[Senate Hearing 108-214]
[From the U.S. Government Publishing Office]
S. Hrg. 108-214
BENEFITS FOR U.S. VICTIMS OF INTERNATIONAL TERRORISM
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 17, 2003
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
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COMMITTEE ON FOREIGN RELATIONS
RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee BILL NELSON, Florida
NORM COLEMAN, Minnesota JOHN D. ROCKEFELLER IV, West
JOHN E. SUNUNU, New Hampshire Virginia
JON S. CORZINE, New Jersey
Kenneth A. Myers, Jr., Staff Director
Antony J. Blinken, Democratic Staff Director
(ii)
C O N T E N T S
----------
Page
Allen, Hon. George, U.S. Senator from Virginia, prepared
statement submitted for the record............................. 39
Eizenstat, Stuart E., partner, Covington & Burling, Washington,
DC............................................................. 14
Prepared statement........................................... 17
Gerson, Dr. Allan, chairman, Gerson International Law Group and
honors professor, George Washington University, Washington, DC. 20
Prepared statement........................................... 29
9/11 Families United To Bankrupt Terrorism--Position Paper,
July 3, 2003............................................... 22
Taft, William H., IV, the Legal Adviser, Department of State,
Washington, DC................................................. 2
Prepared statement........................................... 6
Responses to additional questions for the record by Senator
Allen...................................................... 40
Responses to additional questions for the record by Senator
Biden...................................................... 43
(iii)
BENEFITS FOR U.S. VICTIMS OF INTERNATIONAL TERRORISM
----------
THURSDAY, JULY 17, 2003
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 9:35 a.m. in room
SD-219, Dirksen Senate Office Building, Hon. Richard G. Lugar
(chairman of the committee), presiding.
Present: Senator Lugar.
The Chairman. This hearing of the Senate Foreign Relations
Committee is called to order. Today the committee meets to hear
testimony on policy related to compensation for American
victims of international terrorism. The administration has put
forward a proposal to establish a comprehensive Federal program
to provide benefits to terrorism victims. In the interest of
stimulating congressional deliberations, I've introduced that
proposal at the administration's request as Senate bill 1275.
I'm pleased to welcome this morning Mr. William H. Taft,
Legal Adviser to the State Department, who will explain the
administration's proposal and the analysis behind it. I'm also
pleased to welcome two distinguished lawyers and experts on
compensation issues, Stuart Eizenstat and Allan Gerson, who
will offer their perspectives on the administrations proposal.
Members of our committee have been very interested in
developing a workable terrorism compensation policy for United
States citizens. Senator Allen, a member of our committee in
particular, has been active in this area and we welcome his
thoughts and those of all members on the subject before us.
This hearing acknowledges an unfortunate reality. Many
Americans have been the victims of international terrorist
attacks during the last quarter century, and such attacks are
unlikely to end, unhappily, in the near future. Our policies
must account for the needs of those who have been victims of
past attacks while preparing rationally for an uncertain
future.
I believe that all Senators are committed to ensuring that
the United States has in place the most effective tools
possible to combat terrorism and to promote the security of the
United States. I also know that Senators are unified in their
sympathy for American victims of terrorism and in our desire to
see that these victims and their families receive compensation
for their losses. The questions we must consider are what laws
and policies will most effectively achieve those goals and how
do we ensure that policies aimed at compensating victims of
terrorism are consistent with broader United States national
security interests.
In recent years, Congress has addressed issues related to
compensation for victims of terrorism through several pieces of
legislation. Often such legislation has been attached to larger
bills, sometimes late in the legislative process. This hearing
is intended to provide our committee with an opportunity to
examine the issue of terrorism compensation in a deliberative,
timely, and detailed fashion.
It's an important issue, one that deserves our careful
consideration. Therefore, we are indebted to the witnesses who
have come before us this morning and we look forward to their
testimony. The first panel will be, in fact, Mr. William H.
Taft, IV, Legal Adviser, Department of State, Washington, DC,
and following his testimony and questioning by Senators, we
will call upon the second panel, Mr. Eizenstat and Dr. Gerson.
Mr. Taft, it's great to have you again before us this
morning and we look forward to your testimony. Your entire
statement will be made a part of the record in full and I'll
ask you to proceed as you wish.
STATEMENT OF WILLIAM H. TAFT, IV, THE LEGAL ADVISER, DEPARTMENT
OF STATE, WASHINGTON, DC
Mr. Taft. Thank you, Mr. Chairman, and I appreciate your
putting my complete statement, which has been provided to the
committee, in the record, and I will summarize it here.
I'm honored to appear before you and to testify in support
of the bill, S. 1275. Let me begin, as you did, by expressing
the administration's and my own personal sympathy to the
victims of international terrorism. Over the last 25 years, we
have all seen how Americans and our embassies and facilities
abroad have become the targets for the most dreadful attacks.
We all remember the sight of our embassy personnel being
paraded before the cameras during their captivity in Iran for
444 days, and we can not begin to imagine their suffering.
Additional Americans were taken hostage in Lebanon and held for
years in the most deplorable conditions. Others were killed
while yet others have died in attacks by suicide bombers and
acts of airline sabotage and in attacks on our embassies
abroad.
All of these victims and their families have suffered
unspeakable injuries and pain. Congress has passed numerous
pieces of legislation to make clear its intent that victims of
international terrorism should receive some compensation.
First, in 1996, Congress provided that civil suits against the
terrorist parties including state sponsors of terrorism would
hold them responsible. It passed an amendment to well
established rules of sovereign immunity embodied in the Foreign
Sovereign Immunities Act that removed immunity from suit for
states designated as sponsors of international terrorism. This
legislation opened the courts to suits against the state
sponsors of terrorism and judgments were rendered against those
states. It was, however, difficult for plaintiffs to actually
collect on their judgments.
In most cases, in fact, the defendant states have not even
appeared in the suits, nor do these states typically have very
many assets in the United States against which a judgment may
be executed. What property is here is frequently blocked and
often subject to competing claims of ownership.
To address this situation, in the year 2000 Congress passed
additional legislation. This act made blocked assets of Cuba
available to pay certain outstanding judgments against that
country. It also provided that certain plaintiffs with
judgments against Iran could be paid out of funds from the U.S.
Treasury, which were supplemented by a small portion of blocked
Iranian funds. In all, approximately $377 million was paid by
the Treasury to 13 victims or their families.
Other plaintiffs with judgments against Iran as well as
plaintiffs with judgments against other state sponsors of
terrorism, however, received no payments as a result of the new
legislation. Subsequently, Congress added two more plaintiffs
to the list of those eligible for payments. As a result, one
additional judgment holder against Iran received compensation.
The other additional plaintiff is still awaiting that judgment
in that case. This brought the total of payments from the
Treasury for 14 victims to $386 million.
Following the tragic events of September 11, 2001, Congress
acted swiftly to address the immediate needs of the victims and
families of those most terrific acts of terrorism by passing
title IV of the Air Transportation and Safety Stabilization
Act. It established a special master within the Justice
Department who determines the appropriate amount to be paid in
each individual case. The payments come from the Treasury.
As we all know, while many have welcomed and benefited from
this program, there has also been significant criticism of it.
Last year, Congress addressed this subject yet again and passed
the Terrorism Risk Insurance Act. This statute made additional
judgment holders eligible for payments. It also made some of
the blocked assets of terrorist parties, including those of
state sponsors of terrorism and their agencies and
instrumentalities available to satisfy some judgments.
Congress has previously passed similar provisions in 1998.
However, the bill in which those provisions were included also
permitted the President to waive the attachment provisions, the
provisions that provided that there could be attachment of
blocked assets. President Clinton issued a waiver at the time
he signed the amendment into law.
With passage of the Terrorism Risk Insurance Act, judgment
holders began to attach blocked assets of terrorist list states
but with uneven results. Some who had received judgments
against Iraq were able to satisfy their judgments from some
$100 million in blocked Iraqi assets. All other Iraqi assets,
however, have now been vested by the President in the United
States, and are not available to compensate judgment holders.
Plaintiffs with judgments against Iran are also attempting
to attach Iranian blocked assets, but Iran has very few blocked
assets in the United States, about $23 million, according to
the Treasury's most recent report to Congress, and the largest
amount of these assets are diplomatic and consular properties,
which are subject to obligations under the Vienna Convention on
Diplomatic and Consular Relations, and thus not subject to
attachment under the new statute. So there is very little money
or property available to satisfy these judgments against Iran.
Thus, while it was Congress' intent to address the
suffering of victims of international terrorism, the
legislation it has passed piecemeal over the years has proven
unsatisfactory in several respects. The current litigation-
based system of compensation is inequitable, unpredictable,
occasionally costly to the U.S. taxpayer, and damaging to the
foreign policy and national security goals of this country.
First let me address the inequitable and unpredictable
nature of the current system. While some U.S. victims have been
successful in obtaining large default judgments, others who may
not be able to prove who was responsible for the terrorist act
of which they were a victim are not able to obtain court
judgments. Yet others are barred by international agreement
from even bringing suit. Some judgment holders have been able
to satisfy judgments against the particular state sponsor of
terrorism because at the time their judgments were rendered,
there happened to be sufficient blocked assets that they could
attach. But others have not been able to do that because the
defendant state in their cases has few blocked assets in the
United States.
In addition, plaintiffs have had to compete against each
other for satisfaction, hoping that their writs were served
before others for attachment of the very same assets. Yet
others have been eligible to receive payments directly from the
U.S. Treasury, but many have received and can expect to receive
nothing under the current system. And those victims or families
who have received payments have received drastically varying
amounts for similar injuries.
Second, the current system has been costly to the U.S.
taxpayer and will continue to be so, whether or not the funds
come directly from the U.S. Treasury. Under the Victims of
Trafficking Act, payments totaling, as I said earlier, $386
million have been made from the U.S. Treasury to 14 victims.
Continued payments in this fashion based upon compensatory
damage awards by courts would amount to a significant drain on
the U.S. Treasury, and while some blocked assets have been made
available for attachment, in theory to make the terrorist party
pay, in fact the U.S. taxpayer is most likely to end up footing
the bill for these payments as well.
Virtually all of the Iranian blocked property that has been
the subject of attachments involves property that is the
subject already of claims against the U.S. Government before
the Iran-United States claims tribunal, where we will have to
account for it. And when the time comes for the United States
to demand from Iran or other states reimbursement for the
amounts that it has paid on their behalf, there will be
offsetting claims to cover judgments against the United States
rendered in foreign courts. Recently, an Iranian court entered
a default judgment against the United States in a tort case for
$500 million.
Third, the current system has frequently conflicted with
foreign policy and national security interests. The U.S.
Government blocks assets in the interests of the Nation as a
whole. This is a powerful foreign policy tool. It is not
intended to expropriate those assets, but to use them to
promote important foreign policy goals. Using those assets to
pay court judgments undermines the President's ability to use
them in the broader interest of the Nation. For example,
blocked Iraqi assets were needed this year for the people of
Iraq and to support reconstruction efforts, just as blocked
Afghan assets were needed for similar purposes in 2002 and just
as blocked Iranian assets were held as critical leverage in
1981 to secure the release of the hostages.
Using blocked assets to pay claims and judgments will not
deter terrorism. Terrorist states already know that they will
never see the blocked assets unless they change their behavior.
The only governments that will be hurt by the use of blocked
assets for paying judgments will be the governments that
replace the terrorist state governments now and end their
country's support for terrorism.
Congress evidently recognized that, and therefore looked to
the administration to develop an alternative program. In
passing the appropriations act for the Department for fiscal
year 2002, Congress made clear its interest in a comprehensive
program to ensure fair, equitable, and prompt compensation for
all U.S. victims of international terrorism or their families
that occurred or occurs on or after November 1, 1979. That date
was in the bill.
In June 2002, Deputy Secretary Armitage, in a letter to
many Senators and Congressmen set out four major principles for
a proposal that would do this. First, the program should
provide the same benefits to those with low incomes as to those
with greater means. Second, victims should receive benefits as
quickly as possible without the need for litigation or a drawn-
out adjudication process. Third, the amount to be paid should
be on a par with that provided to families of public safety
officers killed or injured in the line of duty, a catastrophe
for which Congress has previously determined taxpayers would
wish to provide compensation from the Federal Government. And
fourth, compensation would not come from blocked assets,
thereby assuring that the practice of using blocked assets as
leverage in the conduct of foreign policy can continue to be
available to the President.
Last month, we forwarded draft legislative language to you.
We believe that the program we have proposed is the fairest and
most equitable approach to providing benefits to victims or
their families. It provides all victims and their families with
predictability, so that they know up front what benefit the
Federal Government will provide them without ever having to go
to court or needing an attorney or needing ad hoc legislation
from Congress for their particular situations. Importantly, for
persons who have already filed lawsuits against terrorist
states seeking compensation for injuries suffered in terrorist
incidents, whether they have obtained judgments yet or not, the
bill will not affect their ability to attach blocked assets.
They are essentially grandfathered in this respect, losing no
rights that they currently have.
Let me highlight some of the major provisions of the
program that would be established under this bill. When an act
of international terrorism occurs, the victim or victim's
family would receive a quick uniform payment without having to
prove who was responsible for the act of terrorism and without
having to bring a lawsuit and obtain a judgment. The families
of those killed would receive the same amount that is paid to
the families of police officers and firefighters who are killed
in the line of duty under legislation enacted previously. That
amount is currently $262,000 and is subject to an automatic
escalator clause. Those injured or held hostage would receive
up to that amount according to a schedule which would be
established by the Secretary of State in regulations.
The program would be administered by the State Department
and paid for out of funds separately authorized and
appropriated to the Department for this purpose. The U.S.
Government would be subrogated to the extent of payments made
to any recovery in litigation or settlement. Those who decided
not to participate in this program could still sue to the
extent permitted by current law, but they would not be able to
satisfy their judgments out of blocked assets unless their
suits have already been filed.
The possibility that assets of terrorist states, whether
blocked or otherwise, may be available to satisfy judgments in
the past has, with few exceptions, led only to either of two
results, either there turn out to be no available assets and no
payments are made, or Congress has paid the judgments from the
Treasury. Under our bill, the route to the Treasury will be
short and reliable and no one will be under the illusion that
there are terrorist state assets available to compensate them
in the largest number of cases where there really aren't.
