs total in the hundreds of millions of
dollars, permitting garnishment of debts owed by the United States to
Iran as a means of satisfying these judgments could cost the U.S.
taxpayer hundreds of millions of dollars.
You should also know that we face other claims by Iran at the
Tribunal totaling billions of dollars. We are vigorously contesting
these claims. If we are unable to pay awards against us, our position
before the Tribunal in these other claims will clearly be undermined.
eliminating legal separateness of agencies and instrumentalities
Let me now turn to the provision of the proposed legislation that
would change the way the FSIA defines a foreign state's agencies and
instrumentalities for terrorism-list countries where there is a
terrorism-related judgment against it. This provision would overturn
the Congress's own considered judgment when it passed the FSIA in 1976,
as well as existing Supreme Court case law and basic principles of
corporate and international law. In addition, it would prejudice the
interests of U.S. citizens and corporations who invest abroad.
This provision would make corporations that are majority-owned or
controlled by a terrorism-list foreign government liable for all of the
individual debts of that government. The Congress recognized the danger
of this position when it passed the FSIA in 1976. The Conference Report
to that bill observed that ``If U.S. law did not respect the separate
juridical identities of different agencies or instrumentalities, it
might encourage foreign jurisdictions to disregard the juridical
divisions between different U.S. corporations or between a U.S.
corporation and its independent subsidiary.''
U.S. citizens and corporations have far more money invested abroad
than those of any other country, and thus have more to lose if
investment protections such as those provided by the presumption of
separate status is eroded. If we saddle the investors of other
countries with the debts of foreign governments with which they are co-
investors, as the proposed legislation would do, then we can expect
U.S. investors to pay a considerably higher price when other
governments follow our example.
This hearing has afforded a welcome opportunity to discuss a very
important subject involving the fight against terrorism, compensation
for victims, and critical national security interests. Unfortunately,
however, the concerns raised here today indicate that the 1996
amendment waiving sovereign immunity and creating a judicial cause of
action for damages arising from acts terrorism has not met its purposes
of providing compensation to victims and deterring terrorism. In fact,
if blocked assets were exhausted to compensate the families, which
would be the result of this bill, the leverage to affect the conduct of
the terrorist-list states would be lost along with the blocked assets.
I hasten to add that we are not happy that these suits have not led to
recovery for families who have brought cases under the 1996 amendment.
A system that has to date left no recovery option other than one that
conflicts with U.S. national security interests is not an acceptable
system.
We are anxious to work with the Congress to address this difficult
problem. Together, we hope to formulate short and longer-term
approaches that will address the concerns--of compensation for
terrorist acts and the U.S. national interests and international
obligations that we all share--in a much more satisfactory way. Most
important, we believe that for a workable and effective longer-term
solution we need a careful and deliberative review of the issues,
informed by our experience since the 1996 amendment. We suggest that
the Administration and Congress commit to a joint commission to review
all aspects of the problem, and to recommend to the President and the
Congress proposals to find ways to help these families receive
compensation, in a way consistent with our overall national interests
and international obligations.
This commission's task would differ from previous commissions such
as that established under the 1996 Antiterrorism and Effective Death
Penalty Act. The ``Commission on the Advancement of Federal Law
Enforcement'' has 10 specific areas of inquiry in its broad law
enforcement charter, with capability to investigate and deter terrorism
being only one of them.
We believe that the new commission should be one of stature and
with the right expertise to confront all the hard issues we have
discussed today--including the lack of effective remedies in these
cases because of sanctions against terrorism-list countries under U.S.
law, which are absolutely necessary to maintain. I would like to pursue
this idea in more depth with you and your staffs.
A fundamental principle for this joint commission--by definition--
would be the need to inventory outstanding claims and develop an
effective and fair mechanism for compensation of victims of terrorism.
We believe it should be encouraged to think broadly, including
consideration of avenues other than the judicial one created by the
1996 amendment.
Just as important, the commission should be guided by the principle
of preservation of blocking programs and protecting diplomatic
property, for the important reasons we have addressed here today. In
this light, we would suggest that the commission should present
alternatives to statutes that would make blocked assets available for
attachment, such as last year's amendments to the FSIA and the recent
bill presented for consideration by this committee. Just as critical
U.S. interests served by blocking must be preserved, so should the
commission consider the likelihood that, under the current scheme,
foreign countries will take reciprocal actions against U.S. property
abroad--both diplomatic and private.
Once again, we are committed to working together with you to find
legislative and non-legislative means for addressing these issues. As
one critical part of this effort, we look forward to beginning work on
a commission so it can be constituted soon and be charged with making
its recommendations within 12 months thereafter.
Senator Kyl. Would the members of the third panel please
come forward. They are Stephen Flatow, Maggie Khuly, Dr. Allan
Gerson, Dr. Patrick Clawson, and Leonard Garment.
Leading off the third panel is Stephen Flatow. Mr. Flatow's
daughter, Alisa, was murdered by Iranian-backed terrorists in
Gaza in 1995, and since that time, he has been an outspoken and
persistent advocate of the rights of victims to seek redress
against terrorist states in the U.S. courts.
Our second witness on this panel is Maggie Khuly. Ms. Khuly
is the sister of Armando Alejandre, a Vietnam veteran and a
member of the Brothers to the Rescue, who was murdered by the
Cuban air force on February 24, 1996. She is also an advocate
for the rights of victims to seek redress against terrorist
states in the U.S. courts. I should note that she is
accompanied today by Miriam de la Pena, the mother of Mario
Manuel de la Pena, another member of Brothers to the Rescue who
lost his life on that same day.
The third witness on the panel is Dr. Allen Gerson, who is
a Senior Fellow for International Law and Organizations at the
Council on Foreign Relations and former Deputy Assistant
Attorney General and Counselor for International Affairs with
the Department of Justice. Dr. Gerson has also served as chief
counsel to U.N. Ambassadors Kirkpatrick and Walters and also
was a resident scholar at the American Enterprise Institute for
Public Policy Research.
The fourth witness is Dr. Patrick Clawson. Dr. Clawson is
the Director for Research at the Washington Institute for Near
East Policy and is the editor of Middle East Quarterly. Dr.
Clawson spent 5 years as a senior research professor for the
Institute of National Strategic Studies of the National Defense
University and has previously served as the senior economist
for the Foreign Policy Research Institute, the World Bank, and
the International Monetary Fund. He has written extensively on
the issue of financial considerations in dealing with terrorist
states.
And last but certainly not least is Leonard Garment, the
distinguished former counsel to President Richard Nixon and
assistant to President Ford. Mr. Garment's illustrious career
has also included stints as U.S. Representative to the
Commission on Human Rights at the United Nations Economic and
Social Council and counselor to the U.S. delegation to the
United Nations.
We welcome all of you to the panel today. What I would like
to do is ask each of you, if you can, to confine your remarks
to 5 minutes. We will assist you by lighting the lights with
the green, and then when the amber light comes on, I think that
is 30 seconds, I believe, and that will give you an indication
of when you are nearing the 5-minute time. We very much
appreciate your presence on the panel here, all five of you.
Mr. Flatow, would you like to begin, please.
PANEL CONSISTING OF STEPHEN FLATOW, WEST ORANGE, NJ; MAGGIE
ALEJANDRE KHULY, MIAMI, FL; ALLAN GERSON, SENIOR FELLOW FOR
INTERNATIONAL LAW AND ORGANIZATIONS, COUNCIL ON FOREIGN
RELATIONS, NEW YORK, NY; PATRICK CLAWSON, DIRECTOR FOR
RESEARCH, WASHINGTON INSTITUTE FOR NEAR EAST POLICY,
WASHINGTON, DC; AND LEONARD GARMENT, WASHINGTON, DC
STATEMENT OF STEPHEN FLATOW
Mr. Flatow. Thank you, Mr. Chairman. Good morning. My name
is Stephen Flatow. My 20-year-old daughter, Alisa, was killed
in a bus bombing by terrorists sponsored by the Islamic
Republic of Iran. I am not here this morning to mourn Alisa or
to even seek anybody's sympathy. I am here instead to prevent
future terrorist attacks and to tell you, sir, that what is
unseemly is to be led down the primrose path by my government
as we attempt to bring to justice those responsible for Alisa's
death.
Mr. Chairman, Alisa died on April 10, 1995. Late that
evening, as I sat in my hotel room in Israel, I received a
long-distance telephone call from a father. He expressed his
condolences and wondered aloud with me if he would have the
same strength that I seemed to be displaying. Before we hung
up, Bill Clinton also told me that he would help us find those
responsible.
A year later, I was invited to the White House to attend
the signing of a new law that would help in the fight against
terrorism. The law would give our Government new tools in the
battle against this scourge. More importantly, for the first
time, American citizens would be able to use American courts to
sue foreign countries that sponsor terrorist attacks. Not
possessing any military might but possessed instead with faith
in the American legal system to achieve justice, I was
encouraged by the President's oft-stated commitment to use all
tools necessary to defeat terrorists and their sponsors. The
Anti-Terrorism Act was to be my tool.
As you know, my family has sued the Islamic Republic of
Iran for its role as the sponsor of the attack that killed
Alisa. In March 1998, we were awarded $247.5 million by the
U.S. District Court here in Washington, following a 2-day trial
during which we produced 22 witnesses.
We did not take on the responsibility of suing a foreign
country lightly. In fact, we might not have done so at all
except for some very clear signals from the Clinton
administration that it would back us.
Mr. Chairman, on several occasions, I turned to the
administration for information and assistance as we prepared
our case and began our legal battle, and the administration was
with me, so I believe. We were provided with information
concerning the group responsible for the attack, the
involvement by Iran as its financial and moral sponsor. Our
legal papers were rushed through State Department channels to
service on the Iranian government. This could not have happened
without the administration's assistance and support.
To say that I was encouraged by events would be an
understatement. Here I was, an average American citizen
receiving the help of his government as he sought to obtain
justice for his daughter. However, nothing would prepare me for
the letdown that would come on the very day that Judge Lambreth
awarded us our judgment. On that day, the State Department
spokesman was quoted as saying that the United States does not
believe in judgments but rather in negotiations with foreign
countries.
The muted satisfaction of our court victory was soon
tempered further by the administration's efforts to block our
attempts to collect from Iranian assets still located in this
country. The Secretary of the Treasury refused to provide
information about these assets. The search was, quote, ``too
burdensome,'' Treasury's lawyers told me. Our seizure of former
Iranian diplomatic property rented out for 20 years by the
State Department was opposed in the courtroom by a phalanx of
government lawyers.
A 1998 law designed to assist Americans to collect on their
awards was waived by the President immediately after it was
signed. Yet, at the same time, the President publicly promised
to help our family locate commercial assets of the Iranian
government. Subsequent meetings with the President and with the
State Department have failed to produce any tangible
assistance, and when we asked State to come with us to court to
say that a property was Iranian, they refused to do so.
Sadly, despite very strong reactions to other terrorist
attacks involving Americans, we have become the odd man out,
and more than a year after obtaining my judgment, I am still
being opposed by the State Department in my efforts to make the
Iranians pay the price prescribed by the Anti-Terrorism Act.
Somehow, my use of the Federal law has come to be seen as an
attack on the foreign policy of the United States.
Am I frustrated and discouraged? Absolutely. Anyone who
spent several tens of thousands of dollars, has spent hundreds
of hours walking the halls of the Senate and House office
buildings, and talking with you, your colleagues and staffers,
and has been forced with his family to relive day in and day
out a tragedy that tore that family apart would feel nothing
else.
Am I going to quit? No, Mr. Chairman, I am not. A father's
responsibility to his child does not end with her murder. Even
if my country's fight will wobble from time to time, my battle
will continue. The memory of Americans killed by terrorists
requires us to continue to protest against administration
attempts to stifle our efforts to collect that which has been
awarded to us. If the administration will not help us, then at
least let it get out of our way and stop sending lawyers to
court at taxpayer expense to defend the interests of terrorist.
If we do not succeed, Mr. Chairman, killers will be allowed
to get away with murder and our Government will be sending a
message that those who commit murder will not pay a price. That
should be unacceptable to all of us here this morning.
I thank you for the committee's interest in our plight and
would be glad to answer any questions if time allows.
Senator Kyl. Mr. Flatow, you put a great deal in that 4\1/
2\ minutes and I appreciate that very, very much. An excellent
statement.
Mr. Flatow. Thank you.
Senator Kyl. Maggie Khuly.
STATEMENT OF MAGGIE ALEJANDRE KHULY
Ms. Khuly. I am speaking today for the Costa, Alejandre,
and de la Pena families.
The Cuban government murdered Carlos Costa, Armando
Alejandre, my brother, Mario de la Pena, and Pablo Morales on
February 24, 1996. They were killed over international waters
by air-to-air missiles shot from Cuban MiG's. The missiles
pulverized the two small unarmed civilian aircraft they were
flying while searching for fleeing Cuban rafters. Cuba has
publicly stated that the murders were premeditated and accepts
responsibility for the killings.
The killings were such a flagrant violation of human rights
and of international law that we did not doubt the United
States would demand and obtain justice in our case. On February
26, President Clinton asked Congress to pass legislation to
provide compensation for the families out of Cuba's blocked
assets in the United States On March 6, then-U.N. Ambassador
Albright before the U.N. General Assembly decried the fact that
Cuba had not yet offered compensation to the families. We met
with President Clinton on April 29, 1996, and again he
reassured us of the United States' commitment to justice.
On April 24, 1996, Congress passed the Anti-Terrorism and
Effective Death Penalty Act. This authorized us as Americans to
seek redress for the murders through U.S. courts. Congress had
empowered us in our request for justice. To file under the
Anti-Terrorism Act, we had to meet two conditions, American
citizenship and terrorist status for the guilty country. We met
both.
Carlos Costa was born in Florida and Mario de la Pena in
New Jersey. Armando Alejandre came to the U.S. as a child,
later became a Marine, and volunteered for a tour of duty in
Vietnam, where he risked his life for his adopted homeland. The
three were Americans. The first condition had been met. The
second one was met, also. The Department of State has listed
Cuba as a state sponsor of terrorism from 1992 up to the
present.
We also consulted U.S. Government officials before we sued
under this new law. On August 22, 1996, we met with Michael E.
Ranneberger and officials from the Department of State at the
Office of Cuban Affairs. During this meeting, we discussed
possible civil action under the Anti-Terrorism Act and talked
about the forthcoming humanitarian payments from the United
States to the families. We wanted to make very sure that if we
accepted these payments, we were not jeopardizing our ability
to file under the Anti-Terrorism Act.
We were assured by Mr. Ranneberger that President Clinton's
payments were only a gesture, not compensation, and that we
were free to pursue any other avenues in our search for
justice. He added that not only was the U.S. Government
unopposed to our filing the civil action, but that it
encouraged us to do so. President Clinton himself in his letter
accompanying the funds called the amounts humanitarian
payments. As we clearly explained to Mr. Ranneberger and to all
other officials we spoke to, we were looking for justice, not
charity, and I would like to add as an aside that I am deeply
offended at Mr. Eizenstat's comments repeatedly calling it a
race to the court, because we were empowered by the U.S.
Government to do so and we acted within our rights.
There was no problem when a Federal judgment in December
1997 called the shoot-down a murder in outrageous contempt for
international law and basic human rights. There was no reaction
from either the Cuban or the U.S. Government at this
condemnation. The problem began when we tried to collect on
this judgment and the United States adopted an adversarial
position towards us and Cuba then decided to step in.
No words can possibly explain our shock when we went to
court and found U.S. attorneys sitting down at the same table
as Cuba's attorneys. How can you explain to a mother who has
lost her son, to a wife who has lost her husband, to a daughter
who has lost her father, that their own government is taking
the murderers' side? How can one understand the claim by the
United States that the frozen funds are needed to promote civil
society and democracy in Cuba and then have our country not
take into account basic human rights and justice? What message
are we, the United States, sending the Cuban people and its
government when we allow a violation of the right to life to
remain unpunished?
