[Senate Hearing 106-941]
[From the U.S. Government Printing 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\
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    \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.
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    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\
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    \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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