We believe this program would be fair to all victims and
their families. There would no longer be a need to try to find
a defendant and to race to the courthouse to try to obtain a
default judgment and then to see whether any blocked assets are
still available for that particular country, or whether ad hoc
legislation can be enacted to provide a Treasury payment, the
existing system. While providing a generous benefit to victims,
it would be less costly to the U.S. Treasury and fairer than
paying massive default judgments to a small number of victims
and leaving many more victims out.
I hope that you will consider this proposal favorable.
Thank you, Mr. Chairman, for the opportunity to appear.
[The prepared statement of Mr. Taft follows:]
Prepared Statement of William H. Taft, IV, the Legal Adviser,
Department of State
Mr. Chairman, I am honored to have an opportunity to appear before
you today to testify in support of S. 1275.
Let me begin by expressing the Administration's and my own personal
sympathy to victims of international terrorism. Over the last 25 years,
we have all seen how Americans and our embassies and facilities abroad
have become the targets for the most dreadful acts of international
terrorism. We all remember the sight of our embassy personnel being
paraded before the cameras during their captivity in Iran for 444 days
and can not begin to imagine the suffering to which they were
subjected. Additional Americans were taken hostage in Lebanon, and many
of them were held for years by their captors under the most deplorable
conditions. Others were killed by their captors, while yet others have
died in attacks by suicide bombers, in acts of airline sabotage, and in
attacks on our embassies abroad. All of these victims and their
families have suffered unspeakable injuries and pain.
Congress has passed numerous pieces of legislation to make clear
its intent that victims of international terrorism receive
compensation.
First, in 1996, Congress adopted an approach by which civil suits
against the terrorist parties, including state sponsors of terrorism,
would hold them responsible for their acts in the form of money
damages. It passed an amendment to well-established rules of sovereign
immunity embodied in the Foreign Sovereign Immunities Act that removed
immunity from suit for states designated as sponsors of international
terrorism as well as additional legislation, making officials,
employees and agents of state sponsors of terrorism liable for personal
injury or death caused by their acts of international terrorism.
This legislation opened the courts to suits against the state
sponsors of terrorism, and judgments were rendered against those
states; it was, however, difficult for plaintiffs to collect on their
judgments. In most cases, in fact, the defendant states have not
appeared in the suits brought against them. Nor do these states
typically have many assets in the United States against which a
judgment may be executed, and what property is here is frequently
blocked and often subject to competing claims of ownership.
To address this situation, in 2000, Congress passed additional
legislation in the Victims of Trafficking and Violence Protection Act.
This act made blocked assets of Cuba available to pay certain
outstanding judgments against that country. It also provided that
certain plaintiffs with judgments against Iran could be paid out of
funds from the U.S. Treasury supplemented by a small portion of blocked
Iranian funds. In all, approximately $377.7 million was paid by the
Treasury to 13 victims or their families. Other plaintiffs with
judgments against Iran, as well as plaintiffs with judgments against
other state sponsors of terrorism, however, received no payments as a
result of the new legislation. An amendment to the Victims of
Trafficking Act subsequently added two more plaintiffs to the list of
those eligible for payments. As a result, one additional judgment
holder against Iran received compensation; the other additional
plaintiff is still awaiting a judgment. This brought the total of
payments from the Treasury for 14 victims to $386 million.
Following the tragic events of 9/11, Congress acted swiftly to
address the immediate needs of the victims and families of those most
horrific acts of terrorism by passing title IV of the Air
Transportation Safety and System Stabilization Act. It established a
Special Master within the Justice Department, who considers a variety
of factors in determining the appropriate amount to be paid in each
individual case. The payments come from the Treasury. As we all know,
while many have welcomed and benefited from this program, there has
also been significant criticism.
Last year, Congress addressed this subject yet again and passed the
Terrorism Risk Insurance Act. This statute made additional judgment
holders eligible for payments under the Victims of Trafficking Act. It
also made some of the blocked assets of terrorist parties, including
those of state sponsors of terrorism and their agencies and
instrumentalities, available to satisfy some of the judgments awarded
to victims and their families. Congress had previously passed similar
provisions in 1998, amending the Foreign Sovereign Immunities Act, to
permit plaintiffs to satisfy judgments from blocked assets. However,
the amendment also permitted the President to waive the attachment
provisions in the national security interest of the United States.
President Clinton issued a waiver upon signing the amendment into law.
With passage of the Terrorism Risk Insurance Act, plaintiffs were
in a position to begin attaching blocked assets of terrorist list
states to satisfy their judgments. They have started to do this, but
with uneven results. Certain plaintiffs who had received judgments
against Iraq were able to satisfy their judgments from some $100
million in blocked Iraqi assets. All other Iraqi assets, however, were
vested by the President in the United States on March 20, 2003 and are
not available to compensate judgment holders. They will be used to
assist the recently liberated Iraqi people and to assist in the
reconstruction of Iraq.
Plaintiffs with judgments against Iran are also attempting to
attach Iranian blocked assets. But Iran has few blocked assets in the
United States--about $23 million, according to Treasury's most recent
report to Congress, and the largest amount of these are diplomatic and
consular properties subject to obligations pursuant to the Vienna
Conventions on Diplomatic and Consular Relations, and not subject to
attachment under the new statute. So there is very little money or
property available to satisfy these judgments.
Thus, while it was Congress' intent to address the suffering of
victims of international terrorism, the legislation it passed,
piecemeal over the years, has proven unsatisfactory in several
respects. The current litigation-based system of compensation is
inequitable, unpredictable, occasionally costly to the U.S. taxpayer
and damaging to the foreign policy and national security goals of this
country.
First, let me address the inequitable and unpredictable nature of
the current system. While some U.S. victims have been successful in
obtaining large default judgments against a particular terrorist party,
others, who may not be able to prove who was responsible for the
terrorist act, are not able to obtain court judgments, though their
suffering and pain are no less than those who can. And yet others are
barred by international agreement from even bringing suit.
Some judgment holders have been able to satisfy judgments against
the particular state sponsor of terrorism, because at the time their
judgments were rendered, there happened to be sufficient blocked assets
they could attach. Others have not, because the defendant state in
their cases has few blocked assets in the United States. In addition,
plaintiffs have had to compete against each other for satisfaction,
hoping that their writs were served before the others for attachment of
the very same assets.
Yet others have been eligible to receive payments directly from the
U.S. Treasury. But many have received and can expect to receive nothing
under the current system. And those victims or families who have
received payments have received drastically varying amounts for similar
injuries.
According to the Washington Post, there are at present some 60
pending terrorism-related suits, involving more than 1,500 plaintiffs,
targeting Libya, Cuba, Iran, Iraq and other terrorist states. There may
be many more. The current compensation system, created through
piecemeal legislation, that encourages litigation, as I have noted, has
been far from equitable and predictable in providing compensation to
existing judgment holders. If the system can not meet the needs of
existing judgment holders, it is easy to see how inadequate it will be
in addressing the needs of those who have yet to receive judgments, or
the needs of future victims of international terrorism.
Second, the current system has been costly to the U.S. taxpayer and
will continue to be so, whether or not the funds come directly from the
U.S. Treasury. Under the Victims of Trafficking Act, payments totaling
$386 million were made from the U.S. Treasury for 14 victims. Continued
payments in this fashion, based upon compensatory damages awarded by a
court, for potentially more than a thousand plaintiffs would amount to
a significant drain on the U.S. Treasury. And while some blocked assets
have been made available for attachment, in theory to make the
terrorist party pay, in fact the U.S. taxpayer is most likely to end up
footing this bill.
Virtually all of the Iranian blocked property that has been the
subject of attachments involves property that is the subject of claims
against the U.S. government before the Iran-United States Claims
Tribunal in The Hague, where we will have to account for it. Third
parties who have interests in the property will file lawsuits for
compensation. And when the time comes for the United States to demand
from Iran or other states reimbursement for the amounts it has paid on
their behalf, it will no doubt be confronted with offsetting claims to
cover judgments against the United States rendered in other national
courts. Recently an Iranian court entered a default judgment against
the United States for $500 million.
Third, the current system has frequently conflicted with broader
foreign policy and national security interests. The U.S. government
blocks assets in the interests of the nation as a whole. This is a
powerful foreign policy tool. It is not intended to expropriate those
assets, but to use them to promote important foreign policy goals.
Using those assets to pay the court judgments of either plaintiffs
suffering financial losses in business transactions or victims of
terrorism, undermines the President's ability to use this tool in the
broader interest of the nation. For example, blocked Iraqi assets were
needed this year for the people of Iraq and to support reconstruction
efforts, just as blocked Afghan assets were needed for similar purposes
in 2002, and as blocked Iranian assets were held as critical leverage
in 1981 in securing the release of the hostages.
Using blocked assets to pay claims and judgments will not deter
terrorism, but will reduce the incentive that blocking property
provides to end support for terrorism. Terrorist states already know
that they will never see the blocked assets unless they change their
behavior or meet other important U.S. interests. The only governments
that will be hurt by the use of blocked assets for paying judgments
will be the governments that end their country's support for terrorism.
Congress recognized that the current ad hoc, piecemeal approach to
compensation had significant downsides and therefore looked to the
Administration to help develop an alternative program. In passing the
Commerce, Justice and State Appropriations Act for FY 2002, Congress
made clear its interest in a comprehensive program to ensure fair,
equitable, and prompt compensation for all U.S. victims of
international terrorism (or their family members) that occurred or
occurs on or after November 1, 1979.
In June 2002, Deputy Secretary Armitage in a letter to many
Senators and Congressmen set out principles for a proposal that would
do this. The letter outlined four major principles:
(1) that the program should provide the same benefits to
those with low incomes as to those with greater means;
(2) that victims should receive benefits as quickly as
possible, in a stream-lined fashion, without the need for
litigation or a drawn-out adjudication process;
(3) that the amount to be paid should be on par with that
provided to families of public safety officers killed or
injured in the line of duty--a catastrophe for which Congress
has previously determined taxpayers would wish to provide
compensation; and
(4) that compensation would not come from blocked assets,
thereby assuring that the practice of blocking assets and using
them as leverage in the conduct of foreign policy can continue.
Last month, we forwarded draft legislative language to Chairman
Lugar that meets these principles and urged passage of such a program.
We believe that the program we have proposed is the fairest and most
equitable approach to providing benefits to victims or their families
in their true time of need. It provides all victims and their families
with predictability, so that they know up front what they are entitled
to, without having to go to court or needing an attorney or ad hoc
legislation from Congress for their particular situations. Importantly,
for persons who have already filed lawsuits against terrorist states
seeking compensation for injuries suffered in terrorist incidents--
whether they have obtained judgments yet or not--the bill will not
affect their ability to attach blocked assets; they are essentially
grandfathered in this respect.
Let me highlight some of the major provisions of the program that
would be established under S. 1275.
When an act of international terrorism occurs, the victim, or
victim's family would receive a quick, uniform payment, without having
to prove who was responsible for the act of terrorism and without
having to bring a lawsuit and obtain a judgment. We would cover acts of
terrorism going back to the Iran embassy hostage crisis.
The families of those killed would receive the same amount that is
paid to families of police officers and fire fighters who are killed in
the line of duty under legislation enacted previously. That amount is
currently $262,000, and is subject to an automatic escalator clause.
Those injured or held hostage would receive up to that amount according
to a schedule to be established in regulations.
The program would be administered by the State Department in a
streamlined way and paid for out of funds separately authorized and
appropriated to the Department for this purpose. The U.S. Government
would be subrogated, to the extent of payments made, to any recovery in
litigation or settlement.
Those who decided not to participate in this program could still
sue to the extent permitted by current law, but would not be able to
satisfy judgments out of blocked assets, except where their suits have
already been filed.
We believe this program would be fair to all victims and their
families. There would no longer be a need to try to find a defendant,
and to race to the courthouse to try to obtain a default judgment, and
then to see whether any blocked assets are still available for that
particular country or ad hoc legislation could be enacted to provide a
Treasury payment. While providing a benefit to victims of the same
magnitude Congress has determined is suitable for police officers and
firemen, it would be less costly to the U.S. Treasury and fairer than
paying massive default judgments to a small number of victims and
leaving all the others out. I hope you will consider this proposal
favorably.
The Chairman. Thank you very much, Mr. Taft, for your
testimony. You have pointed out in a number of the paragraphs
of your testimony that the administration opposes the use of
blocked assets to foreign states as a source of compensation
for victims of terrorism. You have, I think, sketched out
accurately the predicament currently for our government as it
deals with post-war Iraq, but likewise in previous situations.
Let me say this as a practical example. When I visited with
Ambassador Bremer in Baghdad about 3 weeks ago and we discussed
the sources of money available for the governance of the
country--quite apart from reconstruction, public safety, the
repair of the oil wells, various other things that need to be
done--he mentioned frequently blocked assets. He mentioned
other assets that had come to the United States--sometimes
simply cash out on the payment there that had been taken from
banks and looters and all of this, this sort of one source of
revenue.
In due course, we anticipate that there will be sales of
oil. In fact, the very day that I was there, blocked assets,
that is, oil reserves in Jehon, Turkey that belonged to Iraq
were sold, and some revenues came therefore to this provisional
government. Now the fact is that these moneys are being
expended. As you're pointing out, on the other hand, there may
be victims of terrorism, American victims, who are looking to
the so-called blocked assets of the source of payments and
judgments of lawsuits that might be successful. At some point,
leaving aside the issue today, the overall one, is the American
taxpayer, who takes a look at this whole situation and asks how
much Iraq is costing us month by month. Secretary Rumsfeld has
asked this, but likewise so have Mr. Bremer and the civil
authorities.
In other words, there is one pool of money here. The
question, as you pointed out, is that in the past it may be
that certain lawsuits have been successful, abnormally so.
Perhaps hundreds have been successful all together, with a
great division among rich and poor, some were lucky, with a
timely filing, or whatever happened to be the circumstance.
Finally at the end of the day the blocked assets have to be
replaced if we're to have a relationship with the country.
Right now, we have an active one with what we hope will be a
new democracy and a new day in Iraq. These are not free funds;
they're being replaced even as we speak; they're being used
essentially.
Now, as I gather, one of the nubs of this proposal of our
government is to try to bring some order out of this chaos by
saying the blocked assets are there for use of American
diplomacy, American security, treaties that may be formed with
future governments--preferably ones that are more favorable--
but they are not available for victims' compensation.
Essentially we're going to try to get some regularization of
the process so that the rich and the poor all have an
opportunity. Yet we want to take a look at some other more
recent cases, that is, victims of terrorist violence in New
York City, for example, or police officers who in the course of
duty have met a terrible fate.