The Clinton administration has shut its doors to us. We are
rebuffed even when we want to talk about other issues, such as
criminal indictments. Secretary of State Albright, for example,
will not meet with us on any of our other concerns because, to
quote an aide, ``we are on opposing sides of this civil
action.'' Are we? We thought we were the victims' families,
victims ourselves. We thought we were Americans, entitled to
protection from our own country. We thought Cuba was the
terrorist, the guilty party.
We would like to know what kind of law the Anti-Terrorism
Act is. If it is specifically applicable to terrorist countries
only, and all the U.S. assets of terrorist countries are
frozen, does this mean that American victims of terrorism will
never have access to them? Do we have to depend on an
individual Presidential determination of what human rights are
and how they are to be defended? And what is Congress's role in
all of this, the same Congress who felt so very strongly about
defending Americans and punishing terrorism that it passed this
law? Who will stand up for the rights of Americans against
international terrorism? Thank you very much.
Senator Kyl. I was not sure that Mr. Flatow's statement
could be topped, but I am sure he would not feel badly if I
said your statement has made equally the argument that your
U.S. Government needs to act on your behalf, and I appreciate
your statement very much.
Dr. Gerson, we are delighted to have you with us today.
STATEMENT OF ALLAN GERSON
Mr. Gerson. Thank you. Good morning, Mr. Chairman. It is an
honor for me to appear here today.
I believe that when the history of the 20th century is
written, that the efforts of the U.S. Senate to assure that
American victims of international terrorism have their day in
court, that they be accorded an opportunity to hold accountable
in U.S. courts the perpetrators of horrendous crimes against
their loved ones, and that they make sure that such judgments
are honored, will go into the history books as one of the most
important advances in the development of international
humanitarian law, consistent with the highest ideals and
interests of this Nation.
Mr. Chairman, I am not involved in the representation of
the families of the downed Brothers to the Rescue fliers in
their action against Cuba, nor do I have any involvement in the
actions that have been filed and the judgments that have been
awarded against the American families of victims of Iranian-
sponsored terrorism. And yet, Mr. Chairman, there is, I
believe, an intimate connection that we share with all of these
families.
I represent a number of families of the bombing of Pan Am
Flight 103, which exploded over Lockerbie, Scotland, on
December 21, 1988. Indeed, it was through the efforts of the
families of the victims of Pan Am Flight 103, in unison with
the efforts of another group of victims of a terrible tragedy,
the Oklahoma bombings, which made possible in 1996 the passage
of the Anti-Terrorism and Effective Death Penalty Act.
Once that Act was passed, we finally had access to the
courts after a very, very long and hard struggle. For three
years before that, we argued that the Foreign Sovereign
Immunities Act must be read by the court to waive the immunity
of states that deliberately engage in terrorism against
American citizens. We lost in the district court, we lost in
the court of appeals, and we lost in our appeal to the U.S.
Supreme Court. Throughout this process, Libya appeared in the
courts and very ably defended its claim to sovereign immunity.
It was only after passage of the Act that we finally had an
opportunity to seek justice in the U.S. courts.
The point I want to make, Mr. Chairman, is that in securing
passage of that Act in 1996, we, that is, the representatives
of the families of Pan Am 103, worked very closely to try to
have the U.S. Department of State drop their opposition. It was
also, I might add, a shock to us when we went into U.S.
district court earlier and found that the Justice Department
attorneys had appeared in court not on behalf of the families
of the victims, but really on behalf of Libya in pursuit of its
claim to total sovereign immunity.
We wanted to make sure that, finally, the State Department
and the U.S. Government would be on our side. We understood
their concerns. Many of those concerns were rearticulated today
by Mr. Eizenstat. They dealt with the questions of reciprocity,
of the fear that U.S. citizens might be subjected to the
jurisdiction of foreign states, and the erosion of maximum
flexibility by the executive branch in dealing with terrorist
governments.
But at the end of the day, we were able to obtain the end,
or so we thought, of State Department opposition to the passage
of that Act when we accepted their insistence that the Act
provide that it is not the U.S. courts, but rather the State
Department, that would be the final determiner of which states
are terrorist states or sponsors of terrorism. That gave them
enormous flexibility. It gave the executive branch enormous
flexibility, and we went along with that provision at a very
high price, because we realized that insertion of that
provision into the law would cause us a host of problems in the
courts, as Libya's lawyers could be expected to challenge the
constitutionality of this provision on the grounds of an
unconstitutional delegation of power.
In fact, true to our fears, we became tied up for the next
2 years in litigating this particular point before the U.S.
district court, the U.S. Court of Appeals for the Second
Circuit, and in briefs before the U.S. Supreme Court.
Fortunately, in this round, the U.S. Department of Justice
appeared on our side. Finally, we were able to prevail.
We assumed, of course, that if we were then able to obtain
a judgment once the civil trial was allowed to go forward, that
the courts would do everything within its power to honor that
judgment. We could not imagine that the U.S. Government would
then try to stop collection of that judgment by freezing frozen
assets.
Mr. Chairman, I see the yellow light has gone on. I have
only about a page left, if I may be allowed to get to my point.
Now, to be sure, the President of the United States is
entitled to tremendous flexibility in the conduct of U.S.
foreign policy. As a former Deputy Assistant Attorney General
for Legal Counsel, my job was to promote the President's
prerogative in the realm of foreign affairs. But, Mr. Chairman,
I believe that some balance needs to be drawn between the
rights of justice by individuals who are the victims of
terrorist states and the need for Presidential flexibility in
dealing with such governments.
Again, what message about our own sense of morality do we
send in saying that frozen foreign assets are mere bargaining
chips? Perhaps in other matters of commercial import, but not
where the lives of American citizens have been extinguished and
their families have exercised their day in court. It has been
argued that allowing such judgments to be honored gives them
priority over other claims against such governments where no
judgment has yet been obtained.
But Mr. Chairman, I submit that when Congress enacted the
Anti-Terrorism Act, it gave certain priorities to certain
classes of victims precisely because they realize that the
national interests of the United States are involved and that
national priorities are involved when countries go to war
against American citizens. Surely the courts, and surely the
legislature, can deal with such issues, as Senator Feinstein
suggested earlier, which is about placing caps on available
judgments or about instituting provisions that will allow the
courts to take into account the needs of similarly situated
claimants.
What gives me pause, Mr. Chairman, is the statement of Mr.
Eizenstat which suggests in his testimony that there is a need
to create other avenues, and he has made clear that creating
other avenues encompasses the possibility of creating a new
commission. We fear that that may signify the creation of a new
commission other than the judicial one which was created by the
1996 amendments, thus, in essence, subverting that terribly
important amendment.
One other point, and this is my final point, Mr. Chairman.
The government of Libya has seen fit to go into U.S. courts and
wage a long and arduous and, indeed, an honorable battle to
overcome the imposition of U.S. jurisdiction through the Anti-
Terrorism and Effective Death Penalty Act. By contrast, the
governments of Cuba and Iran have simply defaulted and have not
appeared in court when similar suits under that Act were
brought.
Were we today to not honor judgments reached by courts as a
result of default, what incentive would there be for countries
to wage battles in our courts? They would simply, like Cuba and
Iran, thumb their noses at us, adding insult to injury and
showing contempt for the U.S. courts.
For this reason, I believe that whether a civil judgment is
entered as a result of default or after trial, it is entitled
to execution. Placing foreign assets off-limits, which is
essentially what this Presidential waiver seeks to do, can
render a judgment meaningless and, thus, make a mockery of
justice.
It is for this reason that I support the efforts especially
of Senators Connie Mack and Frank Lautenberg and others in
promoting legislation that would clarify and prevent
administration interference in the Federal court's enforcement
of judgments that have been validly entered pursuant to the
Anti-Terrorism and Effective Death Penalty Act.
American victims of terrorism have earned their day in
court. They have earned their day to having their judgments
honored. The President of the United States should not be
permitted to interfere with the processes of justice accorded
to them in a very narrowly-defined range of cases where an
exception was deliberately and carefully wrought to the normal
immunity of foreign states from being sued for damages in the
U.S. courts.
Thank you, Mr. Chairman, and thank you for giving me that
extra time.
Senator Kyl. Thank you, Dr. Gerson.
[The prepared statement of Mr. Gerson follows:]
Prepared statement of Allan Gerson
Distinguished Senators: It is an honor for me to appear here today
and I thank the Judiciary Committee and its Chairman, Senator Orrin G.
Hatch, for the kind invitation to testify on the subject of this
hearing: Victims' Access to Terrorist Assets .
When the history of the 20th century is written I have no doubt
that the efforts of the US Senate to assure that American victims of
international terrorism have their day in court, and be accorded an
opportunity to hold accountable in US courts the perpetrators of
horrendous crimes against their loved ones, will go into the books as
one of the most important advances in the development of international
humanitarian law consistent with the highest ideals and interests of
this nation.
I am not involved in the representation of the families of the
downed Brothers to the Rescue fliers in their action against Cuba. Nor
do I have any involvement in the lawsuits that have been filed, and the
judgments that have been awarded, against the American families of
victims of Iranian sponsored terrorism. My representation, together
with the law firm that I am associated with in this litigation--
Sonnenchein, Nath & Rosenthal, and my associate, attorney Mark Zaid, is
limited to a number of families of the bombing of Pan Am flight 103
over Lockerbie Scotland on December 21, 1988.
And yet, there is between us an intimate connection with all these
families--those directly affected by the Brothers to the Rescue
bombing, those of former American hostages in Iran, Joseph Cicippio and
David Jacobsen, and the family of Alisa Flatow, a student visiting Gaza
murdered by Iranian-backed terrorists. We are also co-joined with the
families of the victims of the Murrah Federal Office Building bombing
in Oklahoma City in 1995. For the suits filed against Cuba and Iran
were merely the first progeny of what was made possible through passage
of the Antiterrorism and Effective Death Penalty Act of 1996. And that
Act was, in many key respects, the fruit of joint action of the
families of the victims of the Lockerbie and the Oklahoma bombings.
Joined together by fate, they lobbied in pursuit of a common purpose:
deterrence of future acts of terrorism through enactment of stringent
countermeasures which would open America's civil justice system as a
means for accountability through trial and award of compensatory and
punitive damages if successful in obtaining a judgment.
In this regard, it may be of some value to the Committee if I
recount the genesis of my own involvement in this matter. In July 1,
1992, while a professor of international law and transactions at George
Mason University I published an article in the New York Times Op-Ed
page entitled ``Compensate Libya's Victims''. I represented no one at
the time, but as someone who had experience with the then newly
established UN claims commission through which Iraq was required to
compensate victims of its Scud missile attacks and aggression in the
Gulf War, I contended that served as a model for claims against Libya
with regard to the Pan Am 103 bombing . I noted that: ``The White
House, despite its UN efforts against Libya, has been reluctant to take
the extra step needed to give bite to the UN Security Council
resolutions. It should urge the UN Security Council to immediately
establish a UN claims commission. However, after initial success in
getting the proposal for such a commission endorsed by the State
Department--I had in the interim been retained as counsel to one of the
Pan Am 103 family members--the proposal foundered at the last moment at
the White House.
What followed in the absence of that proposed measure to find some
means of accountability and compensation was a long hard struggle of
one and then three Pan Am 103 family members. We had to buck the then
prevailing wisdom that there was no way, pursuant to international law
and the domestic law of the United States, to hold accountable a
foreign state that purposefully destroys the civilian aircraft of
another and deliberately murders civilian passengers aboard that craft
even where it involves the flagship carrier of the United States with
189 American citizens abroad.
The 1976 Foreign Sovereign Immunities Act (FSIA) were cited as an
absolute impediment to what we were trying to accomplish. We claimed
otherwise and in suits filed in the US District Court for Washington
DC, then in federal court in the eastern district of New York we
contended that it was implicit that the FSIA never intended to provide
immunity to states engaged in terrorism against American citizens; that
sovereign immunity need be viewed as a privilege that could be waived
by outrageous conduct unbecoming the behavior of any civilized body. It
was an argument we made in vain. At every opportunity Libya's able
lawyers who had appeared in court to contest the suit argued that we
were precluded by the literal language of the FSIA. Their argument was
upheld by the US District Court. Then, before the US Court of Appeals
the United States government through US Justice Department attorneys
that I had worked with for many years in that distinguished institution
appeared on behalf of the position that Libya was espousing. A common
interest emerged in evading state responsibility and accountability
through the civil courts for the most heinous of crimes. The federal
court of appeals upheld that rulings, and the US Supreme Court declined
any further review.
That would have been the end of the matter, after three years of
struggle. But another national tragedy intervened: the bombing of the
federal office building in Oklahoma City. When one of our Pan Am 103
clients went out to Oklahoma on a mission of mercy to cater to the
grief of those families, she discovered a common bond. Both group of
families believed that justice deferred could be justice denied. The
families of the Pan Am 103 disaster had by then waited for nearly seven
years for some measure of justice. The Oklahoma bombing families did
not want to see the perpetrator of that bombing spend the next 17-18
years on death row--the then national average for convicted killers
exhausting appeals. They wanted justice within one to two years of the
time a conviction was sustained by the courts. Together their political
alliance made possible passage of the historic 1996 Antiterrorism and
Effective Death Penalty Act.
I have in my hand, and I ask that it be made a part of the official
Congressional Record, the sheet of paper distributed by the Pan Am 103,
Oklahoma and other families on that historic day in April 1996
preceding the vote on the bill. It reads, in its simple eloquence:
``Give Us Our Day In Court. Families of the victims of Pan Am 103, the
Oklahoma City bombing and the family of Leon Klinghoffer ask for your
support in favor of H.R. 2703, the Effective Death Penalty and Public
Safety Act of 1996 and in particular its 'right to sue' provision. Why
deny American victims of terrorism their right to hold terrorist states
accountable in US courts of law?''
Securing passage of that Act required working with the U.S.
Department of State to secure its cooperation, or at least dropping
opposition, to its enactment. Then as today, the concerns were the
same: worries about reciprocity, fearing that if foreign governments
are subjected to the jurisdiction of U.S. courts, foreign countries
will soon start conducting their own trials of Americans; concern that
U.S. courts are ill-equipped to pass judgment on foreign legal systems;
and perhaps most prominently of all, concern that the Executive
Branch's need for maximal flexibility in dealing with terrorist states
would be eroded. Mark Zaid and I submitted joint statements at the
hearing of the Senate Subcommittee on Courts and Administrative
Practice held on June 16, 1994 and in July 1994 to the House Foreign
Affairs Subcommittee on International Security, I International
Organizations and Human Rights in an attempt to mollify Administration
concerns shared by a number of Senators and Congressmen. At the end of
the day, State Department opposition effectively ended with acceptance
of their insistence that the Act provided that it, not the U.S. courts,
should be the final determiner of which states are ``terrorist'' states
or sponsors of terrorism. Reluctantly, we went along with this request,
knowing full well that its insertion would likely cause us a host of
problems as Libya's team of lawyers could be expected to challenge the
constitutionality of this provision on the grounds of an
unconstitutional delegation of power. True to our fears, we became tied
up for the next two years in litigating this particular point before
the U.S. District Court, the U.S. Court of Appeal for the Second
Circuit and in briefs in opposition to petitions for certiorari filed
by Libya's lawyers before the U.S. Supreme Court.
Fortunately, in this round, with the assistance of the U.S.
