U.S. GOVERNMENT PRINTING OFFICE

70–954 CC WASHINGTON : 2001

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

(

COMMITTEE ON THE JUDICIARY

ORRIN G. HATCH, Utah, Chairman

STROM THURMOND, South Carolina

CHARLES E. GRASSLEY, Iowa

ARLEN SPECTER, Pennsylvania

JON KYL, Arizona

MIKE DEWINE, Ohio

JOHN ASHCROFT, Missouri

SPENCER ABRAHAM, Michigan

JEFF SESSIONS, Alabama

BOB SMITH, New Hampshire

PATRICK J. LEAHY, Vermont

EDWARD M. KENNEDY, Massachusetts

JOSEPH R. BIDEN, JR., Delaware

HERBERT KOHL, Wisconsin

DIANNE FEINSTEIN, California

RUSSELL D. FEINGOLD, Wisconsin

ROBERT G. TORRICELLI, New Jersey

CHARLES E. SCHUMER, New York

MANUS COONEY, Chief Counsel and Staff Director

BRUCE A. COHEN, Minority Chief Counsel

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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

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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 ClinVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 TERROR SJUD4 PsN: SJUD4
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ton 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

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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

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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:]

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6

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.

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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?

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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?

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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?

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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?

11

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 any- one 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 initi- ated 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-Sec- tion 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

12

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 pursu- ing, 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 warn- ing 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

13

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

14

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

15

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-yearold 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,

16

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.

17

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 pistolwhipped, 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 11⁄2 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

18

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

19

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 CubanAmericans 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 acknowlVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 TERROR SJUD4 PsN: SJUD4
20

edge 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

21

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

22

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.

23

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

24

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

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tween 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.

26

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

27

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,

28

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.

29

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 sponsorVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6602 TERROR SJUD4 PsN: SJUD4
30

ing 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.

31

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

32

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 acVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 TERROR SJUD4 PsN: SJUD4
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knowledgement 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 re- quested 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.

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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:

35

• 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

36

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.

37

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.

38

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 longestablished 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 obliga- tions 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 naVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6621 TERROR SJUD4 PsN: SJUD4
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tional 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,

40

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

41

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.

42

Sadly, despite very strong reactions to other terrorist attacks in- volving 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 41⁄2 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.

43

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

44

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

45

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.

46

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 delibVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 TERROR SJUD4 PsN: SJUD4
47

erately 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

48

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 ap- peared 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

49

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

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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.

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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

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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 stateowned 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.

53

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

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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 statesponsored 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 per- forming 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

55

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

56

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 offi- cials 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

57

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

66

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

67

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

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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

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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.]

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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.

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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. § 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.

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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, § 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 AntiTerrorism 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-TerrorVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00077 Fmt 6601 Sfmt 6621 TERROR SJUD4 PsN: SJUD4
74

ism 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

75

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 secu- rity 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

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uous—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. § 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.

§ 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 DepartVerDate 11-MAY-2000 13:13 Mar 23, 2001 Jkt 000000 PO 00000 Frm 00080 Fmt 6601 Sfmt 6621 TERROR SJUD4 PsN: SJUD4
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ment’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. § 1605(a)(7) were

expanded to apply to any act of terrorism. Instead, however, § 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.

78

ADDITIONAL SUBMISSIONS FOR THE RECORD

PREPARED STATEMENT OF RONALD W. KLEINMAN

I am pleased to have this opportunity to present to the Senate Judiciary Commit- tee 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

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1 H.R. Rep. No. 1487, (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6606 (emphasis added).

ing litigants that these often crucial decisions are made on purely legal

grounds.1

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 AntiTerrorism 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)

80

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.’’ 3The United States has often invoked this doctrine to justify its conduct which arguably vio- lated 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 Fed- eral 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). 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. 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 satisare 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,

• 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

Third, the Administration argues that these assets must be held in order to pro- vide 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

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 imme- diate compensation for many of the 5,911 claimants through Title III of the HelmsBurton 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 HelmsBurton 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 op- eration of the sanctions authorized by that Act.5

81

fied, 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. 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).

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 enforce- ment, 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

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

82

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.

v. New York, 118 S.Ct. 2091 (1998), the Supreme Court held that this violates the

Constitution’s ‘‘presentment clause,’’ Art. 1, § 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 adminis- trative 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.

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).

83

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

§ 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

§ 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 attach- ment 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 § 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 for- eign 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 § 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

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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

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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. § 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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