I don't want to oversimplify, but essentially the policy
drives that. That is, this bill that I've introduced at the
behest of the administration--because we have had already an
active debate on the floor last Wednesday and Thursday when we
took up the State Department authorization, the foreign
assistance, and the Millennium Challenge Account--progressed
through 56 amendments, and several of them dealt with this
subject. I pointed out that we were going to have a timely
hearing, and that is why I'm conducting one this morning.
Although you are the only witness for the moment and I am the
only Senator, the fact is this is very important business
because something is going to happen here. We have a
legislative vehicle in motion, and many Senators have already
made proposals augmenting whatever may have been done by
Senators in the past. The conference and finally a bill signed
by the President has to conform, I would think, roughly to what
you are suggesting this morning, or else it simply won't work
given the President's budget, our foreign policy with Iraq, and
a good number of other situations.
Now, let me ask, if this is the case, how did you arrive at
the amount of compensation that would come to victims? What are
the guidelines, the models, the profiles of what would be fair
to everybody involved, given many countries now, and as I said
in my opening statement, a quarter century really of American
history that this encompasses.
Mr. Taft. Now, Senator, let me say first of all that I
think your holding this hearing is the right way to go about
it. Although the Congress has passed, as I was surveying them,
perhaps 5 or 6 different bills over the past 6 or 7 years, I
really don't think that there has been actually a hearing on
proposed legislation on any of those bills that was passed, and
yet this is a complicated problem.
The fact that the legislation has had to be amended and
changed and altered so many times suggests that holding a
hearing and really looking at the problem whole is the right
way to go, and so I compliment you and the committee on doing
that here, and I would hope that this process would continue,
and obviously Senators have many different ideas, and
Congressmen as well, as to how to approach this problem, but
the way to sort those out is not at 2 a.m. on some other
totally unrelated bill putting in an amendment to deal with a
small part of this problem. The way to do it is to look at it
whole and come up with a proper program.
Now you asked specifically about, and there are obviously a
lot of decisions that have to be made to go into this, which
are not easy: the definition of who is eligible for the
program, the definition of what events will be covered where,
and the one that you asked about certainly is what amount is
reasonable. In considering that, we looked at the different
judgments that had been given and the different programs that
already exist for some guidance. We wanted to have a generous
amount and we wanted to have a uniform amount. Those were some
principles that we said and we wanted to have, I think it's
fair to say also, an affordable amount, an amount that a
person, a taxpayer, a schoolteacher in Indianapolis who pays
taxes and wants to do something for people, thinks is a
reasonable amount for them to be contributing to help, but not
something that would shock them and be more than they think
maybe they should be pitching in to that particular tragedy.
And one of the places that we looked, and what we found
that we thought was a sensible place to be in that regard, was
the Public Safety Officers Program, and it provides more than a
quarter of a million dollars now to people who are killed in
the line of duty, people who are in a profession that we very
much admire and require and respect and who suffer a
catastrophe. It looked to us as if that was a reasonable amount
which the Congress had previously approved in that situation
and was affordable and yet generous, and that was why we came
up with that figure.
The Chairman. Well, Mr. Taft, from the testimony you've
given, about $370 million, more or less, has been paid out, and
did you say to 13 victims?
Mr. Taft. There are, I believe it's 14 have been given, of
whom 13 have already collected.
The Chairman. Obviously just doing the math you get to
enormous awards. Now in what way were these 13 or 14 victims
different substantially from everybody else who may be ready to
file a suit now? In other words, this is quite a past history
of sort of an average of over $20 million or close to $30
million a person.
Mr. Taft. It is in that range. There were some judgments,
although the judgments are very unequal even in that group. I
think some have received over $50 million, one payment, and
some down in the single digit millions, so there is a variety
even within there, but the average is in the $20 to $30 million
range for each. I think----
The Chairman. Well, what were the circumstances----
Mr. Taft [continuing]. If you look, though, I mean we have
so many of these cases now out there. It's calculated there are
perhaps over 1,500 victims suing already now and to pay each of
them $20 million is not something that I think the Congress
would support or that people would say should happen, and yet
if you do the real average payment, it's not in the $20 million
range because you've got hundreds of people out there who are
receiving nothing at all, I mean we've got perhaps 200 people
who have received payments and the rest, 1,000, 1,200 people
have gotten nothing. And so the average is not quite what it
appears.
The Chairman. So you're attempting to say that there ought
to be a compensation figure that appears at least to the
American people in fairness to be a generous amount, but one
which ultimately the American people are going to have to pay.
In other words, there's a supposition that somehow out there
there is Iraqi money, Iranian money, other kinds of moneys that
can be siphoned off without effect to deficits here, taxpayer
money that comes and goes for the education, health and welfare
of our country. And what you're saying is that that doesn't
work out that way. Temporarily you may be able to attach
something, but then you have retaliation, you finally have
regularization with a country and offsetting suits there and
elsewhere that finally eliminate it. This was not free money,
however you might have attached it at the moment, and however
compassionate the cause. Unfortunately, there never will be
enough of it given the number of victims of terrorism in a
dangerous world. We must bring some sense of justice so that
individuals do not have to sue the Department of the Treasury
or have to worry through the process of having a special act of
Congress. or have to approach their Senator at 2 a.m. on the
floor on some strange bill in order to get personal relief;
this is the way some of this happens. Senators are constituent-
oriented. They have a sense of compassion. It doesn't matter
what the bill is. Given the rules of the Senate, amendments, as
we saw last Wednesday and Thursday--56 of them in 24 hours--
come and go pretty fast.
Yet you're saying, as opposed to things being handled that
way, there ought to be certainty for victims and their
families, for procedure, and likewise a quickness in terms of
receiving the compensation. When the loss is acute, the needs
are there. I don't want to oversimplify the proposal, but
that's what I gather is the heart of what you're doing.
Mr. Taft. And I guess only one other thing, Mr. Chairman,
it ought to be for everybody. There are an awful lot of people
who, many more people, I mean four, five times as many people
who've received payments who have not, just nothing, and why
they haven't is in part because they don't know the right
people, in part because they don't know, they can't bring their
cases because they're not sure who was responsible for it, and
so forth, and yet they're very--each case is, the payment that
we've come up with is an across-the-board approach. Obviously
this is not to say that each of these cases is the same.
They're all different and they're all dreadful in their own
way, but we thought in terms of what the Federal benefit should
be to address this, which the Congress has made clear it wants
to do something for this. Whenever the question has been raised
directly, will you do something for this victim, the answer is
yes, we want to, and the votes, you've seen them on the floor,
they're 90 to nothing. And so we agree with that. We want to do
something too, but we want to do something that's affordable
and we want to do it for everybody.
The Chairman. Well I appreciate very much, first of all
that you have a comprehensive statement that's a part of our
record, and likewise your own summation of that, which I
believe covered the salient points. You've outlined those
carefully. The purpose of this colloquy, literally, is simply
to illuminate once again the important points of universality,
the certainty of payment, the fairness, the criteria for
finally getting some judgments to all of the people who might
be involved as opposed to a few who might have the benefit a
specific bill offered, often--as we have both suggested--almost
in the dead of night, often as an amendment to a bill that was
nonrelevant, without having hearings on this subject or any
general conversation with the American public about what we
were doing.
That is the purpose of this hearing. You've contributed
mightily to the success of that endeavor and I appreciate your
testimony.
Mr. Taft. Well thank you very much, Mr. Chairman. If you
have any questions or other members of the committee of course
have questions, we'll be glad to answer them for the record.
The Chairman. And we will keep the record open for another,
we'll say 48 hours, because Senators who have not been able to
attend the hearing this morning but are interested in this
issue may very well want to raise questions through their
correspondence with you. And if you would respond promptly, we
would appreciate it to complete the record.
Mr. Taft. We will certainly do that and I appreciate the
opportunity. Thank you, Mr. Chairman.
The Chairman. Thank you very much.
The chair would like to now call our second panel, composed
of Mr. Stuart E. Eizenstat, partner of Covington & Burling,
Washington, DC, and Dr. Allan Gerson, chairman of Gerson
International Law Group and honors professor, George Washington
University, Washington, DC.
Gentlemen, we appreciate your coming to the hearing this
morning. Both of you have appeared with our committee before
and we have always profited from your counsel. Likewise we've
admired your own contributions to public service, which have
been very substantial throughout the years. I'd like for you to
testify in the order that I introduced you. Let me say at the
outset that your full statements will be a part of the record
and you may proceed in any way you wish to either summarize or
illuminate the points that you have made.
Mr. Eizenstat.
STATEMENT OF STUART E. EIZENSTAT, PARTNER, COVINGTON & BURLING,
WASHINGTON, DC
Mr. Eizenstat. Thank you, Mr. Chairman. I appreciate the
opportunity to testify and I'm pleased that the administration
has decided to tackle this issue because, in effect, in 1996,
Congress passed a right to sue for money damages against
terrorist parties including state sponsors of terrorism without
really providing an effective remedy. And we've all been
searching since then for the appropriate way to deal with this.
During my service in the Clinton administration, both as
Under Secretary of State and as Deputy Secretary of the
Treasury, I worked closely on issues concerning the
compensation of victims of international terrorism, in
particular the 2000 Victims of Terrorism and Violence Act, what
we called Mack-Lautenberg, with a particular focus on the
merits of using blocked assets of state sponsors of terrorism
to achieve such compensation. May I also say for the record
that I've also represented private parties, two families who
were connected with the 2002 terrorist legislation that was
passed in 2002.
Then, as now, ensuring proper compensation for terrorism
victims presents a great challenge due to several factors.
First, while in some instances blocked foreign state assets may
be used to satisfy personal injury claims as the Clinton
administration did with Congress for the use of Brothers to the
Rescue pilot families killed by the Cuban Air Force, such use
of blocked assets on a routine basis has the potential to
weaken the ability of the U.S. Government to conduct foreign
policy and to promote national security and thus should be
subject to Presidential waiver authority wherever it's granted.
Second, large sums from the U.S. Treasury as a source of
compensation places an undue burden on U.S. taxpayers, and
third, the limited pool of potentially available blocked assets
for compensating terrorist victims can create an undesirable,
unseemly, and unfair race to the courthouse to obtain and
satisfy awards.
In light of these challenges, the creation of an
administrative alternative to litigation for international
terrorism claims against foreign states, by providing prompt
and consistent awards to victims, could bring some relief, Mr.
Chairman, from the pressures that litigation of such claims at
times has placed on U.S. foreign policy, the U.S. Treasury, and
on the equitable distribution of awards. At the same time,
however, any administrative alternative should offer, I think,
a genuine alternative to, rather than outright replacement for
the litigation of international terrorist claims against
foreign states. Rather than foreclosing all access to blocked
assets, regardless of the circumstances of a given act of
terrorism or the country or group involved, I think a more
balanced approach, and one frankly more likely to pass
congressional muster, would be to ensure strong Presidential
waiver authority which could be exercised on a case-by-case
basis when warranted by U.S. national security interests.
By creating balanced options between litigation and
administrative proceedings, the victims of terrorism would be
provided with a genuine choice between two courses of action, a
choice which could then be determined by the facts and
circumstances of each individual claim. Moreover, given the
demanding standard under the act S. 1275 for demonstrating a
so-called act of international terrorism, keeping the courts
open to international terrorist claims, in particular those
that would be excluded from administrative proceedings, would
take on greater importance. May I also say that any changes to
current law that may be required should be applied only
prospectively and should not impact on any pending cases, and I
believe the legislation deals with that.
Let me now deal with some specifics. First, the importance
of blocked assets for U.S. foreign policy. Consistent with the
views expressed during my service in the Clinton
administration, indeed before this very committee, blocked
foreign state assets remain, Mr. Chairman, a potentially
powerful tool to advance U.S. foreign policy and national
security interests. Just two examples of the key role they can
play, one in which I was involved when we first met--I think
you may have still been the mayor of Indianapolis at that
time--when I was President Carter's chief domestic adviser, and
that was to gain the release of U.S. citizens held hostage in
Iran. I think, Mr. Chairman, had we not had those blocked
assets available, we may never have gotten our hostages out.
And later in the Clinton administration, the fact that we had
Vietnamese blocked assets I think was a clear incentive to
persuade the Vietnamese leadership during the normalization
process to address important U.S. concerns, including
accounting for POWs and MIAs.
Simply said, blocked foreign state assets, by providing
important leverage for negotiations with foreign states or, as
illustrated by President Bush's appropriate blocking of Iraqi
and Afghan assets, in that case providing emergency funds for
the reconstruction efforts of friendly successor states,
contribute importantly to U.S. foreign policy and national
security interests, and therefore need to be taken great
account of.
Second is to maintain a proper balance between
administrative and litigation alternatives. Fully recognizing,
as I've just done, the importance of blocked foreign state
assets for U.S. foreign policy and national security interests,
in my view, any proposed administrative alternative to
litigation should be precisely that, a genuine alternative
rather than an outright replacement of U.S. courts as a proper
forum to resolve terrorist claims involving foreign states.
To achieve that balance between administrative and
litigation alternatives, permit me to highlight the following
considerations. First, we should make the administrative
proceeding genuine. We should incentivize people to try to take
the administrative route, and frankly we're not going to do
that by an award of $262,000. It's too small and when we
compare that, for example, to the $1.85 million average under
the 9/11 compensation fund, let alone the amounts that can
sometimes be awarded in courts, this is, I think, too low a
standard of recovery to permit people to genuinely be channeled
into this administrative process.
I think the analogy between the public officers who serve
their communities by placing themselves in harm's way--and
that's how the administration came to the $262,000 figure--and
private citizens who have not taken on such duties to the
public seems to me not an appropriate analogy. In other words,
police officers, firefighters, and so forth know that they're
placing themselves daily in harm's way. That's not the case
with private citizens who are completely innocent, and I think
the analogy breaks down at that point.
Administrative determinations, in addition, should not
reverse existing court determinations. A particularly important
category of claims under the act would be persons holding
favorable but unsatisfied court judgments who subsequently
decide to obtain an administrative award. The administrative
entity, I believe, Mr. Chairman, should not be in a position to
reverse a court's determination by declining to find an act of
international terrorism. Court findings, in effect, should be
grandfathered.
Third, the administrative determination should be subject
to review. This is expressly not permitted. I think under the
Administrative Procedure Act, that could be an internal review.