Department of Justice which appeared on our side, we were able to
prevail in the U.S. District Court, the U.S. Court of Appeals and the
U.S. Supreme Court. Of course, it was assumed once this massive hurdle
had been surmounted that if we went to trial--as we proceeded to do (we
are now involved in pre-trial preparations)--and if after a trial we
succeeded in obtaining a judgment, that the courts would do all in its
power to enforce that judgment. We could not imagine, and indeed still
have trouble imagining that the U.S. government through the exercise of
a presidential waiver, would seek to forestall or prevent the honoring
of a validly entered judgment against the frozen assets of the
defendant state. To be sure, there may be other means for collecting a
judgment than seeking to untap frozen assets. At the same time, frozen
assets may be the only assets available in a particular case. Beyond
that, there is the symbolic aspect: what message would we be sending to
terrorist states if the President finds himself in the position of
protecting their money against recovery by victims of their violence?
How would this accord with President Clinton's declaration on the
signing of the Antiterrorism Act that it represented a ``mighty blow''
against terrorism?
To be sure, the President of the United States is entitled to
tremendous flexibility in the conduct of U.S. foreign policy. As a
former Deputy Assistant Attorney General for Legal Counsel during the
Reagan administration, my job was to protect and promote the
President's prerogatives in the realm of foreign affairs. Still, some
balance needs to be drawn between the rights of justice by individuals
who are the victims of terrorist states and the need for presidential
flexibility in dealing with such governments. Again, what message about
our own sense of morality do we send in saying that frozen foreign
assets are ``mere bargaining chips''? Perhaps in other matters of
commercial import, but not where the lives of American citizens have
been extinguished and their families have exercised their day in court.
It is also argued that allowing such judgments to be honored gives
them priority over other claims against such governments where no
judgment has yet been obtained. But Congress enacted the Antiterrorism
Act precisely because national interests and a sense of national
priorities are involved when countries go to war against American
citizens. While recognizing that fairness of access by a multitude of
claimants, real and potential, to frozen assets is a serious concern,
it would seem that this is a problem for courts to administer. Or
Congress can attempt to legislate a fair mechanism for fully assuring
that only the blocked assets that in fact belong to foreign governments
are subject to attachment, that consular property is considered off-
limits for reasons having to do with diplomatic niceties, and that some
residue of assets be set aside for other claimants that can reasonably
be expected to perfect claims in the foreseeable future. There are, to
be sure, adjustments and fine tuning that can be made to provide for
fairness of access to frozen foreign assets. But great care must be
exercised in doing so to assure that the real and symbolic value of
allowing suits aimed at holding terrorist states accountable not be
stripped of their value by simply giving way to the talisman of
presidential discretion.
There is yet another aspect to this matter that requires attention.
The government of Libya has seen fit to go into U.S. courts and wage a
long and arduous and indeed honorable battle to overcome the imposition
of U.S. jurisdiction through the Antiterrorism and Effective Death
Penalty Act of 1996. By contrast, the governments of Cuba and Iran have
simply defaulted and not appeared in court when similar suits under
that Act were brought. Were we today to not honor judgments reached by
the courts as a result of default, what incentive would there be for
countries to wage battle in our courts? They would simply, like Cuba
and Iran, thumb their noses at us, adding insult to injury, and showing
contempt for the U.S. courts. For that reason, I believe that whether a
civil judgment is entered as a result of default or after trial, it is
entitled to execution. Placing foreign assets off-limits can render a
judgment meaningless, thus making a mockery of justice.
For this reason, I support the efforts of Senators Connie Mack and
Frank Lautenberg and others in promoting legislative clarification to
prevent Administration interference in the federal courts' enforcement
of judgments that have been validly entered pursuant to the
Antiterrorism and Effective Death Penalty Act. American families of
victims of terrorism have earned their day in court. The President
should not be permitted to interfere with the processes of justice
accorded to them in a narrowly defined range of cases where an
exception was deliberately and carefully wrought to the normal immunity
of foreign states from being sued for damages in U.S. courts.
Senator Kyl. Dr. Patrick Clawson.
STATEMENT OF PATRICK CLAWSON
Mr. Clawson. Mr. Chairman, thank you for the privilege of
appearing before this committee. Permit me to say a few words
about financial penalties as a counterterrorism technique. I
will particularly address the Iranian case, since the Islamic
Republic of Iran is the world's principal state sponsor of
terrorism.
Let me offer three theses. First, financial penalties can
discourage state sponsorship of terrorism. Countries like Iran
or Cuba or North Korea sponsor terrorism as a means to advance
their state interests, not out of spite or blind ideology. They
are quite good at calculating the costs and benefits from their
behavior. If the world community imposes no penalties for
violating the normal rules of international behavior, then the
rogues will throw out the rule book. But if there is a price to
be paid, they will consider if the cost of violating those
rules is too high.
Iran has been particularly sensitive to the price it must
pay for terrorism. Clear evidence about this was provided by
the 1997 verdict of a German court in the Mykonos case, holding
Iran's leaders responsible for the murder of four Iranian Kurds
in a Berlin restaurant. The German government was concerned
that Iran might step up its terrorism in response to such a
clear verdict. Quite to the contrary, Iran has not engaged or
sponsored a single act of terrorism on European soil or against
Europeans since the Mykonos verdict.
Second, state sponsors of terrorism do not respect the
normal rules of international behavior in economics, just as
they do not respect them in politics. It is, therefore,
inaccurate to characterize the U.S. counterterrorism financial
claim as somehow being a unique roadblock to normal commercial
relations with these terrorism-state sponsors.
Some might say that allowing financial claims against state
sponsors of terrorism invites retaliation. Indeed, I thought
that is what Mr. Eizenstat was saying at times. In fact, the
U.S. financial penalties could be seen as a response to the
assertive financial measures taken by the terrorism-state
sponsors, a way to redress the balance after the terrorism-
state sponsors use extraordinary financial claims as part of
their campaign against the United States.
For instance, the leaders of the Islamic Republic of Iran
regularly castigate the United States for not paying billions
of dollars which they say we owe them. To justify their
allegations, they have put forward some truly creative claims,
such as a lawsuit asking for billions of dollars in damages
done to Iranian railways during World War II.
Intriguingly, this stream of assertive Iranian claims
against the United States have lessened since the Foreign
Sovereign Immunities Act was amended to permit claims against
Iranian terrorism. In other words, Iran's actions are not
consistent with the theory that the Foreign Sovereign
Immunities Act amendments will provoke retaliation.
By the way, I mentioned Iran's creative claims. Iran also
has legitimate claims against the U.S. Government, primarily
for the return of payments for arms, payments made by Iran
before the 1979 revolution. At the end of the day, the U.S.
Government will probably have to write a very large check to
Iran for those claims. Some have suggested that the amount
involved will be over $1 billion.
So there are some substantial assets at stake here. When
Mr. Eizenstat spoke about the exhaustion of these assets, I
think he was using some creative accounting. He also carefully
left out of his account the hundreds of millions of dollars in
assets which the Iranians had to put aside in a blocked account
in the Netherlands which will be used to pay the U.S. claims
that Mr. Eizenstat mentioned. That money, in a Dutch account,
can only be used to pay the $500 million which the United
States has claimed against Iran.
So I would suggest that the best way to discourage these
kinds of politicized claims by the terrorism-state sponsors is
to take firm U.S. countermeasures. When the United States takes
a compromising stand toward the State sponsors of terrorism,
the general response of those state sponsors is to escalate
their demands rather than to compromise.
A particularly clear case of accommodation versus a firm
stance was provided by the Iranian-sponsored seizure of U.S.
citizens in Lebanon. At first, the United States attempted to
reach a deal with Iran, shipping to Iran arms in the famous
Iran-contra affair. This, Mr. Chairman, was not a success for
U.S. foreign policy. Iran released some hostages, but took more
hostages. By contrast, when the U.S. Government took a hardline
stance, making clear that holding the hostages only brought
Iran grief and they were not going to get back any of the money
that we were holding, the hostages were released.
Finally, my third point is we need clear rules. Some would
argue that the U.S. Government needs flexibility in its
dealings with state sponsors of terrorism. To be sure, but U.S.
citizens and businessmen also need clear, transparent, and
enforceable rules. It would be a most peculiar procedure to
permit judgments, but then allow discretion about the execution
of those judgments.
Mr. Chairman, the U.S. Government has advised many
governments around the world to improve the quality of their
governance by enhancing the rule of law as contrasted to the
discretion of the ruler. The U.S. Government would be advised
to take that advice. The rules about judgments against state
sponsors of terrorism should provide clear guidance about what
will happen once a judgment has been obtained. Thank you, Mr.
Chairman.
Senator Kyl. Thank you very much. I was taking a lot of
notes on what you said there and I want to specifically go back
to the last point that you made.
But first, let us hear from Leonard Garment. Leonard.
STATEMENT OF LEONARD GARMENT
Mr. Garment. Thank you. You have my prepared testimony.
Senator Kyl. All statements will be entered into the
record.
Mr. Garment. I will try to summarize it briefly. Mr.
Chairman, being here today is a source of both satisfaction and
disappointment. The satisfaction lies in realizing that for
over 20 years, Congress has moved steadily to expand legal
remedies for Americans who have been tortured and otherwise
terrorized by foreign states. The disappointment exists because
for the same 20 years, a skillful rear-guard action has shot
these remedies full of loopholes and incoherence.
The Lautenberg-Mack bill closes some critical gaps, and I
am happy to be here at your invitation to support that bill.
The committee's attention to this issue makes me hope that we
can eliminate still more of these loopholes and lacunae.
In 1976, the Foreign Sovereign Immunities Act attempted to
ensure that if a foreign state behaved not as a sovereign but
just as another commercial player, it was not immune from the
American legal process. In 1993, I acquired two clients who had
been victims of state torture. One was Scott Nelson, hired in
this country by a Saudi Arabian hospital to monitor the safety
of its facilities, then tortured by Saudi officials for doing
his job too well. A divided U.S. Supreme Court barred Mr.
Nelson's suit for damages, saying the commercial connection
required by the statute was not as strong as the Act required.
But the opinions of the court implicitly invited Congress
to provide a remedy, so Congress responded in 1996 by amending
the Act to permit American citizens to sue foreign states in
U.S. courts for torture and other terrorist acts. But the new
provisions have two major loopholes.
First, at the behest of the administration, acting for the
State Department, or acting through the State Department, or
acting through various spokesmen, the 1996 amendments provide
that Americans can sue only the seven foreign states on the
Department's own terrorism list--Cuba, Libya, Iraq, Iran,
Sudan, Syria, and North Korea.
Second, if a foreign state's assets in this country are
frozen pursuant to the International Emergency Economic Powers
Act, they are not subject to judicial process.
Congress again amended the Immunities Act in 1998 so that
an American with a judgment against a foreign state for torture
or other terrorist acts can reach those frozen assets. But the
President, after asking for the legislation, and acting again
through the State Department, or acting at the initiative of
the State Department, construed his authority broadly and
preemptively, waived the provisions in toto citing national
security but giving no specifics.
So here we are again. The Lautenberg-Mack bill limits the
President's waiver authority to case-by-case determinations.
The bill closes another loophole by providing that even if
assets frozen pursuant to the Economic Powers Act nominally
belong to a state-owned entity rather than to the government,
they may be used to satisfy a judgment--clear, simple,
undeniably correct.
The administration, of course, opposes this bill. My old
and good friend, Stuart Eizenstat, has been sent here to
present the administration's position. The voice is Mr.
Eizenstat's, but alas, the words are those of the State
Department again. I must say, I do not envy Mr. Eizenstat's
task of spinning verbal gold out of substantive straw.
The administration, through Mr. Eizenstat, claims that it
needs leverage over terrorist states. He warns of retaliation.
But the spokesmen for the State Department or Treasury or the
White House always do, and they do so despite the fact that in
the years since 1976, there has been no retaliation, and
despite the fact that the State Department surely wields far
less deterrent power than does the prospect of being hauled
into a U.S. court. I know the committee will give the
administration's objections the deference they deserve.
Let me make two suggestions. One is semitechnical. The bill
now covers a state-controlled entity's assets in this country
that are frozen pursuant to the Emergency Powers Act but does
not cover assets that are not frozen. There is no reason for a
distinction, and I urge this committee to revise Subsection
(b)(4) of the bill to include both categories.
The other suggestion is not technical. It deals with people
like my now fairly ancient client, Scott Nelson, whose case
began this decade's constructive Congressional activity in this
area. Even with the Lautenberg-Mack bill, states that happen
not to be on the State Department's terrorist list will escape
legal responsibility altogether when they torture or otherwise
terrorize American citizens. There is simply no principled
reason why an American tortured by Cuba, which is on the list,
can obtain redress, while an American tortured by China, for
example, which is not on the list, is without a legal remedy.
If a country does not provide cognizable, effective legal
remedies for such atrocity, a victim should be able to seek
redress in a U.S. court.
A bill has been drafted to that effect, with safeguards to
prevent abuse, that recognize that the State Department has
legitimate areas of institutional concern. That bill in 1998
was killed by the administration with the same arguments,
acting through the State Department, at the last moment, and
absolutely without public scrutiny. The fact of these hearings
is, I hope, a sign that the issue of redress will henceforth be
discussed, examined, and cross examined in public.
It is a horrible world that we live in, filled with
barbarism, and that is precisely the reason why the rule of law
is central to civilized life, the point, Mr. Kyl, that you make
so clearly, emphatically, and eloquently. It is as simple as
that. We must apply due process in the service of decency where
and when we can. The committee, I think, understands this
imperative, and for this, we should all be grateful. Thank you
very much.
Senator Kyl. Thank you very, very much.
I am reminded of the business meeting of the Appropriations
Committee held just a few weeks ago in which I offered the
amendment which is now the Mack-Lautenberg bill, and it was a
closed meeting, not open. The objection to the amendment was,
well, of course, this means that since the administration has
signaled that it would veto our legislation if your amendment
is adopted, this means we have to defeat your amendment, and my
amendment was, in fact, defeated, all behind closed doors, the
point you made, Mr. Garment.
I appreciate the fact that we are now in open hearing and
we can discuss this openly, and I suspect that the public
reaction to what the administration has done here will help
persuade the administration that it will need to work with us
to get meaningful legislation passed, so I appreciate that last
point you make.
Mr. Garment. If I may, I think I omitted it, but the bill
that was presented these many years ago is before the committee
again, in my prepared testimony. Thank you very much.
Senator Kyl. You remind me to take a look at that and see
if we can move that into public light, as well.
Mr. Garment. I will, indeed.
[The prepared statement of Mr. Garment follows:]
Prepared Statement of Leonard Garment
Mr. Chairman and members of the Committee: Thank you for inviting
me to present my views on the Mack/Lautenberg bill. That bill would
amend the Foreign Sovereign Immunities Act (``FSIA'') by making it
clear that American citizens who are the victims of terrorist acts have
a right to obtain redress by attaching the frozen assets of the state
responsible for such acts. This legislation will provide a significant
deterrent to states that commit or might be responsible for the
commission of terrorist acts, and will ensure that American citizens
are not left without a remedy if such acts do occur.
In 1976, Congress enacted the FSIA to ensure that our citizens
would have access to American courts to resolve ordinary legal disputes
involving foreign states. The FSIA codified the restrictive theory of
sovereign immunity, under which foreign states are immune from the
jurisdiction of the courts of another state only when they commit
public or sovereign acts, but not when they commit private or
commercial acts. While the focus of the FSIA was on commercial
disputes, the Act also provided an important exception to the general
principle of immunity in cases involving personal injury and death as a
result of the tortuous conduct of a foreign state occurring in the
United States. The courts have construed this ``non-commercial tort''
exception to sovereign immunity as applying to gross abuses of human
rights such as political assassination perpetrated by foreign states on
U.S. territory. See, e.g., Letelier v. Republic of Chile, 488 F. Supp.
665 (D.D.C. 1980); Liu v. Republic of China, 892 F.2d 1419 (9th, Cir.
1989).