Fourth, a subjective requirement that terrorism victims be
targeted on account of their U.S. nationality, which is what
the act requires, is not workable. As drafted, only those
terrorism victims specifically targeted as U.S. nationals would
satisfy the definition of an act of international terrorism and
give rise to the administrative award. This is dramatically
narrower than the existing definition under the Foreign
Sovereign Immunities Act, which requires an extrajudicial
killing without the need to show a specific intent to kill on
account of U.S. nationality.
As with court actions under the Foreign Sovereign
Immunities Act, administrative proceedings should cover all
American victims, regardless of whether the terrorist
specifically targets their victims as U.S. nationals. For
example, you could have a tourist who is in Israel, who is
killed, as an American he might not have been targeted as a
U.S. national, but he should recover.
Fifth, the importance of blocked assets for U.S. foreign
policy and national security interests I think can be
adequately addressed through Presidential waiver authority
without the need to foreclose all access to blocked assets,
which I think will run up against political opposition.
In 1998 and in 2000, President Clinton exercised his wavier
authority, Mr. Chairman, on grounds of national security to
prevent the attachment of foreign state assets to satisfy
international terrorism awards against foreign states. That
waiver authority was provided by legislation passed in 1998 and
in 2000. And more recently, Section 201 of the Terrorism Risk
Act of 2002, the President retains that waiver authority to
prevent on grounds of national security the attachment of
foreign assets covered by the Vienna Convention. What I'm
suggesting is a broader waiver authority, not just limited to
consular properties, but all blocked assets.
I would favor maintaining broad Presidential waiver
authority exercised on a case-by-case basis to safeguard
against the distribution of blocked assets undermining U.S.
foreign policy and national security interests. Reliance on
strong, broad Presidential waiver authority rather than blanket
elimination of access to blocked assets would help keep U.S.
courts as a viable alternative to the administrative system,
but at the same time give the President the discretion to make
sure that the foreign policy interests of the country were not
affected if blocked assets were inappropriate to use.
Serious concerns over using blocked assets of foreign
states are, I think, less of a problem in dealing with blocked
assets of private terrorist groups like HAMAS, but here at the
same time, Presidential waiver authority is essential. Although
S. 1275 would not prevent claimants from attempting to satisfy
judgments by pursuing commercial purpose assets of a foreign
state located in the U.S., a strategy I would support, such
assets can, as Will Taft said, be difficult to locate and
secure, and the limited potential for executing such commercial
assets would not likely have a large impact on overall
litigation prospects.
In short, I think we can advance the important goals
driving the administrative process that again I applaud the
administration for suggesting, without at the same time
completely denying court access to all victims of terrorism
against foreign states by eliminating any hope of satisfying a
judgment through the execution of blocked assets. A case-by-
case approach with broad Presidential waiver authority I think
is the proper balance.
Let me close by commending the administration for their
efforts for trying to come up with a process that is now, as
Will Taft properly said, fraught with all sorts of
uncertainties and conflicting legislation, just entirely too ad
hoc, while at the same time providing a genuine choice between
administrative proceedings and courts. A robust, viable option,
one again that would pay a sufficient amount to incentivize
people to take it, would have the advantage of encouraging
claimants to opt for administrative relief rather than pursue
litigation, with all the attendant difficulties of attempting
to attach blocked assets of foreign states which at times don't
even exist or have been vested for other purposes, as with Iraq
and Afghanistan, or again have serious national security
concerns attached to them.
It's always a pleasure to appear before you as I've done
many times and I thank you for your attention.
[The prepared statement of Mr. Eizenstat follows:]
Prepared Statement of Stuart E. Eizenstat, Partner, Covington &
Burling, Washington, DC
Mr. Chairman, thank you for the opportunity to appear before you
today to testify on S. 1275.
During my service in the Clinton Administration, in particular
during my tenure as Deputy Secretary of the Treasury, I worked closely
on issues concerning the compensation of victims of international
terrorism, with a particular focus on the merits of using blocked
assets of state sponsors of terrorism to achieve such compensation.
Then, as now, ensuring proper compensation for terrorism victims
presented a great challenge, due to several factors: first, while in
some instances blocked foreign state assets may be used to satisfy
personal injury claims (as the Clinton Administration agreed with
Congress to use for the families of the Brothers to the Rescue pilots
killed by the Cuban Air Force), such use of blocked assets on a routine
basis has the potential to weaken the ability of the U.S. Government to
conduct foreign policy and to promote national security, and thus
should be subject to Presidential waiver authority; second, very large
sums from the U.S. Treasury as a source of compensation places an undue
burden on the U.S. taxpayer; third, the limited overall pool of
potentially available assets for compensating terrorism victims can
create an undesirable, unseemly, and unfair race to the courthouse to
obtain and satisfy awards.
In light of these challenges, the creation of an administrative
alternative to litigation for international terrorism claims against
foreign states, by providing prompt and consistent awards to victims of
international terrorism, could bring some relief from the pressures
that litigation of such claims at times has placed on U.S. foreign
policy, the U.S. Treasury, and on the equitable distribution of awards.
At the same time, however, any administrative alternative should
offer a genuine alternative to, rather than replace outright, the
litigation of international terrorism claims against foreign states.
Rather than foreclosing all access to blocked assets, regardless of the
particular circumstances of a given act of international terrorism, in
my view a more balanced approach would be to ensure strong Presidential
waiver authority to be exercised on a case-by-case basis when warranted
by U.S. national security interests. By creating balanced options
between litigation and administrative proceedings, victims of
international terrorism would be provided with a genuine choice between
the two courses of action, a choice which could then be determined by
the particular facts and circumstances of each individual claim, rather
than by the absence of any real hope for enforcing a court award
obtained in litigation. Moreover, given the demanding standard under S.
1275 for demonstrating an ``act of international terrorism,'' keeping
the courts open to international terrorism claims--in particular those
claims that would be excluded from administrative proceedings--takes on
even greater importance.
1. the importance of blocked assets for u.s. foreign policy and
national security interests
Consistent with the views expressed during my service in the
Clinton Administration, blocked foreign state assets remain a
potentially powerful tool in the advancement of U.S. foreign policy and
national security interests. The Supreme Court, in the 1981 Dames &
Moore decision, recognized that blocked assets may serve as a
``bargaining chip to be used by the President when dealing with a
hostile country.'' As two examples of the key role blocked assets can
play in U.S. negotiations with foreign states, blocked assets enhanced
the U.S. Government's ability, when I served in the Carter White House,
to gain the release of U.S. citizens held hostage in Iran in 1981, and
helped to persuade the Vietnamese leadership, during the normalization
process between the United States and Vietnam, to address important
U.S. concerns, including accounting for POW's and MIA's. More recently,
this past March President Bush set aside blocked Iraqi assets for use
in the Iraqi reconstruction effort; similarly, last year President Bush
freed up blocked Afghan assets for reconstruction efforts in
Afghanistan. Simply, blocked foreign state assets, by providing
important leverage for negotiations with foreign states (or, as
illustrated by Iraq and Afghanistan, by providing emergency funds for
the reconstruction efforts of friendly successor states), contribute to
U.S. foreign policy and national security interests.
2. the importance of maintaining a proper balance between
administrative and litigation alternatives for international terrorism
claims
Fully recognizing the importance of blocked foreign state assets
for U.S. foreign policy and national security interests, in my view any
proposed administrative alternative to litigation of international
terrorism claims should be precisely that: a genuine alternative to,
rather than an outright replacement of, U.S. courts as a forum for
resolving international terrorism claims involving foreign states. To
achieve a proper balance between administrative and litigation
alternatives for international terrorism claims, I would like to
highlight the following considerations.
The award available under administrative proceedings must be
significant. For claimants to invest time and energy in developing a
claim--whether administrative or in litigation--awards of significant
value must be available. Accordingly, the proposed administrative award
under S. 1275 of $262,000 to families of victims killed by acts of
international terrorism is far too small and needs to be substantially
increased to contribute to the viability of the administrative
proceedings as an arbiter of international terrorism claims.
Recognizing that the $262,000 figure has been proposed to match current
U.S. law on compensation available to families of public safety
officers killed in the line of duty--including those killed on
September 11th--the amount remains sharply less than standard court
awards of compensatory compensation for deaths of family members caused
by international terrorism, which consistently total several million
dollars. The $262,000 amount also contrasts with the average award of
approximately $1.85 million (and ranging in excess of $6 million) paid
from the September 11th Victims Compensation Fund. Moreover, the
analogy between, on the one hand, public officers who serve their
communities by placing themselves in harm's way, and on the other,
private citizens who have taken on no such duty to the public, is less
than clear. At a minimum, additional funds should be made available to
compensate claimants who have endured lengthy delays in securing awards
for acts of international terrorism.
Admittedly, the certainty of the administrative award helps to
balance the modest amount with far larger, but far less certain, court
awards; nevertheless, larger administrative awards would provide added
weight and legitimacy for the new administrative process, and thereby
invite additional terrorism claims.
Administrative determinations on ``international terrorism'' should not
reverse existing court determinations
A particularly important category of claims under S. 1275 would be
persons holding favorable, but unsatisfied, court judgments who
subsequently decide to obtain an administrative award. For such claims,
the administrative entity should not be in a position, in effect, to
reverse a court's determination by declining to find ``an act of
international terrorism'' giving rise to the claim: court findings on
acts of state-sponsored terrorism should be grandfathered as such under
the administrative process.
Administrative determinations should be subject to review
To better establish the legitimacy of a newly-created
administrative entity for processing international terrorism claims,
and for consistency with the Administrative Procedure Act, some form of
review of administrative decisions is required.
A subjective requirement that a terrorism victim be targeted on account
of their U.S. nationality would be unworkable
As drafted, only those terrorism victims targeted specifically as
U.S. nationals would satisfy the definition of an ``act of
international terrorism'' and thus give rise to an administrative
award. This standard is unworkable, and dramatically narrower than the
existing definition under the Foreign Sovereign Immunities Act, which
requires an ``extrajudicial killing'' without the need to show a
specific intent to kill on account of U.S. nationality. As with court
actions under the Foreign Sovereign Immunities Act, administrative
proceedings should cover all American victims of international
terrorism, regardless of whether the terrorist actors specifically
targeted their victims as U.S. nationals. The challenge of satisfying
such a narrow, subjective standard would ultimately exclude significant
numbers of legitimate international terrorism claims from the
administrative process, such as those with dual citizenship or U.S.
citizens touring abroad, not necessarily targeted as U.S. nationals,
and underscores the importance of keeping U.S. courts open to
international terrorism claims brought by Americans against foreign
states.
The importance of blocked assets for U.S. foreign policy and national
security interests may be adequately addressed through the
President's waiver authority under current law, without need to
foreclose all access to blocked assets
In both 1998 and 2000, President Clinton exercised his waiver
authority on grounds of national security to prevent the attachment of
foreign state assets to satisfy international terrorism awards against
foreign states. Such waiver authority had been provided by legislation
passed in 1998 (Section 117 of the Treasury and General Government
Appropriation Act of 1999) and 2000 (Section 2002 of the Victims of
Trafficking and Violence Protection Act of 2000). More recently, under
Section 201 of the Terrorism Risk Insurance Act of 2002, the President
retains waiver authority to prevent, on grounds of national security
and on a case-by-case basis, the attachment of foreign state assets
subject to the Vienna Conventions on Diplomatic Relations and Consular
Relations. More generally, President Bush's decisions to vest blocked
Afghan and Iraqi assets for the reconstruction of those countries
illustrate the President's authority to determine on national security
grounds the ultimate use of blocked foreign state assets.
As a balanced response to the potential U.S. interests implicated
by the use of blocked assets to satisfy international terrorism awards,
I would favor maintaining broad Presidential waiver authority,
exercised on a case-by-case basis, to safeguard against distribution of
blocked assets that undermines U.S. foreign policy and national
security interests. Reliance on strong Presidential waiver authority,
rather than the blanket elimination of access to blocked assets, would
help to keep U.S. courts as a viable alternative to the administrative
system that S. 1275 would create. If the Presidential waiver authority
provided under Section 201 of the Terrorism Risk Insurance Act proved
to be insufficient for safeguarding U.S. foreign policy and national
security interests, the proper response, in my view, would be to
strengthen the President's waiver authority, rather than completely
seal off blocked foreign state assets from American victims of
international terrorism and thereby eliminate any legitimate prospects
for successful terrorism litigation against a foreign state.
Serious concerns over using blocked assets of foreign states, which
I have discussed, present much less of a problem in dealing with
blocked assets of private terrorist groups like HAMAS. Here, we are
much less likely to have future diplomatic relations or to want to use
the funds for diplomatic purposes. At the same time, here too
Presidential waiver authority would be essential for future suits. For
example, if the funds are needed to release U.S. hostages. Again, the
Presidential waiver, not a blanket prohibition on use of blocked
assets, would be the more reasonable approach.
Although S. 1275 would not prevent claimants from attempting to
satisfy judgments by pursuing commercial-purpose assets of a foreign
state located in the United States--a strategy that I would support--
such assets can be quite difficult to locate and secure, and the
limited potential for executing such commercial assets would not likely
have a large impact on overall litigation prospects. The prospects for
international terrorism litigation against a foreign state, where there
is absolutely no hope of attaching blocked assets of that state, would
be limited at best.
We can advance the important goals driving the administrative
alternative--safeguarding U.S. foreign policy and national security
interests, more equitable distribution of compensation, and reduced
burden on the U.S. taxpayer--without, in effect, denying court access
to all international terrorism claims against foreign states by
eliminating any hope for satisfying a judgment through the execution of
blocked assets. A case-by-case approach to blocked assets would leave
open the courts for exceptional claims whose underlying facts and
parties we may not be able to anticipate at this time and whose
particular circumstances may call for a unique response. Moreover,
given the demanding subjective standard for an ``act of international
terrorism'' under S. 1275 as currently drafted (requiring an act to be
committed on account of the victim's U.S. nationality), maintaining the
potential of court access for all American victims of international
terrorism takes on even greater importance.
I commend the Administration's efforts, and yours, to promote
important U.S. interests and to achieve greater equity for the victims
of such unspeakable events, while providing a genuine choice between
administrative proceedings and the courts for American victims of
state-sponsored terrorism. A robust, viable administrative option would
have the advantage of encouraging claimants to opt for administrative
relief rather than pursue litigation, with all of the difficulties of
attempting to attach blocked assets of a foreign state, which at times
no longer exist or have been vested for other purposes. Thank you Mr.
Chairman for the opportunity to appear before you today.
The Chairman. Well, thank you very much, Mr. Eizenstat.
Dr. Gerson.