The FSIA did not, however, provide a remedy in U.S. courts for
abuses of American citizens' human rights committed outside the United
States, unless those abuses were somehow linked with a foreign state's
commercial activities in the United States. In Nelson v. Saudi Arabia,
507 U.S. 49 (1993), the Supreme Court interpreted this FSIA's
requirement of a commercial nexus to bar, as a practical matter, any
suit in a U.S. court by an American citizen who was the victim of
state-sponsored terrorism. In that case, my client, Scott Nelson,
brought suit against Saudi Arabia for acts of torture by Saudi
officials that left him permanently disabled. Despite Mr. Nelson's
allegation that his torture was retaliation for his performing the job
that the Saudi Government recruited him in the United States to
perform, the Supreme Court regretfully held that the link to commercial
activity was too weak to justify the assertion of jurisdiction over
Saudi Arabia.
In response to a suggestion implicit in the Supreme Court's
decision in Nelson, Congress amended the FSIA in 1996 to permit
American citizens to sue certain foreign states when those states
commit terrorist acts against American citizens. Two critical loopholes
in the 1996 amendments left most American citizens who have been
victims of such acts without any effective remedy. First, at the
insistence of the Clinton Administration responding to State Department
concerns, the legislation was restricted in the final night's
Conference to allow suit only against those foreign states placed by
the State Department on its terrorism list, which now includes only
Cuba, Iraq, Iran, Libya, North Korea, Sudan and Syria. As a result,
foreign states that are not on the terrorism list can continue to
torture and otherwise terrorize American citizens without fear of being
held accountable in American courts. Second, even with respect to those
states that are on the terrorism list, the legislation failed to take
into account the fact that the assets of most of these states had been
frozen pursuant to the International Emergency Economic Powers Act
(``IEEPA'') and were, by the terms of the Act, not subject to judicial
process.
In response to this problem, Congress again amended the FSIA in
1998 to permit American citizens who are victims of state-sponsored
terrorism to enforce any judgment they may obtain by executing against
the blocked property of a foreign state. However, the President, even
as he signed the legislation containing these amendments, announced his
intention to nullify them. Invoking reasons of ``national security,''
he simply ``waived'' the provisions relating to execution against
frozen assets, relying upon legislative language that he broadly
construed as giving him such authority. The proposition that the
President could turn the 1998 amendment to the FSIA into a nullity by
making a sweeping and unsupported assertion that those provisions
endanger our ``national security'' is not only illogical, but
outrageous. The words are those of the President, but the voice, again,
is that of this State Department bureaucracy. The Mack/Lautenberg bill
properly rejects this constitutionally dubious construction of the
President's waiver authority by expressly limiting that authority to
determinations relating to particular assets used for diplomatic
purposes on an ``asset-by-asset basis.''
The Mack/Lautenberg bill would also erase another ambiguity in the
1998 amendments that can impair the ability of American victims of
state-sponsored terrorism to obtain redress. This ambiguity first
surfaced in Alejandre v. Republic of Cuba, a case involving the killing
of two American citizens who private aircraft was shot down over
international waters by the Government of Cuba. In a decision rendered
this summer, a U.S. Court of Appeals held that the family members of
the deceased American citizens could not enforce the judgment they had
obtained against Cuba by attaching Cuban assets frozen pursuant to
IEEPA, because those assets were owned not by the Cuban Government
outright, but by a Cuban-owned commercial instrumentality. The vast
majority of assets in this country that are owned by foreign states are
held in the name of commercial instrumentalities of the state rather
than in the name of the state itself. Accordingly, the practical effect
of the court's decision is to deny American citizens the right to an
effective remedy when they have been injured by an act of terrorism.
The Mack/Lautenberg bill would prudently address this problem by
making clear that for purposes of enforcing a judgement based on the
commission of a terrorist act, ``all assets of any agency or
instrumentality of a foreign state'' that have been frozen pursuant to
IEEPA ``shall be treated as assets of that foreign state.'' This is as
it should be. In giving the President the authority to attach the
assets of a foreign state that represents a threat to our national
security, IEEPA draws no distinction between the assets of a foreign
state and the assets of its majority owned and controlled agencies and
instrumentalities. A foreign state that disregards the most basic
precepts of international law by committing an act of terrorism against
our citizens sacrifices any privilege it might otherwise have to
protect its assets from attachment by invoking a legal fiction that
those assets belong to a state-owned commercial instrumentality, rather
than to the state itself.
As presently drafted, however, the Mack/Lautenberg bill would
permit the assets of an agency or instrumentality of a foreign state to
be treated as the assets of the foreign state itself only when those
assets have been frozen pursuant to IEEPA. There is no reason to treat
frozen and unfrozen assets differently in cases in which a foreign
state has been held liable for committing acts of terrorism against our
citizens. Accordingly, I would strongly urge this Committee to revise
the language of subsection (b)(4) of the Mack/Lautenberg bill to make
clear that even the unfrozen assets of an agency or instrumentality of
a foreign state will be subject to execution in the case of any
judgment relating to a claim for which that foreign state is not immune
by virtue of its involvement in terrorist activity.
The Department of State can be expected to oppose the Mack/
Lautenberg bill on the ground that it would impede the administration's
ability to use the frozen assets of a foreign state as leverage by
offering to return those assets if the state agrees to refrain from
engaging in the type of conduct that resulted in the freezing of its
assets in the first place. Under no circumstances, however, should the
United States release the frozen asset of a foreign state when there
remain uncompensated injuries suffered by American citizens who have
been murdered, tortured or otherwise terrorized by that state. Indeed,
as set forth in the legislative history of the Trading With The Enemy
Act, IEEPA's predecessor, a principal purpose of IEEPA is to conserve
assets of a foreign state so that they can be made available to satisfy
the claims of U.S. citizens. See Chas. T. Main International Inc. v.
Khuzestan Water and Power Authority, 651 F.2d 800, 810 (1st Cir. 1981)
(citing H.R. Rep. No. 85, 65th Cong., 1st Sess. 1-4 (1917)).
Accordingly, there is no sense in which the legitimate leverage of the
executive branch would be compromised by legislation authorizing
American terrorist victims to attach the frozen assets of a foreign
state.
The Mack/Lautenberg bill closes one important loophole in the FSIA
by ensuring that effective remedies are available to American citizens
who are victims of terrorist acts perpetrated by foreign states on the
State Department's terrorism list. Still left open, however, is the
loophole that several colleagues and I have for years been trying to
close over skillful State Department resistance. That loophole allows
states that are not on the Department's list to evade legal
accountability altogether when they torture and terrorize our citizens.
There is, of course, no logical reason, nor, more important, any
principled reason for providing redress in our courts for American
citizens who are tortured by officials of foreign states such as Cuba,
Libya and Iran because they are on the State Department list, but,
then, denying such redress to Americans who are tortured by officials
of countries such as Saudi Arabia and China because those countries are
on the list. So long as those countries do not provide cognizable,
adequate and available remedies in their courts for American victims of
state terrorism, those victims should be able to seek redress in our
courts. The legislation we drafted and then revised to meet practical
concerns presented by Congressional members and their staffs, deals
with this problem in a prudent and effective way.
For years, the State Department has resisted such legislation on
the ground that it would trigger retaliatory measures against the
United States, including bogus lawsuits in which U.S. law enforcement
authorities would be hauled into the courts of foreign states to answer
for their activities. This fear is unfounded. Since the enactment of
the FSIA in 1976, foreign states have been subject to suit in the
United States for human rights abuses perpetrated by their intelligence
and law enforcement agencies within this country. No retaliatory
measures have ever been taken against the United States as a result of
such suits. Similarly, before the FSIA was amended in 1996 to permit
American citizens who were victims of terrorism to bring suit against
states on the Department's terrorism list, the Department issued its
familiar warning of adverse foreign policy consequences. Since that
time, suits have been filed against Libya, Cuba and Iran. Again, none
of the adverse foreign policy consequences about which the Department
warned have materialized.
In the meantime, however, the cases of American citizens who have
been tortured by foreign states that do not happen to be on the
Department's terrorism list have been left out in the legal cold. Two
of those cases involve clients I have represented for nearly a decade.
One of them is Scott Nelson, a systems engineer whose case inspired the
1996 amendments authorizing suits against foreign states that commit
acts of terrorism. But Mr. Nelson, ironically, has not been able to
take advantage of those amendments because Saudi Arabia is not on the
State Department's terrorism list. The other case is that of Jim
Smrkovski. Like Mr. Nelson, Mr. Smrkovski--a Woodrow Wilson scholar
working in Saudi Arabia--was brutalized by Saudi officials who
subjected him to electric shock torture and extracted six of his
toenails. Yet, like Mr. Nelson, Mr. Smrkovski has been unable to obtain
redress because Saudi Arabia is not on the terrorism list. This is
Catch-22 with a vengeance.
The time has come--it is, indeed, long overdue--to close the
critical loophole in the FSIA that distinguishes between acts of
terrorism against American citizens when they are committed by foreign
states on the Department's list and acts of terrorism committed by
foreign states that are not on the list. The issue is not what list the
offending state happens to be on, but whether that state affords any
recognizable legal remedy for the wrongful injuries caused by the
state. American citizens who are the victims of terrorism for which a
foreign state is responsible should have a remedy. And it is vitally
important that every state that may contemplate committing such acts
against our citizens realize that they cannot do so with the impunity
that our laws now afford them.
______
Documents in Support of the Proposed Amendment to the Foreign Sovereign
Immunities Act
CONTENTS
1. Executive Summary
2. Proposed Bill Language
3. Background Paper: James E. Smrkovski
4. Background Paper: Scott J. Nelson
5. Newspaper Articles
______
Executive Summary of the Proposed Amendment to the Foreign Sovereign
Immunities Act
When it enacted the Anti-Terrorism Act three years ago,
Congress amended the Foreign Sovereign Immunities Act to give a
remedy in U.S. courts to American citizens who are the victims
of acts of torture and terrorism when such acts are perpetrated
by foreign countries that have been designated by the State
Department as terrorist countries.
Congress should expand this remedy with a very narrowly
drawn amendment in recognition of the fact that acts of
terrorism and torture are sometimes perpetrated against
American citizens by countries that are not on the State
Department's list.
When such countries torture an American citizen, there is no
remedy in our courts because the Foreign Sovereign Immunities
Act provides a shield from suit.
There is no reason for this distinction. If an American is
the victim of an act of terrorism or torture perpetrated by a
foreign country, he or she should be permitted to seek legal
redress, regardless of whether or not the country responsible
for such an act is on the State Department's list.
The proposed amendment would permit an American citizen who
is tortured by agents of a foreign country to seek redress in
United States courts when the legal system of the foreign
country does not have remedies or procedures consistent with
the basic rudiments of due process.
Under this amendment, suit can only be brought against
countries whose legal system provides no adequate means of
redress. As additional safeguards, a case can only be
considered by U.S. courts after the claimant has afforded the
foreign state a reasonable opportunity to arbitrate the claim
and provided the claimant complies with the detailed service of
process requirements provided for under the Foreign Sovereign
Immunities Act.
This amendment will give American citizens who have suffered
the most inhumane forms of mistreatment a day in court.
Equally important, the legislation will send a clear and strong
message to foreign states who might commit such crimes against our
citizens that they can not do so with impunity. The prospect of
accountability in a U.S. court will serve as a powerful deterrent
against future extralegal violence against American citizens.
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Senator Kyl. Let me just make one quick comment or question
with respect to each of you. We had hoped to conclude this at
noon, but your testimony is so compelling that I want to at
least go back and reflect on one point that each of you made.
Mr. Flatow, I was stunned, I guess, by your testimony that
you were invited to the signing of the bill which gave you the
right to pursue these blocked assets in court, immediately
following testimony by Mr. Eizenstat that the administration
really objected to that provision, though the President was
willing to sign the legislation, notwithstanding his objection
to that provision. But they immediately set out to undercut the
legislation, as Mr. Garment pointed out, the rear-guard action
to shoot loopholes in the law.
But I am struck by the fact that notwithstanding the fact
that they must have known at that time that they did not intend
to permit you to execute on any judgment that you might obtain,
they still called you down to the White House to attend this
bill signing ceremony and encourage you to proceed with your
litigation.
Did the administration ever signal to you that they would
oppose your efforts to execute on a court judgment if you
obtained such a judgment?
Mr. Flatow. No, sir. You see, I think that the weakness in
the original bill was intended to be blown by the victims'
families. The original bill had no teeth. It did not define
damages. It did not set venue. It did not give us a course of
action. It was the amendment that was advanced that summer and
in the early fall by Senator Lautenberg that put real teeth
into the Anti-Terrorism Act, and it was from that bill that we
were then able to actually file our lawsuit. But at no time did
the administration ever pull us aside, especially after I met
with the President, and say, look, we have a severe problem
here. We may have made a mistake.
I know the President was disappointed in the Anti-Terrorism
Act, but only that it was not strong enough for him, that it
did not go far enough in dealing with certain aspects of
terrorism. But as far as I knew, we were under the blessing of
the United States of America.
Senator Kyl. Thank you. You will all have to excuse my lack
of a voice today.
Maggie Khuly, I was impressed by the fact that you said you
were looking for justice, not charity, and in seeking justice
in court, which the law provided, you never viewed yourself as
trying to win a race to the courthouse. I appreciate the point
that you made there.
It seems to me that the message that the United States
intended to send to terrorist states with the adoption of this
law has now become very muddied because of the fact that we are
precluding the execution of judgments obtained pursuant to that
law. Is there any doubt in your mind as to the message that the
Cuban government was trying to send when it shot down those
airplanes?
Ms. Khuly. There was no doubt in my mind, or to any of the
families. The Cuban government was really ridiculing the U.S.
Government and saying, we have got you here and there is
nothing you can do to us. And I think all the way throughout
the lawsuit, by their lack of interest, their not showing up,
their allowing a default judgment, not even commenting, not
caring when they were called murderers in court and convicted,
they really thought they were going to get away with it.
What I am concerned is that they knew they were going to
get away with it and we, the families, did not know. Somehow,
they understood that the United States was not going to enforce
this law, and here we were, asking everybody along the way and
committed to the one action that we had control of. There is no
way we can get criminal indictments. There is no way we can go
to Cuba and face these people in court. We know the names of
the murderers. We know their faces. We have their photographs.
Everybody knows who they are. They have admitted their guilt.
There is nothing we can do.
But here we were given this tool and we took it, and we
took it with the blessing of our Government. Apparently,
everybody but us knew that it was not for real. It is really
distressing and disgusting as Americans to be left alone,
unprotected.
Senator Kyl. I must say that many of us in Congress were in
the same position that you were in. I think you have seen that
we are going to try to remedy that.
Dr. Gerson, you made a very important point, I think, when
you said that Congress surely was mindful of national
priorities when it passed this legislation and knew that there
could be judgments which would be available for execution above
other judgments. Obviously, that is what results when you
create causes of action, and numerous parties have those causes
of action.
Because of your expertise in international law, let me ask
you to comment on the critique of the law by Mr. Eizenstat,
specifically, that U.S. foreign policy interests would be
threatened if we were to allow an execution of a judgment that
had been obtained in this case.
Mr. Garment. Mr. Chairman, I think there are two points to
your question. The first is the nature of our negotiations with
the State Department at the time that the 1996 Act was being
enacted, and second, international law as it pertains to this
issue.
With regard to the first question, the 1996 Act was passed
only after a very, very long period of deliberations in which
the position of the White House and the State Department were
fully stated. The State Department wanted to make sure that
there was maximum flexibility by the administration in dealing
with terrorist states. The concession that was made was that
they would be the determiner of which countries practice
terrorism.
It is for the reason that Mr. Garment--the problem has been
the problem that Mr. Garment pointed out, that it would not be
based on a judicial determination but rather a determination by
the State Department. We went along with that interpretation
and it almost cost us the Act itself because its very
constitutionality was challenged on that ground, and we finally
succeeded in sustaining its constitutionality.