STATEMENT OF DR. ALLAN GERSON, CHAIRMAN, GERSON INTERNATIONAL
LAW GROUP AND HONORS PROFESSOR, GEORGE WASHINGTON UNIVERSITY,
WASHINGTON, DC
Dr. Gerson. Thank you, Mr. Chairman, and thank you very
much for this invitation to appear before the Foreign Relations
Committee on S. 1275, which, I believe, can fairly be described
for what it is: a no-fault terrorism bill.
Today, Mr. Chairman, no American is immune from the scourge
of an international terrorist front committed to global jihad.
Despite the courageous steps undertaken by the President of the
United States and our valiant men and women in uniform, the
truth is that the threat remains. Eternal vigilance and a
readiness to use all the tools at our disposal is more
indispensable than ever. And that, Mr. Chairman, is why the
introduction of S. 1275 is so perplexing, especially to the
American victims of terrorism, who see themselves in the
vanguard of those determined to prevent a repetition of the
horrors that befell them.
Inexplicably, the sponsors of S. 1275 would undo much of
what has been accomplished in the last decade. They would undo
the right accorded to the victims and their families to hold
the murderers and their sponsors accountable in U.S. courts of
law. That empowerment of the families of the victims goes far
beyond the issue of compensation and it is one that Congress,
the courts, and indeed the President have recognized since
1991.
And so I ask, why would anyone want to undo this march of
progress? Why would the United States State Department take the
lead in introducing such a measure? And if I may, Mr. Chairman,
note from your own op-ed in today's Washington Post when you
spoke, in a very different situation, about time for the United
States to lead, I would like to suggest too that what the
United States State Department does with respect to leading or
not leading on the issue of accountability affects vital U.S.
national security interests.
I appear today, Mr. Chairman, not only as an advocate.
Together with my co-lead counsel who is here today, Mr. Ron
Motley, we proudly represent approximately 4,000 families of 9/
11 victims in their suits against the financiers of terrorism,
and share the families' outrage that anyone would propose a
bill which undermines the viability of such suits. But I also
appear, if I may say so, as an individual who, as a scholar and
former government official, has been involved in efforts to
address a balance between the needs of diplomatic flexibility
and the demands of justice.
But Mr. Chairman, I submit that S. 1275 has nothing
whatsoever to do with balance. I submit that S. 1275 is nothing
less than a setback in the war against terrorism. I also submit
that S. 1275, and I use this word advisedly and regretfully, is
deceptive. It purports to provide the families of victims with
additional rights when it in fact deprives them of hard-won
rights. Instead of addressing the moral and the legal right of
the victims, and indeed of all Americans to know the details
regarding the perpetrators and circumstances of the atrocity,
it would cover them up as a way of achieving a political
compromise.
This is not what the families of 9/11 want. This is not
what the American families that are victims to terrorism
believe in. As a compromise with terrorism, and it is not, I
submit, what the Congress or indeed the President had in mind
when he declared a war against terrorism on all fronts.
It is touted that the families of the victims will be the
beneficiaries of this bill. But they themselves deny it. And,
they have never been consulted on it. They do not want a no-
questions-asked instrument. They want a mechanism suited to
discovering the truth. They want accountability. They want
punitive damages. S. 1275 gives them none of that. Indeed, and
I want to emphasize this point, if the bill was intended to be
truly humanitarian, to provide benefits to all, it would give
them a true choice without strings attached. But this bill is
full of strings.
A position paper on S. 1275 prepared by the 9/11 Families
United to Bankrupt Terrorism detailing the specific flaws of S.
1275 has already been distributed to this committee and I would
hope that it might be made available as part of the official
record.
The Chairman. It will be made a part of the record in full.
Dr. Gerson. Thank you, Mr. Chairman.
[The position paper referred to follows:]
9/11 Families United To Bankrupt Terrorism--Position Paper
3 July 2003
senate bill 1215--the saudi bailout bill
Let's assume that sometime in the next two years, Osama bin Laden
carried out his plan to fly an aircraft into the CIA headquarters in
Langley, Virginia as Abdul Hakim Murad, an Al-Qaeda operative, said bin
Laden intended to do in his confession to U.S. authorities in 1995.
Under proposed Senate Bill 1275, the liability for Osama bin Laden, the
terrorists who carried out the attack, and the charities and wealthy
individuals who financed the attack would be limited to a death benefit
of $250,000.00 per victim. This amount is far below the penalties that
courts have imposed against terrorists and their financiers in anti-
terrorism suits. The financial dis-incentive to sponsor terrorism will
be removed if this bill is passed. The financiers of terrorism will
realize that continuation of such dastardly operations remain
relatively cost free. And, more Americans will die. S. 1275 would
reward, not punish, terrorism. Such is the Orwellian inversion of
purposes which this bill presents under the guise of providing an
additional benefit to the American victims of terrorism.
The Congressional independent investigation of the September 11th
attacks concluded several months ago and still the 9/11 Families United
to Bankrupt Terrorism await the results of the investigation. The delay
has been caused by a reluctance on the part of some government
officials to publish, among other things, the ties that Saudi-based
charities, government officials and members of the royal family have to
terrorists and how the September 11th hijackers received their funding.
In the same obstructive spirit the State Department offers S. 1275.
This proposed bill is offensive to the 4,000 member strong 9/11
Families United to Bankrupt Terrorism and all other families victimized
by terrorist attacks. The bill seeks to retroactively eliminate the
entire body of international jurisprudence enacted to protect terrorist
victims including the Foreign Sovereign Immunities Act, 28 U.S.C. 1605;
Torture Victim Protection Act, 28 U.S.C. 1350; Alien Tort Claim Act, 28
U.S.C. 1350 and the Anti-terrorism Claims Act, 18 U.S.C. 2333. Most
importantly, the proposed bill breaches the credo of the U.S.A. Patriot
Act--``Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism.'' See USA Patriot Act,
Title X, 2001. The Patriot's Act emboldens the anti-terrorism statutes
and the numerous cases which have interpreted these statutes:
All Americans are united in condemning, in the strongest
possible terms, the terrorists who planned and carried out the
attacks against the United States on September 11, 2001, and in
pursuing all those responsible for those attacks and their
sponsors until they are brought to justice.
USA Patriot Act of 2001, Title X, Sec. 1002. To successfully wage a
war on terrorism we must use every weapon in our arsenal including the
civil justice system. ``The only way to imperil the flow of money and
discourage the financing of terrorist acts is to impose liability on
those who knowingly and intentionally supply the funds to the persons
who commit the violent acts.'' Boim v. Quranic Literacy Institute, et
al., 291 F.3d 1000 (7th Cir. 2002). The State Department's proposed
bill is also inconsistent with the position taken by the Department of
Justice in its amicus brief filed on November 14, 2001 in Boim. The
Department of Justice wrote: ``the Government believes that this
provision [Section 2333(a)] can be an effective weapon in the battle
against international terrorism; it fights terrorism by discouraging
those who would provide financing for this activity.'' In S. 1275 the
State Department has crippled plaintiffs ability to use this weapon
against the financiers of terrorism. Why would we now, when our nation
and its citizens are threatened most disarm an effective force in
combating terrorism?
Presently, victims of terrorism may bring a cause of action in the
United States against a terrorist or any individual or entity that
knowingly provides support to a terrorist or terrorist organization.
Victims may also pursue civil litigation against a foreign state
designated as a state sponsor of terrorism that engages in the
terrorist activity. This bill seeks to completely supplant these rights
and remedies retroactively with a no-fault black-lung type federal
fund.
If this proposed bill were passed it might impair our ability to
pursue our terrorist lawsuit against the financiers of the September
11th attacks. Most importantly, S. 1275 would hurt all Americans as the
families of 9-11 are but the spear-holders for a national effort to
deter terrorism by placing the price of terrorism not on the shoulders
of the families of the victims, or on the back of US taxpayers, but on
the back of those responsible.
compensation amounts are grossly inconsistent with traditional tort
values
Victims of a terrorist attack, under this proposed bill, would file
a claim and would receive a death benefit equaling two-hundred and
fifty thousand dollars ($250,000.00), adjusted annually for inflation.
This amount bears no relationship to civil damage awards and is
entirely inconsistent with awards which have previously been rendered
in litigation brought by victims of terrorist activities:
In Smith v. Islamic Emirate of Afghanistan, et. al, (Case: 01 Civ
10132), U.S. District Court, Southern District of New York, determined
that the September 11th attacks were acts of international terrorism
and that two family victims of the attacks were decreed entitled to the
following damage amounts:
Family of George Eric Smith:
Economic Damages: $1,113,280
Pain & Suffering: $1,000,000
Al Qaeda Additional Liability: $4,229,560
Iraq Additional Liability:
Marion Thomas (wife): $3,000,000
Raymond Anthony Smith (Father): $1,000,000
Deborah Sallad (sibling): $500,000
Raymond Smith (Relation Unknown): $250,000
Family of Timoth Soulas:
Economic Losses: $15,139,203
Pain & Suffering: $3,000,000
Al Qaeda Additional Liability: $36,278,406
Iraq Additional Liability:
Katherine Soulas (wife): $10,000,000
Father: $3,000,000
Children: $3,000,000 (each child)
Siblings: $2,000,000 (each sibling)
The compensation amount authorized by S. 1275 is grossly unfair.
The amount contemplated is far short of the true value of such claims
in the civil justice system. The proposed compensation amount falls
below even the amounts authorized by the Victims Compensation Fund.
Even the VCF, which has been greatly criticized by many 9/11 families,
offers greater compensation benefits than the proposed bill.
The Victims Compensation Fund has created such anxiety and angst
among victims' families that it has proven to be an ineffective tool to
compensate families fairly and to assist them in their time of grief.
See generally, Kolbert, Elizabeth, ``The Calculator: How Kenneth
Feinberg determines the value of three thousand lives,'' The New
Yorker, November 25, 2002; Chen, David, ``Fund for Terror Attack
Victims Offers Awards in 14 Test Cases,'' New York Times, September 30.
2002.
There is already a system in place to fairly evaluate damages
suffered by a family. Juries everyday contemplate the loss and
suffering that victims have endured and award damages, when
appropriate, after a fair evaluation of all of the evidence. Any
attempt to create a no-fault compensation system with pre-set awards
creates a series of problems which we have seen repeatedly in asbestos
bankruptcies, coal] miners' black lung cases, and allergic reactions to
vaccine cases. First, the awards will be unfair to some claimants. With
this bill, the awards are so low that it would be unfair to every
claimant. Second, plaintiffs and victims do not have the opportunity to
tell the story of their loved one's death and hold accountable the
terrorist. Third, victims are robbed of the discovery process and an
opportunity to uncover who was involved, why the terrorist attack
occurred, how it could have been prevented, and who was responsible for
financing the attacks. What almost all victims and the families of
victims seek are: 1) exposure of those responsible for their loss; 2)
accountability of all responsible parties; 3) compensation for the harm
they have suffered; and 4) punishment of responsible parties to deter
such actions in the future. This proposed bill deprives victims of
these opportunities.
punitive damages
No-fault compensation schemes deprive victims of the right to seek
punitive damages. Punitive damages are a proven means by which to deter
intentional and reckless conduct. There is no case in which punitive
damages are more warranted and essential as a case involving terrorism.
Deprivation of this right will foreclose all meaningful opportunities
for victims to hold terrorists accountable and deter future terrorist
attacks.
parents, siblings and aliens would not be entitled to compensation
The proposed bill limits the number and types of persons who are
eligible to file a claim for compensation for a terrorist act. S. 1275
provides compensation only for United States nationals and limits
recovery to one claim per decedent. Foreign nationals, who are injured
in a terrorist attack in the United States, have the right to bring a
cause of action against the terrorists, their financiers and state
sponsors of terrorism pursuant to the Torture Victim Protection Act and
the Alien Tort Claims Act. Nevertheless, such victims are not entitled
to compensation under the proposed Bill. In addition, the nuclear
family, where a close familial relationship exists, whether foreign or
domestic, may bring an individual action pursuant to the Foreign
Sovereign Immunities Act. Thus, under current law, spouses, children,
parents and siblings of a decedent may bring an individual cause of
action. The proposed bill robs these individuals of their current right
to seek compensation for their losses.
frozen assets should be used to compensate victims of terrorist attacks
Section 14 of S. 1275 eliminates provisions of the Foreign
Sovereign Immunities Act and the Terrorism Risk Insurance Act of 2002
which guaranteed that victims of a terrorist act could satisfy a
judgment rendered in their favor against assets of the culpable party
seized by the United States government. Thus, while the proposed bill
claims to permit victims a choice to either pursue litigation or file a
claim for compensation through a federal fund, S. 1275 removes the
means by which victims may be compensated through litigation. Depriving
injured parties a meaningful remedy in litigation is depriving victims
of their right to litigate.
The State Department for decades has attempted to interfere with
victims' efforts to pursue litigation against individuals and foreign
states that sponsor terrorism. The security of Americans is the first
responsibility of government. Instead, the State Department in
sponsoring this bill has made paramount its own security in exercising
monopolistic power over anything involving smooth diplomatic relations.
But smoothness has its price. The State Department always seeks to use
seized assets as a diplomatic negotiating chip. There is no place for
diplomacy with terrorists.
subrogation
Even for the brave victims who may pursue litigation, the United
States government reserves the right to subrogate, to the extent of
payments made under the program, the victims' claims.
To the extent Section 11 implies that the United States government
will prosecute terrorist financiers for theft support of a terrorist
act and use the funds recovered to finance this program, it is
disingenuous. It has been over one and a half years since the September
11th terrorist attacks and there has not been a single prosecution of a
financier of the attacks. The United States government has recovered
evidence linking, charities, banks and certain members of the Saudi
royal family to funding Al-Qaeda and HAMAS. In fact, there are Internet
home pages in Saudi Arabia boasting of compensation that will be
awarded to families of suicide bombers. The United States government,
however, has not conducted a single prosecution.
Under this proposed bill, even if the United States government
began to conduct such an operation and seized some assets in
satisfaction of terrorist attacks, the amount of money offered,
$250,000.00, is far too low to have any deterrent effect. Seizure of
$250,000.00 per claimant will not deter these wealthy contributors to
terrorism. This pittance amount suggested in the bill will make any
meaningful investigation of terrorism cost prohibitive. Collecting
evidence will far exceed the cost of the subrogated amount.
little incentive for united states government action
The United States government, to date, has failed to trace the
roots of the September 11th attacks to its financial base. We believe
the reason for this inaction is that the base of terrorism resides
within Saudi Arabia. ``For years, individuals and charities based in
Saudi Arabia have been the most important source of funds for al-Qaeda;
and for years, Saudi officials have turned a blind eye to this
problem'' See, Council on Foreign Relations, Independent Task Force on
Terrorist Financing, at 9. As further evidence that officials within
the U.S. government will not permit a true investigation into Saudi
Arabia's role in sponsoring terrorism, the final report of Congress'
investigation of the September 11th attacks has not been published.