Now, with regard to international law, I have a doctorate
in international law. I was a professor of international law
and transactions for many years. It seems to me that the first
rule of international law is the protection of innocent
civilians against massive human rights deprivations. As in all
areas of the law, we try to create categories, even among
different outrages. But certainly at the top of that list is
the outrage of terrorism, the deliberate infliction of death or
bodily harm on innocent civilians. That falls within the realm
of what we call in international a use cogence, which is a norm
of law which is obligatory upon all governments.
So in pursuing this legislation, it appears to me that what
the U.S. Senate is doing, both in giving life to the initial
1996 Act and in making these further clarifications, is really
promoting that cardinal rule of international law that
international terrorism cannot be accepted and that all
remedies need to be pursued, and the remedy that we have
fashioned today is the remedy of opening up the civil courts
for judgment, but a judgment is meaningless if it cannot be
enforced.
Senator Kyl. But is there any per se prohibition in
international treaties, to which Mr. Eizenstat referred, from
executing a judgment on frozen assets in the United States?
Mr. Garment. I am not aware of such a provision in any
treaty, but even if there were such a provision, just as any
law which is passed by the U.S. Congress must pass muster, it
must be in accordance with the U.S. Constitution, so, too, any
provision of a treaty that says that would have to be in
accordance with international law as it has been generally
interpreted. Thus, the constitutionality under international
law of such a provision, if one existed, would be suspect.
Senator Kyl. I was perplexed by the assertion and I perhaps
should have asked Mr. Eizenstat if he thought it was a per se
inhibition. If that is, in fact, what he was arguing, then it
seems to me totally inconsistent with the President's call for
legislation to permit compensation from blocked assets. I mean,
either you can or cannot do it. But if there is an
international prohibition to that, then the President should
have never called for Congress to establish it. I suspect that
your point is valid, namely that there is no per se prohibition
on that.
Dr. Clawson, I think the last point you made, and I was
writing it down as you were finishing, is the one that I wanted
to emphasize again, and that is that while obviously a
government always needs some flexibility in dealing with other
countries, in particular when you are dealing with terrorist
states, the principles that you laid out need to be kept
clearly in mind. We also need very clear rules, and that there
is something very unclear, very inconsistent with providing a
remedy in court which cannot be executed, that that is totally
inconsistent and sends the wrong message.
Are you aware of any inhibition in international law to
execution on a judgment properly obtained under the provisions
of the 1996 law?
Mr. Clawson. I am not an international lawyer, so my
opinion may not be worth very much on this subject, I am afraid
to say, but I would certainly suggest that I am not aware of
any such provision, and indeed, it would seem to me that had
there been any such provision, it would have been forcefully
brought to the attention of this committee at the time that the
original legislation was enacted back in 1996.
Mr. Eizenstat's objections do not seem to be overwhelmingly
objections to the original law, or the original set of
provisions in 1996, and that, indeed, that would have been the
appropriate time for him to raise these arguments. But once
this has been enacted into law, that really his job should have
been to implement that law, even though he may not particularly
appreciate that set of rules.
In the field that I work in most closely, in economic
development, there has been an explosion of research and work
in the last decade showing that there are few things more
important than having a clear, transparent, law-based set of
rules so that everyone knows what are the rules of the game
here. It seems to me that what Mr. Eizenstat was doing was
offering objections to a law once passed while trying to hide
this by saying that he was just objecting to the enforcement of
the judgments obtained under the law. I do not think that is
good for the rule of law in this country.
Senator Kyl. I think that is a key point to this entire
hearing.
Mr. Garment, might I conclude by asking you, in effect, the
same question. You made the point that, of course, the State
Department always wants leverage, but that being hauled into
court and having a judgment rendered against you and being
subject to the execution of that judgment might be maximum
leverage.
Mr. Garment. Yes; we are not exactly a small player in the
world of economics.
Senator Kyl. If we enforce the judgment----
Mr. Garment. The enforcement is the most powerful kind of
deterrent. But, of course, Stuart Eizenstat is an able lawyer
and what he was compelled to do was to offer, in a very
lawyerly way, sophistries, and he may not like it, but it is
double-talk, and it is double-talk that has a very specific
institutional purpose, which is to say to the world and to say
to the Congress, separation of powers notwithstanding,
collegiality notwithstanding, this is our business. You stay
out of it. This is our business. Flatow, you stay out of it.
Everybody stay out of it.
The sophistry is the creation of a terrorist list of
nations. The argument that we made when we presented
legislation to provide that the nonexistence of a remedy in an
offending state should be the test was not acceptable because
it took away their power to create a list and to juggle the
list, despite its inherent constitutional infirmities.
So that is what is at play here. They have their
responsibilities. They have people of good faith trying to
carry out their responsibilities. You have yours. The people
who are injured by terrorist acts of terrorist states or by
other states that have no system of redress for injured
persons, particularly American citizens, should come before a
tribunal. The injured person should have a right of redress and
the statute should not only provide a day in court, but the
satisfaction that comes with a successful day in court, namely
the ability to have satisfaction.
Senator Kyl. I thank you. I think each one of you have made
very important points.
Let me be clear that I interrupted Mr. Eizenstat a couple
of times and I did use the phrase double-talk, and I think you
have to call a spade a spade here. He has been required to
defend the indefensible. That is the bottom line. He is a good
lawyer and he has tried to present some arguments, but they are
all after the fact. If they were legitimate, they could have
been presented before the fact, at a time when we could have
fashioned the legislation in a different way. But that was not
done.
Now, discovering that, in effect, this does limit to some
extent the ability of the State Department people to limit
their range of actions, there is no objection raised. But it
seems to me that it is raised too late. Once these judgments
have been obtained, it is the responsibility of a sovereign
nation of the status of the United States of America to see
that they enforced, especially when the President of the United
States, no less, has asked the U.S. Congress to pass precisely
this kind of legislation authorizing precisely these kinds of
judgments.
The failure of the President to back the Congress in the
legislation at this time is a dereliction of his
responsibility, not only to the families who have obtained
these judgments pursuant to that law, but to the cause against
terrorism which this country is so committed to, and that the
President need to say, I am going to cut through all this legal
gobbledy-gook and all of the State Department arguments about
leverage and flexibility and I am going to do what is right,
and what is right is to let these people execute on the
judgments.
And to the families of others who also may obtain
judgments, we will find a way to exert our power on countries
like Cuba and Iran and other countries to ensure that before
they are admitted into the family of nations, one of the prices
they will have to pay is the satisfaction of those judgments,
as well, not to argue that no one is going to be satisfied,
because after all, there just is not enough money.
So it seems to me that we have created a record here that
enables us to move forward, based on these principles. We could
not have done it without the personal testimony of those of you
who have suffered, and we appreciate your willingness to come
forward again to share your stories with us.
I know that I share the views of Senators Mack and
Lautenberg and Senator Feinstein when I say that we will pursue
this with all vigor and do what we can to achieve both
objectives, the satisfaction of the claims that specifically
have been made in this case pursuant to law, and second, the
fight against terrorism, to send a very clear, not a muddled
message, but a very clear message that acts of terror will not
be sanctioned by the United States of America.
We thank you all very much for attending, and this hearing
is now concluded. I will mention that the hearing record will
be kept open for one week to accept written statements by other
interested parties, as well as statements or questions by
members of the committee who could not join us today. Thank you
very much.
[Whereupon, at 12:24 p.m., the committee was adjourned.]
A P P E N D I X
----------
Questions and Answers
----------
Jersey City, NJ, November 13, 1999.
Re: Committee's October 27, 1999 Hearing ``Terrorism: Victims' Access
to Terrorist Assets''
Hon. Orrin Hatch, Chairman,
U.S. Senate Committee on the Judiciary,
Attention: Joelle Scott, Deputy Chief Clerk,
Dirksen Senate Office Building, Washington, DC.
Dear Ms. Scott: I am responding to Senator Hatch's letter of
November 4, 1999. In answer to the Senator's questions, I respond as
follows:
Responses of Stephen M. Flatow to Questions From Senator Hatch
Meeting with Mr. Berger. My 1998 meeting with National Security
Advisor Sandy Berger took place in the West Wing of the White House. I
was accompanied by Senator Frank Lautenberg. When we sat down in Mr.
Berger's office, I was quite surprised that his first remark to me was
substantially that he was unfamiliar with my case and that I should
please bring him up to date. I was surprised at the comment because the
purpose of the meeting was an attempt by Senator Lautenberg to help us
overcome the Treasury's reluctant to assist us with information
regarding Iranian assets and I was certain that Mr. Berger would have
been briefed before the meeting.
It was my impression that Mr. Berger was hiding behind this veil of
innocence as to the specific status of our case, Senator Lautenberg
stressed much better than I was able the importance of this issue
because I had obtained a judgment under a Federal Law. While Mr. Berger
did not have to explain the Administration's ``about-face'' because he
wasn't aware of its details, he promised Senator Lautenberg and me that
he would look into it and have someone get back to us as soon as
possible.
Within a week, Senator Lautenberg called me, with some excitement
in his voice I might add, to indicate that he had received a telephone
call from Mr. Berger and that my attorney, Steven Perles, should not
hesitate to contact James Baker at Mr. Berger's office. Mr. Perles, did
so and was surprised to find out that Mr. Baker had no idea why Mr.
Berger had given his name.
I have not had any further direct meetings with Mr. Berger since
1998.
Treasury Department. By way of background, let me tell you that our
request to Treasury for information regarding Iranian assets was, we
thought, the most logical place to begin our search for assets. Knowing
the government's penchant for categorizing, labeling, identifying and
tagging everything within its purview, I believed the Treasury
Department would have no problem in providing the requested
information.
Our first request was initiated by us through the offices of
Senator Lautenberg. We received no response. This led us to issue a
subpoena to the Treasury Department.
On June 19, 1998, my attorney, Thomas Fortune Fay, received the
attached letter which straight forwardly indicates that Treasury had
objections to the information we requested and states that ``the
subpoena is unduly burdensome and overly broad.'' If we wanted
information, we are told, we would have to be more specific and narrow
the scope of our request.
I cannot accept the Treasury Department's explanation at face
value. How could we narrow the scope of our request? We had no idea
what to ask for. How could Treasury possibly believe that an American
citizen and his attorneys, without access to diplomatic information in
the possession of his government, have idea as to what information we
should ask to see? And, if I somehow was able to narrow my request, I
visualize information being kept from us because we didn't know it
existed and could not, therefore, ask for it. Treasury put us in a
classic ``Catch-22.'' In essence, Treasury is saying, ``be specific
with what you ask us, and don't blame us if you didn't ask for the
right thing.''
Instead of our request being too burdensome for a response, I
believe that Treasury's refusal to provide information was an attempt
to delay us, if not to prevent us, from collecting on our judgment. If
that was its goal, Treasury has been successful.
I trust the foregoing is responsive to your questions. I very much
appreciate the opportunity to testify before the Senate Judiciary
Committee and am grateful for the Committee's interest.
Sincerely yours,
Stephen M. Flatow.
______
U.S. Department of Justice,
Civil Division,
Washington, DC, June 19, 1998.
Re: Flatow v. Islamic Republic of Iran, et al., Case No. 97-396
(D.D.C.)
Thomas Fortune Fay, Esq.,
Law Offices of Thomas Fortune Fay, PC, Washington. DC.
Dear Mr. Fay: I represent the Department of the Treasury (the
``Department'') with respect to the third party subpoena you served on
the Department on June 5, 1998, in connection with the above-referenced
care. Attached to that subpoena are five document production requests.
Any response by the Department, to the subpoena is subject to 31 C.F.R.
Sec. 1.11. In addition, in accordance with the provisions of Federal
Rule of Civil Procedure 45(c)(2)(B), I am writing to state the
Department's objections to production as called for by the subpoena.
First, the subpoena is unduly burdensome and overly broad. For
example, request number one requests all documents pertaining to any
assets in which any of the named defendants, including the Islamic
Republic of Iran, has asserted or alleged any interest. This request is
not limited to any period of time, and thus calls for the production of
an enormous number of documents, even including those concerning the
Iranian hostage crisis, dating back to 1979 and before. An even wider
net is cast by request number five, which calls for a list of documents
pertaining to assets of any of the named defendants in the possession
of ``any agency or department of the United States.'' This fifth
request amounts to a demand for a government-wide search for documents
regarding Iranian assets and is not properly served on this or any
Department, or made of the government as a whole. Locating potentially
responsive documents to requests one and five alone would require a
search of a massive number of files going back in time indefinitely, a
burden made heavier by the omission of any definition of generic terms'
used in the requests, such as ``asset'' or ``ownership right.''
Requests number 2, 3 and 4 are similarly over broad and unduly
burdensome.
Even if potentially responsive documents could be identified, the
process of reviewing them to determine what information can be released
would impose an onerous burden on the Department and take a great deal
of time. This is especially so in light of the short return time set by
your subpoena. Federal Rule of Civil Procedure 45(c)(3)(A)(iv) says
that a court ``shall'' quash a subpoena if it ``subjects a person to
undue burden.''
Nonetheless, the Department is attempting to locate and categorize
documents that might be responsive to your subpoena. While we obviously
have not had time to review even the categories of documents, it is
likely that a substantial number will be subject to claims of
privilege, including the state secrets, law enforcement, deliberative
process, attorney-client and any applicable statutory privileges as
well as the attorney work product doctrine. The foregoing objections
are not exclusive, and the Department reserves the right to accept
these and other privileges and defenses after it has located and
categorized responsive documents. I will send you a second letter
containing a list of categories of documents that are generally
responsive to your subpoena as soon as the Department has completed
identifying such categories. In the meantime, I ask that you consider a
significant narrowing the scope of your subpoena.
For all the above reasons, the Department objects to the subpoena
served on the Department on June 5, 1998. Pursuant to Fed. R. Civ. P.
45(c)(2)(B), the requester ``shall not be entitled to inspect and copy
the materials * * * except pursuant to an order of the court by which
the subpoena is issued.'' Therefore, the Department will not produce
the requested documents at the date, time, and place specified on the
subpoena. That said, the Department nevertheless is willing to discuss
its concerns, and to confer on the production of a much narrower
category of non-privileged, relevant documents. I am available to
discuss this matter at your convenience.
Sincerely,
John R. Niemeyer,
Trial Attorney, Civil Division,
U.S. Department of Justice.
__________
Responses of Dr. Allan Gerson to Questions From Senator Hatch
In response to questions posed in connection with proposed
legislation curtailing the use of a presidential waiver to preclude
attachment of frozen foreign assets, I should like to make three
points:
1. The ``proper balance of power'' between the rights of individual
victims or the families of such victims of state-sponsored terrorism to
appropriate remedies versus the rights of the Executive Branch to
maximal flexibility in the conduct of foreign affairs is struck by
respecting the authority of Congress when it has acted to assure an
appropriate balance, especially where the constitutionality of
Congressional action has been expressly upheld by the federal courts.
To permit legislation validly enacted to be disrespected by
Presidential action which renders meaningless that legislation erodes
the Constitutional division of powers. While the President may ask the
Courts to defer to his authority in exceptional situations involving
the national interest to forego enforcement of judgments, he has no
authority pursuant to legislation or common law principles which
mandates non-enforcement of judgments;
2. Moreover, any effort to prevent enforcement of judgments entered
pursuant to valid legislation is probably, and should be, a taking of
property under the Fifth Amendment of the Constitution requiring fair
compensation;
3. The enactment of the 1996 and 1997 Amendments to the FSIA, and
the President's signing of those Amendments into law, cannot be
reversed without ``remedial legislation.'' Otherwise the President is
either exercising an unconstitutional ``line item veto'' or using an
insupportable claim to Executive Branch authority to impede Congress's
lawful invocation of its exclusive authority under the foreign commerce
clause, under Article 1, Sec. 8 cl. 10's grant of authority to define
and punish violations of the Laws of Nations, and Article III's grant
of authority to define and establish the jurisdiction of the federal
courts.