Press reports indicate that the report will disclose ``additional ties
between the Saudi royal family, government officials and terrorists.''
See, attached Frank Davies, ``U.S. Report on 9/11 to be `Explosive,' ''
Miami Herald, (July 10, 2003). S. 1275 is a back door attempt by the
State Department to increase bureaucracy and hide from the American
people the true means by which terrorism is financed. Victims of a
terrorist attack must be able to engage in discovery, to voice their
grief and to face their tormentors, without the impediment of often
illusory diplomatic obstacles. For this reason the State Department
should welcome, not deprive private citizens of their duly enacted
rights to pursue claims against terrorists and their financiers in US
courts of law. Private citizens must not be deprived of their right to
pursue litigation against terrorists and their financiers. This
proposed bill should be completely shredded and sent back to the State
Department forthwith.
In 1990 and 1992 Senator Charles Grassley introduced Antiterrorism
legislation ``to empower victims with all the weapons available in
civil litigation . . . and accord the victims of terrorism the remedies
American tort law.'' See 137 Cong. Rec. 8143 (1991). The Senate report
on the legislation stated that by imposing ``liability at any point
along the causal chain of terrorism, it would interrupt, or at least
imperil, the flow of money.'' S. Rep. 102-342, at 22. What has changed
between 1990 and 2003?
February 26. 1993--Bombing of the World Trade Center--6
murdered and 1,042 injured.
June 25, 1996--Bombing of the Khobar Towers--19 murdered and
370 injured.
August 7, 1998--East Africa Embassy Bombings--391 murdered
and over 5,000 injured.
October 12, 2000--Bombing of the USS Cole--17 murdered and
39 injured.
September 11, 2001--Attacks in Washington, New York and
Pennsylvania--2,915 murdered and thousands injured.
October 12, 2002--Bombing in Bali, Indonesia--181 murdered
and 250 injured.
May 12, 2003--Bombings in Riyadh, Saudi Arabia--34 murdered
and 194 injured.
May 16, 2003--Bombings in Morocco--43 murdered and over 100
injured.
Do these thousands of deaths justify allowing foreign nationals,
like Osama bin Laden and states to gain economic freedom for their
atrocities at a cost of $250,000 per dead American? The State
Department says so. The 9/11 Families United to Bankrupt Terrorism say:
No.
Dr. Gerson. On my part, I should like to focus on the
national security dimension of this issue, and to show that the
interests of security and the interests of justice are not only
joined here at the hip, but are inextricably linked.
Of course, the President's prerogatives in foreign affairs
calls for diplomatic flexibility. We all recognize that, but it
is not an unfettered right. Mr. Eizenstat has tried to draw or
approach this by way of reaching a balance, but that is not
what S. 1275 is about. Under S. 1275, under section 114 of that
bill, it would put off limits to terrorism's victims blocked or
frozen assets. But they do not belong to the executive branch.
The Constitution permits appropriation of such assets for
public purposes. The congressional enacted scheme for blocking
assets aimed at keeping it from our enemies; not at making it
unavailable for American claimants. Its purpose was not to
create a slush fund for the Executive.
Moreover, Mr. Chairman, I submit that section 114 would
essentially gut the effective work of Congress which has
encouraged the use of civil litigation against terrorism. It
would mean that you could not recover through normal execution
of a judgment, as going against blocked assets may be the only
way to accomplish such recovery. In this way, S. 1275 is an
effort by the State Department to overturn everything that
Congress has done since 1991. And, to do that, they are willing
to create and administer a new no-fault terrorism victims'
compensation system.
The State Department would argue, and indeed Mr. Taft has
this morning, that the current scheme rewards those that get
first to blocked assets. Mr. Eizenstat has characterized that
as, ``an unseemly race to the courthouse.'' But I would also
note that Mr. Taft's testimony dwells simply on default
judgments, largely against Iran, judgments that have been
satisfied by the United States Treasury. And, if that is the
problem, it should be labeled as such and addressed as such.
But S. 1275 represents something entirely different.
Instead, the State Department approach in S. 1275 is so
sweeping that it would remove all deterrents against the
financing or sponsors of terrorism. As S. 1275 now stands, the
American taxpayer would pay the victims of terrorism. The
result is the best of all possible worlds for terrorists
themselves. They can victimize at will, secure in the knowledge
that it is the U.S. Treasury, not their assets, that would be
called upon to pay the price. The result, Mr. Chairman, I
submit, is cost-free terrorism. It is precisely the opposite of
what the President and the Treasury Department and the FBI have
been struggling so hard to accomplish in the aftermath of 9/11.
Toward this purpose, S. 1275 would set up a new office at
the State Department to determine on a case-by-case basis
whether an international terrorist act occurred. In doing so,
it goes even beyond the 1996 amendments to the 1976 Foreign
Sovereign Immunities Act. These amendments, which were inserted
at the demand of the State Department, arrogated to it and not
the courts the determination of which states are in fact state
sponsors of terrorism. Rather than simply naming terrorist
states, S. 1275 is open-ended, insofar as the Secretary of
State will make a determination on a case-to-case basis as to
whether an act of terrorism occurred.
But Mr. Chairman, the most invidious aspect of S. 1275 is
its no-fault premise. In this way, it would neutralize the
deterrent power, and I emphasize that, the deterrent power of
civil litigation. How does that advance the national interest?
How does that provide security for more Americans? And although
this bill, as has been mentioned, does not directly affect the
families of 9/11 as it does not apply to anti-terrorism actions
filed before submission of S. 1275, the families of 9/11 are
concerned above all with a sound national anti-terrorism
policy. And for that reason, Mr. Chairman, I say that S. 1275
represents nothing less than the latest skirmish in a long
clash of what I would call cultural wars. You will have to
choose, and all the Senators will have to choose, which one is
to prevail. One culture, I submit, is the culture of
accountability, where the rule of law and the co-relative
rights of civil actions are fundamental. And, in the
countervailing culture, which supports S. 1275, expediency is
supreme.
Now, Mr. Chairman, I make these remarks today not to demean
the State Department but to explain its institutional
shortcomings. The irony is that the projection abroad of
American values of accountability and truth telling, to which
the State Department is ostensibly fully committed, is in fact
compromised by S. 1275. And I say this, Mr. Chairman from
recent experience. Shortly before the Iraq war, I was asked by
the State Department to go to Geneva as counsel to my former
boss, Ambassador Jeane Kirkpatrick, whom I had served when she
was Ambassador to the United Nations. She had been selected by
the President to lead the U.S. delegation to the U.N. Human
Rights Commission, and our job there was to promote on an
international scale the U.S. commitment to the rule of law as
part of its commitment to human rights, and we did so by
fending off attacks by such so-called U.S. allies as Saudi
Arabia, who sought at the very same time to condemn the U.S.
engagement in Iraq.
But how, I ask, can we present one face abroad and another
at home? At a time when our government favors the establishment
of truth commissions in Africa and cooperation with U.N. war
crimes tribunals for the Balkans, Rwanda, and Sierra Leone,
what lesson would we send to the world about our commitment to
accountability and truth telling when we seek, as does S. 1275,
to eviscerate the civil justice system approach and replace it
with one of no fault?
Professors Steven Ratner and Jason Abrams, in their book,
Accountability for Human Rights Atrocities in International
Law: Beyond the Nuremberg Legacy, write: ``Accountability helps
build a culture of respect for human rights. It can signal to
future violators of human rights that their actions will not
simply be forgotten by some political compromise.'' But I
submit that S. 1275 is all about political compromise. S. 1275
would allow the violators of human rights to be forgotten. And
again, I ask for what purpose?
In 1999, as was pointed out, the Senate Judiciary Committee
endorsed measures to enable victims of terrorism to execute on
judgments against the frozen assets of terrorist-linked
entities. Then in 1999, as today, I found myself shoulder to
shoulder with my friend and colleague, Stuart Eizenstat, taking
opposite positions on this particular issue. But those measures
which enable the families of victims to go after frozen assets
were indeed enacted into law. And yet today, 4 years after 9/11
we find ourselves here again, this time with the State
Department trying to undo what was then wrought.
Although S. 1275 postures itself as providing a benefit to
victims of terrorism through the choice of compensation from a
government plan, it in fact deprives such victims and their
families of their existing hard-won rights. It would award them
up to $250,000, and I will allow, if I may, Stuart Eizenstat's
testimony to speak for itself on what a paltry sum that is.
But in exchange, and this is the point I want to make, in
exchange for that paltry sum, they would be forfeiting their
precious, hard-fought right to sue. Instead of treating family
members as they deserve, which is as partners in the war
against terrorism, it would relegate them to the status of
victims of but another crime.
In 1996, a coalition of families--including those of
victims of the Pan Am 103 bombing that I represented; of the
1995 Oklahoma Federal office building bombing; the family of
Leon Klinghoffer, who was pushed off his wheelchair from the
deck of the Achille Lauro; and the families of Americans held
hostage by Iranian guerrillas in Beirut--held up during the
Senate hearings on the 1996 Anti-Terrorism Act a simple sign.
It read in its simplicity, ``Give Us Our Day In Court.'' They
got that day through passage of the 1996 Anti-Terrorism and
Effective Death Penalty Act. They got it through the
receptivity of the American courts to entertain suits for
treble damages against non-state actors through the 1991 Anti-
Terrorism Act. They got it through judicial receptivity to
actions under the much older Alien Tort Claims Act. And all of
this activity was blessed and reinforced by Congress through
passage in the aftermath of 9/11 of the 2001 USA PATRIOT Act.
And now, S. 1275 would seek to take much of that away.
There can, I submit, be no effective day in court when the
frozen assets of a defendant are declared off limits, and
that's what this bill does. It declares them off limits,
period. It does not provide for any particular schemes, as Mr.
Eizenstat has discussed; it simply says they are off-limits.
Moreover, the oblique language of section 14 is so broad as to
erase any any logical tie to the legitimate needs of diplomatic
flexibility.
I ask this: what possible legitimate foreign policy
objective could possible be promoted by putting the assets of
known terrorist organizations that the United States designates
as terrorist organizations, like al-Qaeda and Hamas beyond the
reach of collection? And yet that's what S. 1275 purports to
do. For this reason, and others, S. 1275 sets back the clock
instead of moving it ahead.
If I may conclude with an episode. In the summer of 1992,
in a U.S. courtroom not too far from here in a case involving
the then single largest attack on American civilians, I
represented an individual named Bruce Smith who had lost his
wife on Pan Am 103 as it exploded over Lockerbie, Scotland, on
December 21, 1988. His aim was simple: to hold the Government
of Libya accountable for civil damages in a U.S. court of law.
It had nothing to do with American compensation. Libya had
already been indicted by both the United States and the U.K. in
separate criminal proceedings. Nevertheless, my former
colleagues at the U.S. Department of Justice, acting on behalf
of the U.S. Department of State, saw fit to intervene in that
case, not for the benefit of the families of the American
victims, but on behalf of the principle espoused by the
Government of Libya: sovereign immunity, the outmoded 18th
century concept that nations are sovereign, responsible only to
themselves, and obligated to no one for the wrongs they may
commit.
That absolutist view was overcome through passage of the
1996 Anti-Terrorism and Effective Death Penalty Act. But Mr.
Chairman, I fear, and I say this regretfully, that ever since
that day the State Department has waged a rear-guard effort to
do away with the concept of civil suits against foreign
entities, governmental or otherwise, implicated in the
sponsorship or promotion of terrorism. That effort, which S.
1275 represents, if allowed to succeed, would set back a decade
of historical advances.
In conclusion, S. 1275, in purporting to provide benefits
when it in fact takes them away, and purporting to address
American families' while in fact derogating from the very
concept of accountability on which the rule of law is based,
and then putting on the American taxpayers' shoulders the
financial obligations which should rest on the shoulders of
those who perpetrated the crime, robs the American people of
their right to justice.
Justice for the families of 9/11, as is the case with
regard to the families of Pan Am 103 and other terrorist
outrages, is inextricably linked to serving a preventive or
deterrent function. It is in this way that U.S. national
security and the interests of justice on behalf of families of
terrorism are simultaneously furthered.
For these reasons, Mr. Chairman, I say that S. 1275 simply
does not deserve serious consideration. Thank you very much,
Mr. Chairman.
[The prepared statement of Dr. Gerson follows:]
Prepared Statement of Dr. Allan Gerson, Chairman, Gerson International
Law Group and Honors Professor, George Washington University,
Washington, DC
Chairman Lugar, Distinguished Senators:
I thank you for your invitation to appear before this hearing of
the Senate Foreign Relations Committee on S. 1275. Today, no American
is immune from the scourge of an international terrorist front
committed to global jihad. Despite the courageous steps undertaken by
the President of the United States and our valiant men and women in
uniform, the truth is that the threat remains. Eternal vigilance and
the readiness to use all the tools at our disposal is more
indispensable than ever. That is why the introduction of S. 1275 is so
perplexing, especially to the American victims of terrorism who see
themselves in the vanguard of those determined to prevent a repetition
of the horrors that befell them.
Inexplicably, the sponsors of S. 1275 would undo much of what has
been accomplished in the last decade. They would undo the right
accorded to the victims and their families to hold the murderous
sponsors and perpetrators of terrorism accountable in US courts of law.
That empowerment, that goes far beyond the issue of compensation, is
one that Congress, the Courts, and the President have recognized since
1991.
Why would anyone want to undo this march of progress? Why would the
US State Department take the lead in introducing such a measure?
To shed light on these questions I appear here today not only as an
advocate who, together with my co-lead counsel, Ron Motley, proudly
represent approximately 4,000 families of 9-11 victims in their suit
against the financiers of terrorism. I appear, too, as someone who has
long been involved, as a scholar and former government official, in
efforts to address a balance between the needs of diplomatic
flexibility and the demands of justice. But S. 1275 has nothing to do
with balance.