While I am an International Law scholar and not a Constitutional
Law expert, I have had familiarity with the scope of Presidential
executive authority over foreign policy in my former capacity as a
Deputy Assistant U.S. Attorney General for Legal Counsel. I believe,
based on that experience and my own reading of the law, that the
legislative proposal to allow Anti-Terrorism Act judgments to be
satisfied through execution against blocked foreign government assets
does not interfere with the President's prerogatives in the conduct of
foreign affairs.
First, the Constitution provides no express Executive Branch
authority over foreign government assets. That power rests, under the
Constitution, totally with Congress, which has exclusive power over
foreign commerce, and has invoked that power through enactment of the
Trading with the Enemy Act (``TWEA'') and the International Emergency
Economic Powers Act (``IEEPA''). The President's power to freeze
foreign government assets derives from those statutes. If Congress
chooses to enact other statutes to address such blocked assets, this is
within Congressional authority.
Second, there is an international law component here. The enactment
of the Anti-Terrorism Act and the corollary legislation to allow
enforcement against blocked assets falls within the express
Constitutional grant of authority to the Congress under Article 1,
section 8 clause 10 ``To define and punish Piracies and Felonies
committed on the high Seas and Offences against the Law of Nations.''
By its very essence, the legislation under consideration defines and
punishes offenses against international law. The President can, of
course, exercise his veto power to prevent legislation punishing
violators of international law. Here, however, the President's
attorneys went to U.S. federal courts to defend the constitutionality
of the Anti-Terrorism Act. The U.S. District and Appellate Court upheld
the constitutionality of the law and the U.S. Supreme Court declined
further review.
Third, once the decision to place a matter of defining,
identifying, and punishing violations of the laws of nations within the
judicial authority established under Article III, the President is
duty-bound to assure enforcement of any resulting judgment. This is the
meaning, for example, of the Supreme Court's decision in Chicago &
Southern Air Lines, Inc. v. Waterman S.S. Corp., 333 U.S. 103 (1948),
``Judgments, within the powers vested in courts by the Judiciary
Article of the Constitution, may not lawfully be revised, overturned,
or refused faith and credit by another Department of Government''
(emphasis added). Although the President has no Constitutional
prerogative to disregard or interfere with a valid exercise of the
judicial authority, he is nevertheless free to appeal to the Court's
discretion to not honor a judgment in particular cases where it can be
demonstrated that implementation of foreign policy would severely
jeopardize the security interests of the United States. This is my
reading of the provision for presidential waiver ``in the interest of
national security'' provided in the 1998 amendment to the FSIA known as
the Treasury Dept. Appropriations Act, 1999. But the 1998 amendment to
the FSIA was surely not intended to override existing limitations on
presidential power or to give unlimited scope to ``national security''
arguments to void on a blanket basis enforcement of judgments against
frozen foreign assets. There is nothing in the legislative history that
would lead to such a conclusion, and indeed such an interpretation runs
counter to the efforts of Congress in enacting meaningful legislation
for citizens to directly attack foreign governments implicated in the
sponsorship of terrorism.
As Justice Jackson explained in this famous and often cited passage
in Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 637-8 (1952),
the President can ask that the Courts defer to his judgment, but he can
not override them.
When the President takes measures incompatible with the
expressed or implied will of Congress, his power is at its
lowest ebb, for then he can rely only upon his own
constitutional powers minus any constitutional powers of
Congress over the matter. Courts can sustain exclusive
Presidential control in such a case only by disabling the
Congress from acting upon the subject. Presidential claim to a
power at once so conclusive and preclusive must be scrutinized
with caution, for what is at stake is the equilibrium
established by our constitutional system.
In this particular case, the President's position confronts not
only the ``equilibrium'' established by our constitutional system but
constitutional rights of the families of victims of terrorism which the
Anti-Terrorism Act's provisions seek to protect. Under the Fifth
Amendment, the federal government cannot ``take'' property interests--
including those represented in court judgments--without compensation to
the owner. For these purposes, a ``taking'' includes indefinite delays
in the realization of the value of a judgment. And as a long line of
cases makes clear, the President's authority to settle claims of U.S.
nationals against foreign governments which rise to the level of
``Fifth Amendment property interests'' is conditioned on provision of
some alternative method of recovery, and that without such alternative,
Executive Branch interference with execution exposes the federal
government to liability for an unconstitutional taking without
compensation. See, e.g., Dames & Moore v. Regan, 453 U.S. 654, 690-91
(1981) (Powell, J., concurring and dissenting); In re Aircrash in Bali,
Indonesia on April 22, 1974, 684 F.2d 1301, 1310-13 (9th Cir. 1982);
cert. denied sub nom Pan American World Airways, Inc. v. Cause, 493
U.S. 917 (1989), Gray v. United States, 21 Ct. Cl. 340, 392-93 (1886)
(Executive Branch action to extinguish claim against foreign government
may give rise to right to compensation against U.S.); Chas. T. Main
Int'l. Inc. v. Khuzestan Water & Power Authority, 651 F.2d 800, 813,
n.20 (1st Cir. 1981) (``of course, neither the President nor Congress
may exercise their powers [to settle claims against foreign governments
or to block foreign government assets] so as to contravene the
protections of the Bill of Rights, even when acting in the sphere of
international relations.'')
Finally, it has been said that opening frozen foreign assets to
execution of judgments obtained against states-sponsors of terrorism
would be unfair to other claimants against blocked assets whose
potential recovery would be reduced by this early access. This is,
however, a different matter than the right to an unlimited scope for
presidential invocation of ``national security'' to place frozen
foreign assets off-limits to such claimants. I myself believe that
priority should be accorded to families of victims of international
terrorism over ordinary commercial claims insofar as the US national
interest in deterring terrorism is furthered in giving priority to such
claims. In any event, however, the issue of priorities among different
sets of claimants is one that courts routinely address and lack of
clarity on this issue should not serve to justify a blanket
presidential waiver against enforcement of any judgments frozen foreign
governmental assets.
In sum, Congressionally enacted means for enforcement of Anti-
Terrorism Act judgments against frozen foreign government assets does
not interfere with President's constitutional prerogatives in the area
of foreign policy. Rather, it represents a valid invocation of clear
Congressional authority to define and punish violations of the Laws of
Nations, and gives meaning to our own legislation. It does so while
honoring the President's prerogatives in unusual cases involving US
national security interests to ask the courts' indulgence in not
honoring otherwise valid claims against frozen foreign assets. But the
Congress also recognized that attachment of frozen foreign assets may
be the only way of honoring a judgment pursuant to the Act, and that
closing off that avenue by a blanket invocation of ``national
security'' would mock Congressional intent. For these reasons, any
further Congressional clarification aimed at clearly defining the
limits of a Presidential waiver of remedies under the 1996
Antiterrorism Act are to be commended.
I trust that these observations will be helpful to the Committee.
__________
Responses of Patrick Clawson to Questions From Senator Hatch
Question 1. Has the Administrations's retention of Iranian assets
as leverage led to any real concessions by the Iranians? Put another
way, we have held Iranian assets for approximately 20 years. During
that time, has the Iranian regime's support for terrorist actions
diminished in any appreciable manner?
Answer 1. Iran takes a much more expansive view of the assets
question than the narrow legalistic interpretation favored by the U.S.
government. Iranian leaders and the Iranian media have regularly and
repeatedly referred to all the assets in dispute, not simply the small
amounts that are technically frozen. In particular, the Iranians are
interested in the fate of the hundreds of millions of dollars--possibly
over a billion dollars--at stake in the disputes at the Hague Tribunal
set up in 1981 under the Algiers Accord which ended the embassy hostage
affair. It is these assets to which Iranian leaders repeatedly refer.
At times, the United States has agreed to release large sums to
Iran as part of the resolution of the disputes dating back to 1981.
Indeed, the United States released to Iran $285 million on November 27,
1991. That date was less than a month after the release of two American
hostages in Lebanon (Jesse Turner and Thomas Sutherland) and six days
before the release of the three remaining American hostages (Joseph
Cicippio, Alann Steen, and Terry Anderson). The release of funds was
presented as a technical legal matter rather than as part of the
hostage release negotiations. Perhaps so, but the timing was most
interesting. One could be tempted to view this as a concrete example of
what President George Bush has said in his inaugural address about
relations with Iran, namely, ``Good will begets good will.''
The question can be asked: how much leverage did this release of
assets gain the United States? Perhaps the best answer comes from the
detailed account of the hostage release negotiations by the principal
intermediary involved, Giandomenico Pico, the UN hostage negotiator
(Man Without a Gun, New York: Times Books, 1999). Pico goes through the
many factors raised by the Iranians in the negotiations, but not once
does he mention the frozen assets or the release of the $285 million.
Indeed, a major theme of his book is that the United States did not
follow through on President Bush's offer of good will and that the
Iranians were bitterly disappointed about this. From his analysis, it
would appear that the release of the assets brought the United States
no leverage.
The Iranian regime's support for terrorist actions in Europe did
diminish in an appreciable manner after 1996. The reason for this
change is almost certainly the actions--limited though they were--taken
by the European Union governments in the aftermath of the verdict by a
German court in the Mykonos case, holding Iran's political leaders
responsible for the murder in Berlin of Iranian Kurdish dissidents.
The Iranian regime's support for terrorism aimed against the Middle
East peace process continues unabated, as reported by the Palestinian
Authority and Israeli sources.
Question 2. In your statement, you declare that ``intriguingly, the
stream of inventive Iranian claims against the United States has
lessened since the Foreign Service Immunities Act was amended to permit
claims against Iranian terrorism.'' What evidence, if any, do you have
to support the notion that this ``effect'' is related to the amendment
of the FSIA?
Answer 2. Little if any evidence is available about the causes for
Iranian actions. The cautious observor will only observe what Iran has
done. The alternative is to offer speculation, based on statements by
Iranians leaders--which may be disingenuous--and on interpretations of
Iranian motivations and behavior patterns. A good story can be told
about why the FSIA amendments are independent of the lessening Iranian
claims; after all, there have been many other factors influencing
Iranian behavior, especially the election in 1997 of a new, less
confrontational president. However, another good story can be told
about why the two are connected; Iran has at times responded to tough
actions by backing off, while it may regard friendly gestures as
concessions which show weakness that can be exploited. We do not have
solid evidence which of these two stories is more true.
Question 3. Mr. Garment has recommended the further expansion of
the FSIA to include the torious acts of other, non-terrorist nations.
Would you support the expansion of the FSIA to include tortious conduct
of any foreign nation against U.S. citizens in any part of the world?
Private suits to recover damages for tortious actions by foreign
governments is an extraordinary step which should only be authorized in
extraordinary circumstances. Any expansion of the FSIA should be
confined to outrageous actions by governments that repeatedly violate
the rights of Americans. It is hard for me to imagine circumstances
under which a government would meet this test yet not be included on
the State Department list of terrorism-supporting states. It is
appropriate to rely on that list for FSIA suits. The list has great
integrity, that is, it has been prepared with considerable care by
professionals who do not appear to be influenced by overall U.S.
foreign policy objectives. For instance, the list has included Syria
for years while the United States was trying to induce Syria into more
cooperative stances on the Middle East peace process; not once has the
U.S. government been willing to consider dropping Syria from the list
before it met the technical criteria required to get off the list.
That said, U.S. citizens certainly do suffer tortious acts by
governments not on the State Department list of state sponsors of
terrorism. This is a problem which may grow as Americans travel and
work abroad more, as the economy undergoes globalization. This is an
issue which could be appropriately considered by the sort of commission
that Under-Secretary Eizenstat proposed. For instance, it might be
worthwhile negotiating an international convention on this matter.
__________
To: Senator Orrin Hatch, Chairman,
c/o Joelle Scott, Deputy Chief Clerk
U.S. Senate Committee on the Judiciary
From: Leonard Garment
Re: Responses of Leonard Garment to Questions From Senator Hatch
Date: November 19,1999.
Question 1. Do you agree that Saudi Arabia should not be considered
a terrorist state?
Answer 1. Yes. But officials of Saudi Arabia, like officials of
certain other states that are not on the State Department's terrorism
list, have from time to time committed egregious violations of human
rights, including acts of torture against U.S. citizens. It is our
position that American citizens who are victims of the terrorist acts
that are enumerated in 28 U.S.C. Sec. 1605(a)(7)--namely torture,
extra-judicial killing, hostage-taking and aircraft sabotage--should be
allowed to pursue their claims in U.S. courts in cases in which no
adequate and available remedies exist in the country in which those
acts occurred.
Question 2. What do you believe would be the foreign policy
consequences of opening the FSIA to include tortious acts by all states
of the world?
Answer 2.At the outset, we would note that we do not advocate
expanding the FSIA to permit suit in the United States against any
foreign state for any tortious act committed anywhere in the world.
Rather, we advocate amending 28 U.S.C. Sec. 1605(a)(7) to permit suits
against a foreign state only when it commits one of the four
universally condemned acts specified therein (torture, extra-judicial
killing, hostage-taking and aircraft sabotage) and only when: (1) it
can be established that there are no adequate and available remedies
existing in that foreign state; and (2) that state has been afforded a
reasonable opportunity to arbitrate the claim in accordance with
international law and has rejected that opportunity.
With these limitations, we doubt that there would be any adverse
foreign policy consequences resulting from the proposed amendment. We
would note in this connection that foreign states have been subject to
suit for acts of torture, assassination and other gross abuses of human
rights when those acts are committed in the United States since the
FSIA was enacted in 1976. Yet, despite that fact and despite the fact
that suits have been brought against states that are not on the
Department's terrorism list for such conduct (including Chile and
Taiwan), no foreign state has ever retaliated against the United
States. We would note that the State Department warned of adverse
foreign policy consequences resulting from the 1996 amendments to the
FSIA that permitted suits to be brought against countries on the State
Department's terrorism list. Yet, no such adverse consequences ever
materialized.
Question 3. Considering the malleability of the definition of
terrorism, are you concerned about the ability of nations to manipulate
that definition in their courts to seek unfair actions against the
United States?
Answer 3. We agree that owing to the absence of any international
consensus on what constitutes ``terrorism,'' this would be a concern if
28 U.S.C. Sec. 1605(a)(7) were expanded to apply to any act of
terrorism. Instead, however, Sec. 1605(a)(7) was prudently drafted to
limit its reach to four enumerated acts that are specifically defined
in widely-subscribed international agreements and that are universally
condemned. The amendment we are advocating would not expand the acts
for which a foreign state could be sued to acts other than those that
are already enumerated.
Question 4. What's to prevent specious suits by the Belgrade
authorities against NATO nations?
Answer 4. While it is theoretically possible that frivolous suits
could be brought against the United States, experience demonstrates
that this is not a realistic risk of the proposed legislation. As set
forth above, foreign states have been subject to suit for gross abuses
of human rights when those acts are committed in the United States
since the FSIA was enacted in 1976. Yet, no foreign state has filed a
retaliatory suit against the United States based on the conduct of U.S.
officials in their territory. In particular, the bombing of Serbia took
place, of course, on Serbian territory. Yet, the Belgrade authorities
did not attempt to use the FSIA as a justification for bringing a
frivolous retaliatory suit against the United State on the basis of the
NATO bombing of Serbia. Moreover, no frivolous retaliatory suits have
been brought against the United States in any country on the
Department's terrorism list since the FSIA was amended to allow suits
against such states in 1996.
Question 5. What redress is there, should we expand the FSIA in the
way you suggest?
Answer 5. If Americans who are victims of torture and other
specified acts of terrorism are permitted to bring suit, they will have
their claims heard by an impartial tribunal. Having obtained such a
judgment, they may be able to obtain payment through attachment of the
assets of the foreign state responsible or through other means, such as
with State Department intervention. There will continue to be no
redress for U.S. citizens, however, if the FSIA is not appropriately
amended.
Additional Submissions for the Record
----------
Prepared Statement of Ronald W. Kleinman
I am pleased to have this opportunity to present to the Senate
Judiciary Committee the background to proposed legislation to address
the extent of Presidential authority to impede enforcement of Anti-
Terrorism Act judgments against the assets of foreign governments
blocked under Treasury Department regulations implementing the Trading
With the Enemy Act. I am one of the counsel for the families of four
members of the Brothers to the Rescue murdered by the Cuban Government
while flying humanitarian missions over the Straits of Florida
searching for rafters seeking to escape the tyranny of Cuba. As my
colleagues and the representatives of the families have testified,
while flying in two small civilian aircraft, these four men were
obliterated by air to air missiles shot by Cuban Air Force MIGs at the
instruction of Fidel Castro himself. In the words of President Clinton,
We must be clear: this shooting of civilian aircraft out of
the air was a flagrant violation of international law. It is
wrong and the United States will not tolerate it.
The President went on to state that his Administration was imposing
unilateral sanctions and would seek multilateral sanctions through the
United Nations. With respect to multilateral sanctions, he had
instructed Ambassador Albright to make sure that those sanctions would
remain in place ``until it [Cuba] compensates the families of the
victims.'' With respect to unilateral, U.S. sanctions, he stated:
First, I am asking that Congress pass legislation that will
provide immediate compensation to the families, something to
which they are entitled under international law, out of Cuba's
blocked assets here in the United States. If Congress passes
this legislation, we can provide the compensation immediately.
Despite the President's condemnation of Cuba and his commitment to
providing compensation from blocked Cuban assets, the Families have
been impeded in enforcing the judgment--either with respect to the
compensatory or punitive elements of the award--by fiat from the State
and Treasury Departments, which have intervened to defend Cuba and have
asserted expansive and insupportable interpretations of existing
Treasury Department regulations. Let me give you one example. The
Administration has argued before the Federal courts that all assets
subject to the Cuban Assets Control Regulations are ``immune'' from
execution of judgments, even when those assets are licensed for
payment--and being paid--to a judgment debtor. This claim, however,
flies in the face of the express language of the Foreign Sovereign
Immunities Act which provides (and has provided since 1996) in
connection with Anti-Terrorism Act judgments that ``any property in the
United States of an agency or instrumentality of a foreign state * * *
shall NOT BE IMMUNE from attachment in aid of execution or from
execution, upon a judgment. * * *''
Treasury's interpretations of its regulations fail to comply with
the explicit language of the Foreign Sovereign Immunities Act, and are
illegal and unenforceable for these reasons. But more importantly,
these interpretations fly in the face of the President's statements of
total support for the Families and the commitment of U.S. policy to
assure compensation under international law standards. Neither the
State, Treasury nor Justice Departments have ever submitted a clear and
comprehensive justification for this reversal of policy. We can,
however, identify from their many statements four basic themes asserted
to rationalize their opposition to further compensation from the
blocked assets. As explained below, on detailed review, each of these
arguments turns out to be based on erroneous facts and fallacious legal
policies.
Before addressing the Administration's four ``policy arguments,''
it is important to note that the whole purpose of the Foreign Sovereign
Immunities Act--as drafted and proposed by the Justice and State
Departments--is to eliminate any such political or foreign policy
considerations from interfering with issuance and enforcement of
judgments against foreign governments and their agencies and
instrumentalities where--as here--consistent with international law. As
the legislative history of the Foreign Sovereign Immunities Act states:
A principal purpose of this bill is to transfer the
determination of sovereign immunity from the executive branch
to the judicial branch, thereby reducing foreign policy
implications of immunity determinations and assuring litigants
that these often crucial decisions are made on purely legal
grounds.\1\
---------------------------------------------------------------------------
\1\ H.R. Rep. No. 1487, (1976), reprinted in 1976 U.S.C.C.A.N.
6604, 6606 (emphasis added).
And, both before and after the murders of the four Brothers to the
Rescue and of Alyssa Flatow, this President has signed at least four
separate pieces of legislation amending the Foreign Sovereign
Immunities Act to allow the victims of terrorism, torture and extra
judicial murder to proceed in Federal Court to obtain and enforce
judgments against the terrorism-sponsoring governments responsible for
their suffering. See, Torture Victims Protection Act, Pub. L. 102-256
(signed March 12, 1992); Anti-Terrorism Act, Pub. L. 104-132 (signed
Apr. 24, 1996); Civil Liability for Acts of State Sponsored Terrorism,
Pub. L. 104-208 (signed September 30, 1996); and Section 117 of the
Treasury Postal Appropriations Act for Fiscal Year 1999. Under the
structure of the law as established since 1992 with the active support
of this President, the types of ``policy'' issues now invoked by the
Administration to impede enforcement of these Foreign Sovereign
Immunities Act judgments have no role and should be rejected out of
---------------------------------------------------------------------------
hand.
Nor does international law support the Administration's position.
Enforcement of these FSIA judgments is no different than enforcement of
any other FSIA judgments--and since at least 1954 it has been the
unqualified view of the United States (including the State and Justice
Departments) that enforcement of FSIA judgments does not violate
international law. If there were any doubt here, it is eliminated by
the issuance of the report of the OAS's Inter-American Commission on
Human Rights, which has ruled that, under international law, Cuba is
obligated to provide ``adequate and timely compensation'' for its
murders of the four Brothers to the Rescue, ``including complete
satisfaction for the human rights violations, * * * as well as payment
of a just compensatory indemnification for [full economic damages and
pain and suffering] and moral [i.e., punitive] damages.'' In other
words, Cuba has no basis to challenge enforcement of any award--such as
the award of the United States District Court for the Southern District
of Florida--which is based upon these elements of damages.
Turning to the Administration's four arguments, none withstands
scrutiny on the merits. First, the Administration argues that any
legislation to require payment from the blocked diplomatic assets
infringes on the President's Constitutional authority over foreign
affairs, arising particularly under Article II section 3 (which
authorizes the President to receive ``Ambassadors and other public
Ministers''). The District Court has addressed this issue, holding
that, as is clear from the text of this Constitutional provision, it
does not empower the President to immunize foreign government property
from enforcement of federal court judgments; to the contrary, that
power is exercised by Congress under Article III, as reflected in
enactment of the Foreign Sovereign Immunities Act and the Foreign
Missions Act. Even more explicitly, Congress has the exclusive power
under Art. 1, Section 8, clause 10 to ``define and punish Piracies and
Felonies committed on the high Seas, and Offenses against the Law of
Nations.''
Second, the Administration argues that the proposal enacted last
year could place the nation in violation of international law
obligations because it allows enforcement against diplomatic property
of terrorism-sponsoring governments. This is not an issue for my
clients, who have waived in open court any claim to enforcement against
Cuba's diplomatic assets. Nor is this a valid claim at this time, since
the proposal presently before this Committee provides a broad authority
for the President to protect diplomatic property from execution, but
not the proceeds of commercial use of former diplomatic property. In
any event, the Administration is incorrect in asserting that execution
of Anti-Terrorism Act judgments, even against diplomatic property,
would violate treaty obligations. To the contrary, this represents a
proper remedy available to the United States under international law as
a unilateral countermeasure to assure the enforcement of judgments
issued under the Anti-Terrorism Act. By definition, every judgment
under the Anti-Terrorism Act involves a violation of customary
international law of human rights, and, in its judgment in this case,
the District Court specifically found that Cuba had violated the norms
of international law in murdering the Brothers to the Rescue. And this
has been confirmed by the OAS report. As observed by the Restatement of
Foreign Relations Law of the United States (3d) at Section 703(2),
``any state may pursue international remedies against any other state
for a violation of the customary law of human rights.'' As recognized
by the Restatement in Section 905, these include unilateral remedies,
including ``countermeasures that might otherwise be unlawful, if such
measures (1) are necessary to * * * remedy the violation; and (2) are
not out of proportion to the violation and the injury suffered.'' \2\
Where, as in this case,
---------------------------------------------------------------------------
\2\ In this respect, the Restatement is fully consistent with the
widely respected and oft-cited 1979 Report of the United Nations
International Law Commission to the General Assembly, U.N. GAOR 34th
Sess., Supp. No. 10, at 311, which was drafted to reflect global
consensus on international law principles. As confirmed in the ILC's
draft articles on state responsibility: ``The wrongfulness of an act of
a State not in conformity with an obligation of that State towards
another State is precluded if the act constitutes a measure legitimate
under international law against that other State, in consequence of a
wrongful act of that other State.''
A terrorism-sponsoring foreign government violates the
---------------------------------------------------------------------------
internationally protected rights of American citizens,
A federal court determines the proper level of compensation
to remedy that injury, and
The terrorism-sponsoring state refuses to provide that
compensation,
the United States is fully within its recognized international rights
to allow execution against treaty-protected diplomatic property, or for
that matter, any other property, even if that were otherwise illegal
under international law or inconsistent with treaty obligations.\3\
---------------------------------------------------------------------------
\3\ The United States has often invoked this doctrine to justify
its conduct which arguably violated international law principles,
including in response to terrorism, as for example in connection with
the open violation of international air space to apprehend the
terrorists responsible for the Achille-Lauro incident. See, Gurule,
``Terrorism, Territorial Sovereignty, and the Forcible Apprehension of
International Criminals Abroad,'' 17 Hastings Int'l. & Comp. L. Rev.
457, 495 n. 727 (1994); see also the opinion of the Justice Department
set forth in ``Authority of the Federal Bureau of Investigation to
Override International Law in Extraterritorial Law Enforcement
Activities, 13 Op. Off. Legal Counsel 163 (1989) (opining that the FBI
could legally violate customary international law and UN Charter art.
2(4) while engaging in extraterritorial abductions).
Third, the Administration argues that these assets must be held in
order to provide leverage to induce Cuba to pay historical claims by
Americans arising during the Cuban Revolution. It is true that there
are 5,911 such claims that were certified by the Foreign Claims
Settlement Commission in 1976 (none of which represent a judgment or
any other type of enforceable property interest). However, it is
demonstrably false that the blocked accounts are being held as some
form of collateral against which these 5,911 claims are to be paid or
that these claimants have any legal expectation of payment from these
assets. That was explicitly considered and rejected by Congress (after
a study by the Treasury and State Departments) at the time the Cuban
Claims Program was established by and through legislation enacted by
Congress in 1964. See, Final Report of the Cuban Claims Program, issued
by the Justice Department's Foreign Claims Settlement Commission as its
1972 Annual Report to Congress, at 70.\4\
---------------------------------------------------------------------------
\4\ In this connection, it is important to note that NONE of the
assets were the properties of the FCSC claimants. Indeed, more than 90
percent of the blocked assets came into existence AFTER the FCSC
completed its operations in 1972. These are royalty payments made by
U.S. telecommunications company into blocked accounts between 1976 and
1992, and have no relation to the property expropriated by Cuba from
the U.S. nationals who were ultimately allowed to submit claims for
certification by the FSCS.
---------------------------------------------------------------------------
Moreover, the Executive Branch cannot credibly assert that it has
any intention to use these blocked funds as leverage to induce Cuba to
pay these claims. The Treasury Department has blocked these funds for
37 years without ever achieving a settlement of even one of the 5,911
outstanding claims (indeed, there is no public evidence that Cuba has
ever been willing to engage in negotiations over any of these claims).
At the same time, under this Administration, the Treasury Department
has allowed far larger amounts to be paid to Cuba since 1994 (over $300
million in all) without attempting to use those funds to leverage a
settlement of these 5,911 claims.
Congress has, however, already provided a separate statutory
process for immediate compensation for many of the 5,911 claimants
through Title III of the Helms-Burton Act, Pub. L. No. 104-785.
However, based on recent reports, none of these claimants has sought
immediate compensation through these procedures. See, Shamberger, ``The
Helms-Burton Act: A Legal and Effective Vehicle for Redressing U.S.
Property Claims in Cuba and Accelerating the Demise of the Castro
Regime,'' 21 B.C. Int'l. & Comp. L. Rev. 497, 505 (1998). In part, the
failure of the Helms-Burton Act to achieve immediate compensation for
these 5,911 claimants from funds other than the blocked assets is the
President's unilateral actions in suspending operation of the sanctions
authorized by that Act.\5\
---------------------------------------------------------------------------
\5\ In some statements, the Administration has argued that payment
of these claims from blocked assets or satisfaction of some claims
against Cuba before other such claims were satisfied, would be
unprecedented. To the contrary, the Executive Branch has allowed--
indeed, facilitated--satisfaction of Citibank's claim through judgments
enforced in BANCEC, and has granted numerous licenses allowing
withdrawals by one major U.S. telecommunications company from the
blocked assets to reimburse it for its claims against Cuba, including
at least one claim under the FCSC program. And, of course, the
Administration has assisted IT&T in obtaining more than $27 million
from STET in partial compensation for its FCSC claim for expropriation
of its telephone company properties in Cuba.
---------------------------------------------------------------------------
Fourth, the Administration argues--inconsistently--that these
blocked funds must be retained to provide leverage over Cuba to comply
in the future with its obligations under international law. The funds
cannot be both committed to pay past claims arising in 1962 and to
induce future compliance with international law. The credibility of
this is further undermined by the very words of the NSC staffers who,
in briefing the press after the President's February 26, 1996
statements, announced that these funds would never be seen by Cuba
again. In any event, the proposal that continued holding of these funds
will somehow deter Cuba from sponsoring terrorist attacks against U.S.
citizens (or any other internationally prohibited conduct) is belied by
the fact that, in murdering the Families' relatives while these funds
were already in U.S. control, Cuba has demonstrated that it is willing
to violate international law by killing Americans regardless of whether
the U.S. is imposing sanctions or not.
Beyond the inadequacy, inconsistency and hypocrisy which
characterize the Administration's arguments against execution of Anti-
Terrorism Act judgments against Cuba's blocked assets, this Committee
should recognize four additional factors.
First, deferring efforts to satisfy the judgment would be
illogical. The judgment is final and non-appealable. If it is not
satisfied during the Castro Regime, it will still be the responsibility
of any successor regime, or any successor government. If a Democratic
Cuba emerges, this judgment will still have to be satisfied, and will
remain an impediment to improved bilateral relations. This
Administration's policy can be summed up in one phrase: ``not on my
watch.'' But this just means that the issue will have to be addressed
during the next Administration's watch.
Second, if the Administration is allowed to successfully interfere
with enforcement, this will expose the U.S. government to a claim under
the Fifth Amendment for a ``taking.'' This creates the incongruous
situation that the U.S. Treasury could become liable to pay to the
Families the damages (including punitive damages) lawfully imposed on
the terrorism sponsoring governments. The budget impact would be
significant, and must be avoided. See, e.g., Dames & Moore v. Regan,
453 U.S. 654, 690-91 (1981) (Powell, J., concurring and dissenting); In
re Aircrash in Bali, Indonesia on April 22, 1974, 684 F.2d 1301, 1310-
13 (9th Cir. 1982); cert. denied sub nom Pan American World Airways,
Inc. v. Causey, 493 U.S. 917 (1989), Gray v. United States, 21 Ct. Cl.
340, 392-93 (1886)(Executive Branch action to extinguish claim against
foreign government may give rise to right to compensation against
U.S.).\6\
---------------------------------------------------------------------------
\6\ A court would not have to conclude that the President lacked
Constitutional or statutory authority to block the assets in order to
conclude that the attempted invocation of that authority would create a
cognizable and potentially valid claim for just compensation under the
Fifth Amendment. See, e.g., Chas. T. Main Int'l. Inc. v. Khuzestan
Water & Power Authority, 651 F.2d 800, 813, n.20 (1st Cir. 1981) (``of
course, neither the President nor Congress may exercise their powers
[to settle claims against foreign governments or to block foreign
government assets] so as to contravene the protections of the Bill of
Rights, even when acting in the sphere of international relations.'')
Moreover, the facts of this case are distinguishable from the line of
cases arising from the Iranian Hostage Crisis suggesting that neither
the blocking of foreign government assets from prejudgment attachment
nor the reference of an international claim to an international forum
for resolution is a taking within the meaning of the Fifth Amendment.