S. 1275 is a setback in the war against terrorism.
S. 1275 is, moreover, inherently deceptive. It purports to provide
the families of victims with additional rights; in fact, it deprives
them of their hard-won rights. Instead of addressing the moral and
legal right of the victims to know the details regarding the
perpetrators and the circumstances of the atrocity, it would cover them
up as a way of achieving a political compromise. This is not what
Congress or indeed the President had in mind in declaring a war against
terrorism on all fronts.
It is touted that the families of the victims will be the
beneficiary of this bill. But they themselves deny it, and indeed have
never been consulted on it. They do not want a no-questions-asked
instrument. They want a mechanism suited to discovering the truth. They
want accountability. They want punitive damages. S. 1275 gives them
none of that. Indeed, if its scope were truly humanitarian, it would
give them a true choice without strings attached. It would allow, for
those needy enough to apply to the new government fund, an obligation
to repay the taxpayer advance if they ever succeed in obtaining a
judgment or settlement.
A Position Paper on S. 1275 (``The Saudi Bailout Bill'') by the 9/
11 Families United To Bankrupt Terrorism detailing the specific flaws
of S. 1275 has already been distributed to this Committee, and I hope
that it will be made available as a part of the official record. On my
part, I should like to focus on the national security dimension of the
issue, and to show that here the interests of security and the
interests of justice are joined at the hip.
Of course, the President's prerogatives in foreign affairs call for
diplomatic flexibility. But that is not an unfettered right. Blocked or
frozen assets, which section 14 of S. 1275 would put off-limits to
terrorism's victims, do not belong to the Executive Branch. The
Constitution permits appropriation of such assets for public purposes.
The congressionally enacted scheme for blocking assets aimed at keeping
it from our enemies, and at making it available for American claimants.
Its purpose was not to create a slush fund for the Executive.
Moreover, section 14 would gut the effective work of Congress in
encouraging the use of civil litigation against terrorism. It would
mean that you could not recover through normal execution of a judgment,
as going against blocked assets may be the only way to accomplish such
recovery. In this way, S. 1275 is an effort by the State Department to
overturn everything Congress has done since 1991, and to do that they
are willing to create and administer a new no-fault terrorism victims'
compensation system.
State would argue that the current scheme rewards those that get
first to blocked assets. But the State Department approach would remove
all deterrents against the financing or sponsoring of terrorism. As S.
1275 now stands, the American taxpayers would pay the victims of
terrorism. The result is the best of all possible worlds for
terrorists. They can victimize at will, secure in the knowledge that it
is the US Treasury, not their assets, that would be called upon to pay
the price. The result is cost-free terrorism. It is precisely the
opposite of what the President and the Treasury Department and FBI have
been struggling so hard to accomplish in the aftermath of 9-11.
S. 1275 would, moreover, set up a new office at the State
Department to determine on a case-by-case basis whether an
international terrorist attack occurred. It even goes beyond the 1996
amendments to the 1976 Foreign Sovereign Immunities Act, inserted at
the demand of the State Department, arrogating to it, and not the
courts, the determination of which states are in fact state-sponsors of
terrorism. Rather than simply naming terrorist states, S. 1275 is open-
ended insofar as the Secretary of State will make a determination on a
case-by-case basis as to whether an act of terrorism occurred.
But the most invidious aspect of S. 1275 is its no-fault premise.
In this way it would neutralize the deterrent power of civil
litigation. How does that advance the national interest? How does that
provide security for more Americans? Although this bill does not
directly affect the families of 9-11, as it does not apply to anti-
terrorism actions filed before submission of S. 1275, the families of
9-11 are concerned above all with a sound national anti-terrorism
policy. And, knowing the history of this bill, they have reason to fear
that even the effective date is not secure.
Distinguished Senators, S. 1275 represents no less than the latest
skirmish in a clash of cultures. You will have to choose which one is
to prevail. One is the culture of accountability where the rule of law
and the correlative rights of civil actions are fundamental. In the
countervailing culture, expediency is supreme.
These remarks are not meant to demean the State Department but to
explain its institutional shortcomings. The irony is that the
projection abroad of the American values of accountability and ``truth-
telling,'' to which the State Department is ostensibly committed, is
compromised by S. 1275. I say this from recent experience. Shortly
before the outset of the Iraq war, I was asked by the State Department
to go to Geneva as counsel to my former boss, Ambassador Jeane
Kirkpatrick, who had been selected by the President to lead the US
delegation to the UN Human Rights Commission. Our job was to promote,
on an international scale, the US commitment to the rule of law. We did
so while fending off attacks US ``allies'' such as Saudi Arabia who
sought to condemn the US engagement in Iraq. But how can we present one
face abroad and another at home? At a time when our government favors
the establishment of truth commissions in Africa and cooperation with
UN war crimes tribunals for the Balkans, and Rwanda, and Sierra Leone,
what lesson would we send to the world about our commitment to
accountability and truth-telling when we seek, as does S. 1275, to
eviscerate the civil justice system approach and replace it with one of
no-fault?
Professors Steven Rather and Jason Abrams have pointed out in
``Accountability for Human Rights Atrocities in International Law
beyond the Nuremberg Legacy'' that: ``Accountability helps build a
culture of respect for human rights . . . It can signal to future
violators of human rights that their actions will not simply be
forgotten by some political compromise.'' But S. 1275 is all about
political compromise.
S. 1275 would in this way allow the violators of human rights to be
forgotten. Again, for what purpose? In 1999 the Senate Judiciary
Committee endorsed measures to enable victims of terrorism to execute
on judgments against the frozen assets of terrorist-linked entities.
Those measures were enacted into law. Today, four years later, after 9-
11, we find ourselves here again: this time, with the State Department
trying to undo what was then wrought.
Although S. 1275 postures itself as providing a benefit to victims
of terrorism through the choice of compensation from a government plan,
it, in fact, deprives such victims and their families of their existing
hard-won rights. It would accord them $250,000. But in exchange, they
would forfeit their precious right to sue. Instead of treating family
members as partners in the war against terrorism, it would relegate
them to the status of victims of but another crime.
In 1996, a coalition of families--including those of the victims of
Pan Am 103, the 1995 Oklahoma Federal Office Building bombing, the
family of Leon Klinghoffer who was pushed in his wheelchair off the
deck of the Achille Lauro, and the families of Americans held hostage
by Iranian guerrillas in Beirut--held up during the Senate hearings on
the 1996 Anti-Terrorism Act a simple sign. It read: ``Give Us Our Day
In Court.''
They got that day in court through passage of the 1996 Anti-
Terrorism and Effective Death Penalty Act. They got it through the
receptivity of American courts to entertain suits for treble damages
against non-state actors through the 1991 Anti-Terrorism Act. They got
it through judicial receptivity to actions under the much older Alien
Tort Claims Act. All of this activity was blessed and reinforced by
Congress through passage, in the aftermath of 9-11, of the 2001 U.S.A
Patriot Act. Now, S. 1275 would take much of that away.
There can be no effective day in court when the frozen assets of a
defendant are declared off limits. Moreover, the oblique language of
Section 14 is so broad as to erase any logical tie to the legitimate
needs of diplomatic flexibility. What possible legitimate foreign
policy objective would be promoted by putting the assets of known
terrorist organizations like al Qaeda and Hamas beyond the reach of
collection?
For this reason and others, S. 1275 sets back the clock instead of
moving it ahead.
In the summer of 1992 in a US courtroom not too far from here in a
case involving the then single largest attack on American civilians, I
represented an individual, Bruce Smith, who had lost his wife on Pan Am
103 as it exploded over Lockerbie, Scotland on December 21, 1988. His
aim was to hold the government of Libya accountable for civil damages
in a US court of law. Libya had already been indicted by both the
United States and the UK in separate criminal proceedings.
Nevertheless, my former colleagues at the US Department of Justice,
acting on behalf of the US Department of State, saw fit to intervene in
that case, not for the benefit of the families of the American victims,
but on behalf of the principle espoused by the government of Libya:
sovereign immunity, the outmoded eighteenth century concept that
nations are sovereign, responsible only to themselves and obligated to
no one for the wrongs they may commit. That absolutist view was
overcome through passage of the 1996 Anti-Terrorism and Effective Death
Penalty Act. Ever since, I fear, however, the State Department has
waged a rear-guard effort to do away with the concept of civil suits
against foreign entities, governmental or otherwise, implicated in the
sponsorship or promotion of terrorism. That effort, if allowed to
succeed, would set back a decade of historical advances.
S. 1275, in purporting to provide benefits when it in fact takes
them away, in purporting to express American values while in fact
derogating from the very concept of accountability on which the rule of
law is based, and in putting on the American taxpayers' shoulder the
financial obligation which should rest on the shoulders of those who
perpetrated the crime, robs the American people of their right to
justice. Justice for the families of 9-11, as is the case with regard
to the families of Pan Am 103 and other terrorist outrages, is
inextricably linked to serving a preventive or deterrent function. In
this way, US national security and the interests of justice on behalf
of the families are simultaneously furthered.
S. 1275 does not deserve serious consideration.
Thank you.
The Chairman. Well thank you very much, Dr. Gerson. As
you've noted, you and Mr. Eizenstat have argued before our
committee before, and we have benefited from those diverse
views.
Let me ask, just as a layperson in all of this, certainly
as you pointed out those who came to hearings before had signs
that this is fundamental for American justice, and that this is
something that has a strong appeal to each one of us as
legislators. As you pointed out, in the 1996 act, to some
extent that opportunity was there. At least as we've
established in the case of Iran, there were some substantial
blocked assets. Over $370 million of them have been paid to
certain victims.
One of the problems that strikes me as a layperson is,
taking a look at the profile of the terrorists who flew into
the World Trade Center, one can say, I suppose, even if those
individual men had no particular net worth that was
identifiable, no assets could be attached because they in fact
perpetrated the devastation not only on the building but then
the victims that were a consequence of that. As you've pointed
out, Dr. Gerson, backing them, at least as we've alleged, were
al-Qaeda operatives. There might be some assets there, despite
allegations that S. 1275 sort of puts those off limits. I would
just say as a practical matter--and I've sat through many
hearings trying to establish how in the world the United States
is going to get cooperation from other countries in blocking
the transfer of assets, even finding assets--maybe the
assumption is correct, out there somewhere, in markets or in
however these assets might occur, that al-Qaeda has something
that could be attached, that could somehow be of availability
for a day in court for the victims of 9/11.
Now, as we've all pointed out, the 9/11 victims are not a
part as we understand it of the S. 1275 legislation. As you
say, their interest is justice for everybody and deterrence
against terrorism. Yet at the same time, just as a practical
matter, as we think about deterrence against terrorism, and war
against terrorism, it appears to me that if the hijackers are
an indicator, we may be facing persons who are certainly not
attached to a nation-state, that may be loosely attached to a
cell of al-Qaeda if we can establish that. Therefore you can
have a day in court, but the prospects of there being any
relief are pretty dim. Nor, at least as I understand the
profiles of the hijackers, would they have been deterred by any
of the legislation that we're talking about today. That is not
really a part of their ethos, so they go ahead and go in the
World Trade Center anyway and kill Americans and people from
other nations.
Thus I understand the general principle, but in terms of
the application of terrorism as we are fighting it now, it may
miss the mark. As I understand, this may be expedient, S. 1275.
It just says, regardless of who these hijackers were, whether
they knew about the law or they were deterred, whether they
belong to anybody, there ought to be some relief for victims
that is fairly certain. Furthermore, in one form or another,
this is going to be paid for by the American taxpayer, as
you've said.
As I read Mr. Eizenstat's testimony, plus other available
testimony before the committee on this issue in the past, the
American taxpayer picks up the tab in any event, one way or
another. You can attach the assets, but in due course the
offsets, as treaties come about, as new governments are
rehabilitated or what have you, mean that essentially this
wasn't free money. Maybe the State of Iran is deterred, or
Libya, or Iraq. These are nation-states in the classic sense
that we've thought about this. Now, given the sub-nationals,
the cells, the rest of it, even that becomes murkier in terms
of the deterrent aspect against terrorism.
Thus what the State Department has done, as I understand
their rationale, is taken into account the thousands of victims
and the probable desire for fairness among the victims, the
lack of certainty certainly, the years that may go by even if
you get your day in court and you get a judgment of getting
anything, and maybe not even deterrence, because the whole
scheme of terrorism changes. At least the State Department is
saying that we will guarantee that American citizens will get
something.
Mr. Eizenstat has testified, and you have sort of agreed
with part of that testimony, well if the compensation is
$252,000 or $262,000, that's too little. Essentially $1.8
million is being mentioned with regard to certain victims of 9/
11. Mr. Eizenstat is saying that if you're going that route,
the sum ought to be higher, and likewise there ought to be so-
called flexibility, so that you are not bound to that
particular situation, but you have the ability to try out some
other remedy. However, if the incentive that comes from the
higher figure is such, more victims would settle at that point.
People would find their cases closed earlier. Still you have
either option beyond those options that the State Department's
bill has.
If you will discuss with me for a moment, Dr. Gerson, the
whole idea of prevention and deterrence as well as, without
arguing for or against expediency or certainty, or however one
wants to characterize the State Department, why it is a bad
thing if this brings about some justice in a fairly certain
timely way for thousands of people who otherwise, despite all
protestations of the legal system, are not getting any justice,
any compensation of anything in the current situation.
Dr. Gerson. Thank you, Mr. Chairman. I'd be very pleased to
respond. As I understood it, you raised two questions. One,
what is the linkage to deterrence by the kinds of civil suits
that families of the victims of terrorism have brought and
continue to bring? Second, why is it such a bad thing to
provide some measure of relief to the families of victims? If I
might, I'll respond to both questions in turn.
With regard to deterrence, it is true, Mr. Chairman, that
the world has changed and that we have many more non-state
actors. But it has not changed in one fundamental aspect: The
non-state actors continue to be funded by governments. As Tom
Friedman pointed out in a piece in the New York Times not too
long ago, 95 percent of all terrorism continues to be
governmental-sponsored terrorism or somehow government-related
terrorism. In our particular suit on behalf of 9/11 families
entitled Burnett vs. Baraka Investment and others, we have
named nearly 200 different defendants, and these defendants are
the ones that financed terrorism. We can not deal with
terrorism without dealing with how it is financed. That's the
essence of this suit.