Here, the interference is with the enforcement of a judgment (in which
the Plaintiffs have a cognizable interest not present in connection
with prejudgment attachments) and the President is effectively
destroying the enforceability of Plaintiffs' judgment without providing
an alternative source of financial satisfaction of the claim. Thus,
AT&T and the President cannot validly rely on such decisions as Chas.
T. Main supra. Similarly, the President's actions in nullifying
Plaintiffs' judgments against a foreign government do not arise from
any negotiations which benefited the Plaintiffs directly, and therefore
distinguishes this case from such cases as Abrahim-Youri v. United
States, 139 F.3d 1462, 1467 (Fed. Cir. 1997) (finding no taking of
claims because ``though the choses in action were extinguished, the
Government provided an alternative tailored to the circumstances which
produced a result as favorable to plaintiffs as could reasonably be
expected.'') cert. denied sub nom Gurney v. United States, 118 S.Ct.
2366 (1998).
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Third, the Administration's interpretation of existing law--and in
particular the scope of the ``national security'' waiver enacted last
year--presents a significant Constitutional issue by transforming the
waiver provision into a ``line item veto,'' allowing the President to
simultaneously sign the Treasury Department Appropriations Act into law
while nullifying one of its provisions. Just last year in Clinton v.
New York, 118 S.Ct. 2091 (1998), the Supreme Court held that this
violates the Constitution's ``presentment clause,'' Art. 1, Sec. 7, cl.
2. To date, the Justice Department has suggested no valid basis to
distinguish Section 117 from the provisions declared unconstitutional
in Clinton. Enactment of the proposal presently pending before this
Committee would eliminate this issue while providing the President with
Constitutionally-appropriate authority to exclude diplomatic property
if deemed necessary.
And fourth, the Administration is claiming the authority to defeat
enforcement of a valid, final and enforceable judgment of an Article
III Court based on its assessment that there are other claimants ``no
less worthy'' than the Plaintiffs to receive priority payment from the
blocked assets.\7\ No court (or for that matter any administrative
agency) has ever determined whether those claimants are ``as worthy''
of receiving payment from blocked assets. Certainly, no one in the
Executive Branch is authorized to make this assessment. However, the
Plaintiffs are judgment creditors under a judgment issued by an Article
III court, which is not true of any of those claimants. And the
Plaintiffs' judgment includes punitive damages awarded because of the
heinous nature of the crimes committed by Cuba against their families,
which is not true of any of those other claimants. And enforcement of
the Plaintiffs' judgment against Cuba is essential to reinforce U.S.
anti-terrorism policy, which is not true of any of those other claims.
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\7\ Compare Chicago & Southern Air Lines, Inc. v. Waterman S.S.
Corp. 333 U.S. 103, 111 (1948) (``Judgments, within the powers vested
in courts by the Judiciary Article of the Constitution, may not
lawfully be revised, overturned, or refused faith and credit by another
Department of Government.'') (emphasis added). The Administration's
interpretation asserted would deny full faith and credit to a judgment
expressly submitted to the jurisdiction of this Court under the Anti-
Terrorism Act and the Foreign Sovereign Immunities Act. In defense of
the Judicial Powers established pursuant to Article III, this Committee
should reject this argument.
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__________
Prepared Statement of Andreas F. Lowenfeld
Mr. Chairman and Members of the Committee: I am honored by your
invitation to present my views on the proposal sponsored by Senators
Mack and Lautenberg to amend the Foreign Sovereign Immunities Act to
authorize attachment and execution on frozen assets of foreign states
in order to satisfy judgments obtained against such states in United
States courts.
I am sorry that I was not able to present my views in person and
answer your questions, but I am grateful for the assurance that my
views will be entered into the record and will be seriously considered.
In brief, I am opposed to the legislation as introduced, but I have a
suggestion that may to some extent--though not completely--meet the
concerns of the Senate on behalf of the victims of terrorist acts or
their families.
I. QUALIFICATIONS
I am the Herbert and Rose Rubin Professor of International Law at
the New York University School of Law, where I have been a Professor
since the Fall of 1967. Prior to becoming a Professor of Law I served
for more than five years in the Office of Legal Adviser in the United
States Department of State, holding the position of Deputy Legal
Adviser at the time I left government service.
While in the State Department I was actively involved in drafting
and administering economic controls against Cuba, the Soviet Union,
China, North Korea, and other states considered inimical to the United
States. In particular I worked on a variety of problems involving the
Foreign Assets Control Regulations and the Cuban Assets Control
Regulations, both of which relied in important respects of freezing of
assets of designated states and their nationals.
Among my twelve books on various aspects of international economic
law is a major volume on Trade Controls for Political Ends (1st ed.
1977. 2d ed. 1983) which (inter alia) discusses in detail the
administration of asset freezes in the context of relations with Cuba,
China, and Iran under the Trading with the Enemy Act (TWEA) and the
International Economic Emergency Powers Act (IEEPA). When Congress
considered repeal or reform of the TWEA in 1977, I was the first
witness called by then Chairman Bingham of the Subcommittee on
International Economic Policy and Trade of the House Committee on
International Relations, and my testimony was cited both by the
majority and by the dissenting opinion in the leading Supreme Court
case on the scope of the regulations issued with respect to Cuba under
the TWEA. Regan v. Wald, 468 U.S. 222 at 239 (majority opinion by
Rehnquist, J.); id. at 245, 246, 249, 250 (dissenting opinion by
Blackmun, J.) (1984).
I have also written several articles and a chapter in my book on
International Litigation and Arbitration (1993) on the United States
and international law concerning sovereign immunity, and I was
responsible for the relevant sections both on asset freezes and on
suits against foreign states as Associate Reporter of the Restatement
(Third) of the Foreign Relations of the United States (1987).
II. THE PROPOSED LEGISLATION
As I understand it, the legislation would build on the 1996
amendments to the Foreign Sovereign Immunities Act in three significant
ways. First, the bill would make judgments obtained in U.S. courts by
victims of terrorist acts as defined in Sec. 1605(a)(7) enforceable
against agencies or instrumentalities of foreign states even if these
agencies or instrumentalities were separately established and had no
part in the terrorist acts on which the claim was based. This amendment
to present Sec. 1603, the definition section of the FSIA, would reverse
recent decisions such as Flatow v. The Islamic Republic of Iran, 1999
U.S. Dist. Lexis 13759 (U.S. Dist. Ct. Md. Sept. 9, 1999), which
rejected enforcement of a judgment previously secured by plaintiff
against Iran arising out of a terrorist act against an independent
foundation belonging to the government of Iran; Alejandre v. Telefonica
Larga Distancia de Puerto Rico, Inc., 183 P.3d 1277 (11th Cir. 1999),
reversing an order of attachment and execution issued by the District
Court in favor of families of the victims of the deadly assault by the
Cuban Air Force against civilian aircraft flying over international
waters on search and rescue missions, and an earlier decision in
Letelier v. Republic of Chile, 748 F.2d 790 (1984), cert. denied, 471
U.S. 11 25 (1985), reversing an order of attachment and execution
against an aircraft of the state-owned airline of a judgment rendered
in favor of families of persons murdered in the United States by the
order of the Chilean government.
Second, the bill would make available for attachment and execution
funds due from or payable by the United States to any state against
which an anti-terrorism judgment had been entered, in the same manner
as if the debtor were a private person.
Third, the 1998 Amendment to the FSIA, which added present
Sec. 1610(f) and thereby made frozen assets of states against which an
anti-terrorism judgment had been issued available for attachment and
execution, and also provided for the first time for punitive damages
against foreign states in actions arising out of terrorism, contained
abroad waiver provision, which the President utilized on the same day
that the amendments entered into force. Presidential Determination No.
99-1, Oct. 21, 1998, 63 Fed. Reg. 59201 (Nov. 2, 1998). The proposed
legislation would limit the President's waiver authority to protecting
from attachment the premises of foreign diplomatic missions and funds
necessary to operate such missions. Apparently no authority would
remain in the President to prevent attachment and execution against
assets frozen under the Trading with the Enemy Act or the International
Emergency Economic Powers Act, as is expressly permitted by Sec. 1610
(f).
III. APPRAISING THE PROPOSED AMENDMENTS
A. Corporations owned by terrorist countries
I am least troubled by the first proposal, provided it can be
properly confined and does not signal a wider abandonment of the
separate entity approach to corporations owned by governments. The
proposal would adopt what used to be referred to in the context of the
Iranian Hostage Crisis as the ``Big Mullah'' theory. See e.g.,
Revolutionary Days: The Iran Hostage Crisis and the Hague Claims
Tribunal, pp. 66-67 (Lowenfeld, Newman, Walker, eds. 1999). The idea is
that a corporation owned by a state is an asset of the state, and
should be available in limited cases--i.e. in cases arising out of
terrorism--to be used to satisfy the debts of the state. Government
corporations should not be treated as interchangeable defendants. Thus,
for instance, a claim or judgment against a state-owned corporation
should not be able to be satisfied by execution on assets of the state-
owned airline. But in a case such as Letelier or Alejandre, in which
the liability of the state (i.e., the apex of the pyramid) is clearly
established, it is not unreasonable and not against any overriding
principle of international law to permit execution against assets of
corporations owned by the guilty state.
I should add, however, that I found subsection (a)(1) of the Bill
extraordinarily difficult to understand, with all the strike-outs and
cross-references. If the Senate is anxious to make a statement that can
serve as an expression of the outrage of the United States and as a
warning to those who might consider state sponsorship of terrorist
acts, the message should be communicated clearly and unequivocally.
Further, while I accept the idea of executing against state-owned
assets, I would be opposed to extending the authorization to
garnishment of debts, in reliance on footnote 36 of the Supreme Court's
decision in Shaffer v. Heitner, 433 U.S. 186 at 210 (1977), which seems
to preserve in the case of enforcement of judgments the otherwise
discredited technique upheld in Harris v. Balk, 198 U.S. 215 (205). The
device of garnishment of intangible assets is sufficiently
controversial, both within the United States and under international
law and practice, that it seems to me unwise to burden what would in
any event be a departure from internationally accepted practice with
such a remedy. Thus while executing on a foreign state's direct assets
may be accepted, searching for debts to the state unrelated to the act
of terrorism seems to me an unattractive, if not unlawful step. In
particular, debts incurred by American telephone companies acting under
specific license issued pursuant to the Cuban Assets Control
Regulations to a Cuban telephone company located outside the United
States would not seem to be suitable for levy under legislation
designed to assist victims of terrorism.
B. Debts of the United States
In addition to garnishment against private parties who may have
debts to terrorist states, the bill would permit garnishment of debts
owed by the United States to terrorist states. Generally, garnishment
of debts owed by the United States is not permitted, on the ground that
the United States has not waived its immunity from such proceedings.
See, e.g. Simon v. Montgomery (Garnishee: United States of America), 54
P. Supp. 2d 673 (M.D. La. 1999). Congress could, of course, waive the
immunity of the United States, but I believe such a move would be
unwise, and might well involve the United States in breach of its
international obligations. As I believe the Committee has been
informed, the Iran-U.S. Claims Tribunal has issued an award holding the
United States responsible for an award to an Iranian entity which the
Iranian party has been unable to collect. See Iran Aircraft Industries
v. Avco Corp., 980 F.2d 141 (2d Cir. 1992); Islamic Republic of Iran v.
United States of America, Case No. A-27, June 5, 1998. The Award in
Case A-27 is now a debt of the United States, and arguably therefore an
asset of Iran. Although I disagree with the decision of the Claims
Tribunal in Case A-27 (indeed I was of counsel to the U.S. government
in the case), I believe the United States should now pay the award,
without interference through garnishment or attachment.
The United States has a great stake in observance of international
dispute settlement generally, and in the Iran-United States Claims
Tribunal in particular. The creation of the Claims Tribunal, as the
Committee will recall, was essential to resolving the Hostage Crisis,
and its continuing success is of great importance both to the foreign
relations of the United States and to the closure of the many disputes
involving claims of United States disputes involving claims of United
States citizens and corporations. I am not suggesting, of course, that
these claims are entitled to greater respect than the claims of victims
of terrorism. I believe it would be bad policy, bad law, and bad
precedent, however, to permit garnishment and execution against the
United States of the debt arising from an award of the Claims Tribunal.
C. The frozen assets
The United States has used blocking or freezing of assets as a
major tool of foreign policy since World War I--and indeed (in somewhat
different form) since the presidencies of Jefferson and Madison. A
freeze of assets, often combined with a trade embargo, is a highly
useful technique, poised between ``business as usual'' and the use of
force, for a country to express its disapproval of the actions of
another state. The assets freeze a few days after the seizure of the
American Embassy in Teheran was essential to the return of the
hostages. Their detention was longer than anyone expected, but the
hostages came out essentially unharmed. As is well known, a significant
portion of the frozen Iranian Assets went into the pool from which
claims of U.S. citizens against Iran could be paid in implementation of
the awards of the Iran-United States Claims Tribunal. More important,
all the evidence indicates that without the frozen assets as an element
for bargaining, the fate of the hostages might well have ended in
tragedy.
The assets freeze against Libya, I believe, was at least a
contributing factor in the extradition of the two principal suspects in
the bombing of Pan Am Flight 103. We were able to negotiate resumption
of relations with China, and more recently with Vietnam, in part in the
context of relaxing the Foreign Assets Controls. A similar development
may be foreseen--I do not say expected--in relations with North Korea
and Cuba.
In upholding the so-called Algiers Accords of January 1981, the
U.S. Supreme Court, despite some misgivings, understood that judicial
attachments could not be allowed to stand in the way of a major policy
decision involving frozen assets. Dames & Moore v. Regan, 453 U.S. 654,
esp. at pp. 673-74 (1981). I believe the same rationale applies today.
While it is impossible to foresee how the foreign assets that remain
blocked will fit into a future negotiation or claims settlement (see
below), it is clear to me that programs of freezing or blocking assets
in emergency situations cannot be properly implemented if private
creditors are permitted to attach and even execute on such assets, I
believe, therefore, that Congress was wise in last year's legislation
to provide a Presidential waiver authority, and that President Clinton
was justified in exercising that authority in the interest of national
security. It would be extremely unwise, in my judgment, to withdraw
that waiver authority now.
IV. IMPROVING THE OPPORTUNITIES OF THE VICTIMS OF TERRORISM
Before closing, I would like to make a suggestion that may bring
same relief to the victims of terrorist acts and their families. As I
understand it, the assets blocked under the Cuban Assets Control
Regulations are being held for an eventual settlement with a Cuban
government, with a view to at least partial satisfaction of claims
brought before the Foreign Claims Settlement Commission by former
owners of expropriated property. Claims for compensation for disability
or death are also included in this program, but only if they were
submitted within a limited period in the 1960's. See 22 U.S.
Sec. 1643b(b) . It seems to me that recent victims of terrorism and
their families, such as the victims of the downing of the planes of the
Brothers to the Rescue, should also be included as claimants in
whatever assets are eventually made available. Further, I would submit
that claims arising out of personal injury or death by terrorist acts
should be granted some kind of priority over claims on behalf of
persons and companies that have suffered only economic loss. Of course
the holders of the recent judgments are not the only victims of
terrorism; I submit that Congress should amend the International Claims
Act to provide for registration of all such claims, with a view to fair
apportionment.
I have not had the time--or indeed the required information--to
work out this suggestion in detail. The aim, however, is clear. Victims
of terrorism should be compensated, whether or not they were the first
in the court house. However, major foreign policy tools of the United
States--including the means to normalize future relations with states
now considered terrorist--should be preserved. Foreign asset controls
under the TWEA and IEEPA have always permitted large areas of
discretion for the President. While some direction by the Congress is
justified, subordinating the President's discretion in this area to the
vagaries of individual litigation would be an unwise, and I believe
ultimately counterproductive step.
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