We have in the audience today, Mr. Chairman a family
member, Matt Sellito, who lost his son tragically at the World
Trade Center. I heard him speak not too long ago, and if I can
paraphrase him, he said the following. He said the perpetrators
of that dastardly deed did a terrible, terrible thing, but
their sin is even compounded by the sins of those who financed
them, the cold-blooded handlers. These are the people that we
are going after. It's not the funds that al-Qaeda may have here
that we are after. It's the funds that the financiers have that
are of interest in order to shut down the financing of
terrorism. Unless you shut that down we are not effective. And
this has been recognized. Mr. David Aufhauser, the General
Counsel of the Treasury Department spoke here in Congress not
too long ago and he said exactly the same thing: We can not
address the issue of terrorism without closing down the
financing of terrorism. That's what this lawsuit seeks to do.
And it will have a deterrent impact, we believe, in that
regard.
The Chairman. On that point now, the 200 defendants
mentioned might have some funds, but as a practical matter, how
do you get your hands on any of the assets of these people? I'm
just inquiring after looking at this from the standpoint of our
Intelligence Committee or Foreign Relations Committee, with one
hearing after another of how you block transfers, how you even
identify where the money is. I mean, you can name 200 out
there, but physically how do you get any assets from any of
these people?
Dr. Gerson. Well, our job has been to identify the enormous
quantity of assets that they have in the United States and to
make sure that the price for the terror that they helped commit
is going to be a price that they're going to pay through civil
damages. Those assets are substantial. They have been
identified in the United States and elsewhere. And, insofar as
we are dealing with corporate interests as well, banks,
institutions, and so-called charities that have any business in
the United States, if they refuse to honor a judgment duly
entered by a court of the United States they will never be
allowed to do business in the United States again. And, if I
may say so, they really have no place to take their money. We
do have treaties with other countries. Those assets will be
chased down wherever they are.
For this reason, Mr. Chairman, I believe that civil actions
constitute a very, very effective tool and a deterrent. Having
been involved in the Pan Am 103 case, that's hopefully reaching
a conclusion, I think everyone will say that it was the fact
that Libya's assets and their ability to do business with the
United States was jeopardized constituted the economic
considerations that forced them to have a change of policy.
Now, Mr. Chairman, I would like to address the other point
that you made, which is why S. 1275 is a bad thing. It's a bad
thing for a simple reason: It's deceptive. It's not a gift.
It's a gift with terrible strings attached. The families that
waved the sign that day that said ``Give Us Our Day In Court''
will now have taken away their day in court because S. 1275 is
not without strings. And the string that are attached to it
make you forfeit your right to sue. You know, there is the
government compensation fund that applies to the families of
the victims of 9/11. That doesn't have a string attached. This
would have that string attached. And it would lure families in
their desperate hour of need, when they are emotionally
distraught, into believing that they are getting some relief
when in fact they are forfeiting their most precious asset.
I need to say this too, Mr. Chairman, having worked with
families of victims now for some time. Many of these families
would say, we want their money and then as soon as we get it
we'd like to burn it. Money is not what their objective is.
This is not about money. This is about accountability. They
want to know the truth, and the American people want to know
the truth. This bill, if we shed all the rhetoric, is about
eliminating the truth because it will serve as a deterrent to
civil actions and that's a terrible thing for America.
Mr. Eizenstat. May I make a comment? First of all, just a
clarification, and I think it shows the difficulty and the
complication. In our 2000 legislation, which I helped to
negotiate with Senators Mack and Lautenberg, the $377 million
which has been paid was not paid out of Iranian assets, it was
not paid out of Iranian assets, it was paid out of U.S.
Government assets in an amount equivalent to the amount that
Iran had deposited in the foreign military sales account and
which was a matter of litigation in The Hague.
What we did in that case, and this is why it's not
completely, I think Allan is overstating it a bit, it's not
completely a sort of a free hand for the terrorist state, is
that in that legislation, and it would be provided in S. 1275
as well, the U.S. Government is subrogated to the right of the
plaintiffs to sue the ultimate terrorist state. So I would hope
under the 2000 legislation that if at some point in time we in
fact normalize relations with Iran that this would be one of
the claims that would be lodged, so that Iran would have to
know that we were not going to forget this.
But again I think that the complication is evident here.
According to the Treasury in their latest report to the
Congress, Iran has only about $23 million in blocked assets so
I don't believe, as Allan says, that one should be foreclosed
from going to court. I think that there should be a right under
certain circumstances to get blocked assets, subject again very
importantly to this Presidential waiver. But I think that it's
oftentimes, as you're suggesting, a chimera. These blocked
assets are very limited, sometimes they don't exist at all, and
at the very least having a clear administrative process with an
adequate payment level would provide some measure of certainty,
and I would hope that a lot of claimants would take that rather
than the uncertainty and the litigation fees and the attorneys'
costs and so forth.
I at the same time don't think they should be foreclosed
from taking that route so long as the President has the
authority to say, in a particular case, we believe that these
blocked assets serve a national security purpose and that they
therefore shouldn't be subject to attachment for a judgment,
and claimants would have to make that decision as to whether
they want to take that risk. There will be some instances, and
we've done it in the Cuban case where we actually used blocked
assets and we didn't exercise the waiver, President Bush, I
think again showing the fine balance.
My understanding is that for some of the outstanding
claimants in 2003, he permitted the use of the blocked assets
in a limited amount, I think it was up to $100 million, but
then foreclosed it for other matters because he wanted to use
the Iraqi assets for the reconstruction of the country, and
that, I think, is a very important national purpose.
The Chairman. Well, you both have illustrated the dilemma
that the Congress has in legislating this issue. If we leave
things as they are, then presumably victims of terrorism--
whether it's non-state or state and so forth--have their day in
court, their ability to sue. The United States, if it's
fortunate, can chase down assets and may or may not find any,
or find foreign policy objectives as in the case of Iraq, as it
tries now to compromise. The President apparently puts $100
million over if it might be used for victims, but the rest is
to reconstruct the country because that's pretty important in
terms of world peace and national objectives. Those foreign
policy objectives are always going to be fairly important. With
Iran, for example, if we were to come hypothetically into some
diplomatic relationships beyond those which we have, it's
probably going to center for a moment around whether Iran
forgoes its nuclear experiment and movement toward what many
alleged before this committee is an attempt to move toward
producing nuclear weapons. It's a very serious issue.
The compensation of victims of terrorism is a very serious
issue. Perhaps you give the President the opportunity to make
the choice and he says, well, as much as I think there ought to
be some assets available for the victims, at the same time,
nuclear weapons might annihilate all of us. This is a tough
choice but it is nevertheless what I'm I'm trying to sort out.
Both of you--in your experience in various administrations, and
in responsibilities you've had--have had to deal with this. I'm
dealing with this as a citizen amateur this morning, just
trying to ferret out how in the world an ordinary citizen who's
a victim of terrorism is ever likely to be compensated.
It may be, as you've pointed out, Dr. Gerson, that this is
not the interest of any of the victims, but rather their
interest in getting the satisfaction of a judgment that
somebody's responsible, even if there's not a dime available.
Maybe this is what this is about. Perhaps that can be achieved
in the current legislation, that is, there'll be some
satisfaction, a course of rule in favor of the victims. Yet
they should not anticipate--in this world at least--any
compensation unless American taxpayers decide to appropriate
substantial sums of money. That's essentially what the State
Department bill does. I think both of you pointed out in
various ways that, either rightly or wrongly, for good or for
bad, we're talking about a transfer of funds from some American
citizens to others. Those who are going to get the money have
suffered because of some totally extraneous act of their lives.
They or their loved ones just were in the wrong place at the
wrong time.
Now, beyond that, you've said, Dr. Gerson, that this could
apply even to an American tourist who's caught in the crossfire
of a terrorist act in Israel, or elsewhere, as I understand it
and maybe it should. Yet that's an even broader application
than the 9/11 situation or the Pan Am aircraft. In other words,
we would once again need to come to some definition. The State
Department has defined it, as you've indicated, far too
narrowly in terms of circumstances. That may be so; it may not
be. The purpose of the hearing is to try to refine where one
ought to be on this issue.
As a practical matter, it's still sort of centered on the
thought of whether justice is served if there is very little
possibility of compensation for anybody despite the prospect
that you have the right to sue and wait and wait and hope that
somehow the world will provide. I don't think the world will.
I'm sort of pragmatically thinking probably the American
Government would do so in a systematic way if people are in
fact to get some compensation. So have another go at that if
you will.
Mr. Eizenstat. May I take a stab at that? I mentioned that
you and I came in contact first during the Carter years. Let's
take a hypothetical based on an actual situation. We had the
hostages taken, 444 days.
The Chairman. Yes.
Mr. Eizenstat. We froze Iranian assets. Let's assume, Mr.
Chairman, at that point, that Congress had passed what it did
in 1996 20 years later and had already allowed suits in an
amendment to the Foreign Sovereign Immunities Act against Iran.
And let's assume that those hostages had filed the suits and
gotten the default judgment and the President's sitting there
in the White House trying to negotiate the release of the
hostages, and the victims have gotten large judgments against
Iran pursuant to what Congress later passed.
It's this kind of dilemma that to me means that the
President should have the authority to make that kind of
balanced judgment. Perhaps in that situation he would have
decided that the hostages should get some amount, as President
Bush did with the Iraqi situation. But certainly, had all of
those assets been consumed by lawsuits, we would have been
devoid of what was an absolutely critical tool to get those
hostages released.
So I think really when Congress legislates here, and I
think it should, because there's just no certainty, I think
that creating an administrative forum with an adequate
compensation system is important. Preserving the right to sue
is also important, but then if that right to sue is going to be
satisfied out of blocked assets, the President for sure ought
to be able to make that judgment. That's what he's paid for.
That kind of balance that I'm suggesting would have been a
difficult balance in 1980, 1981, but one in the end that he
would have been called upon to make, and I think only he could
make that.
The Chairman. Dr. Gerson.
Dr. Gerson. Mr. Chairman, let me first comment on your use
of the phrase ``amateur'' to describe your involvement in this
field. You are anything but an amateur and you of course
understand the complexities of the legislative process. Having
said that, may I suggest that the best way to deal with this
issue is simply to get S. 1275 off the table. It simply is the
wrong vehicle for addressing any of the issues that we have
discussed today. The purpose of S. 1275, as I tried to point
out, is simply to continue a very long war that the State
Department has waged against having any U.S. claimants become
involved in what they consider the exclusive monopolistic
prerogative of the State Department in dealing with foreign
affairs. We are way beyond that, yet that is what this bill
represents.
In terms of the specifics, I personally am opposed to
having the U.S. taxpayers pay anything to the families of
victims. The vast majority of the families of terrorism do not
want anything like this. They want the price to be paid by the
perpetrators. They don't want money from the U.S. Treasury. If
they are to get money from the U.S. Treasury because it is
necessary to provide some emergency relief, it should be
labeled properly as such without deceptive advertising, and
there should be no strings attached.
Mr. Eizenstat has, my friend Stu has spoken a lot about the
Presidential waiver authority, and that's fine, but it doesn't
have anything to do with S. 1275. I used to serve in the Reagan
administration at one point as the Deputy Assistant Attorney
General for Legal Counsel, and my job was to expand the
President's prerogatives, and very often I would use the word
IEEPA, which was not a cry of horror, it simply stood for the
International Economic Emergency Powers Act. And the President
has ample authority in specific circumstances, in specific
circumstances, to make his case that his foreign policy
prerogatives require a special treatment in a particular case.
But that's not what S. 1275 does. S. 1275 is a blanket
omnibus bill that would put all frozen assets off limits,
including, which is the most invidious aspect of it, not only
the assets of foreign countries, but also the assets of
terrorist organizations, and there's no, absolutely no sound
foreign policy objective that can be served by having the
President wield increased flexibility with regard to
negotiating with terrorist groups.
So, again, for these reasons I submit that we're dealing
with the wrong vehicle to accomplish these ends. S. 1275 has
nothing to do with balancing legitimate foreign policy
considerations, the interests of flexibility and diplomacy that
we all acknowledge the President is entitled to. This is the
wrong vehicle. It should be gutted. It should not be discussed
as the basis for any further discussions in the Congress.
Mr. Eizenstat. Mr. Chairman, I've suggested some
significant changes that could be made, but I think it's a
basis to at least begin the discussion. I think it's incorrect
to suggest that there should be no administrative remedy,
because I think without that administrative remedy, as you've
very cogently suggested, victims in the end may think that
there's a pot of gold at the end of the rainbow when there
isn't.
I also think that to suggest, as I assume that Allan is
doing, that in all cases willy nilly that those who have a
default judgment against either a terrorist organization or a
state sponsoring them should be able to attach frozen assets or
blocked assets without any consideration of the foreign policy
implications also goes too far. And that's why what I'm
suggesting is building on this administrative remedy that the
administration has suggested, making it a more viable
alternative by increasing the amounts and incentivizing people
to take it, allowing suits, not cutting off suits, but giving
the President the authority in terms of satisfying any judgment
out of blocked assets the right to balance in a particular
case, and he might decide with Hamas or a terrorist group, we
don't have any interests, we're not going to normalize
relations with them. In other instances he may decide an
extraordinary case like the Cuba case, OK, we'll let frozen
assets be used, but he should have the authority, as President
Clinton did to waive in 1998 and 2000, and in effect as
President Bush did in 2003 to say no, there are supervening
uses for these: leverage for normalization, leverage for
hostages, rebuilding a country, as in Afghanistan and Iraq.
Without that kind of balance, then I think, you know, we're
not going down the right path, but I do think that this is a
good faith effort by the administration to try to begin putting
these issues into context, and although, again, I have
suggested modifications to it, I would hate to see Congress
just abandon it and say, OK, we're just going to continue this
ad hoc process and what will happen is when a lawsuit's filed
and Allan gets a judgment, they'll be back here looking for
some additional legislation in terms of finding an asset to
attach or whatever, we'll be right back into the same issue. So
we might as well get on it, try to deal with it, and try to
incentivize people to go, without foreclosing a court action,
into an administrative route.
Dr. Gerson. If I could just respond briefly, Senator. With
all due respect to my colleague, Stu Eizenstat, the President
already has the authority. He doesn't need S. 1275. S. 1275 is
not about that. Second, he suggests that S. 1275 represents a
good faith effort. I've tried to make it clear in context, in
the historical context, that this is not a good faith effort,
that it is really not about compensating the families of
victims. It is about freezing the families totally out of the
foreign policy process at a time when it has been demonstrated
and in which the Congress has repeatedly affirmed, most
recently through the 2001 USA PATRIOT Act, that the families
have a rightful role to play in the war against terrorism, and
that civil litigation is one component.
Stuart, you don't have to be afraid that I'm going to be
back here before Congress if I win a judgment. The amount of
money that can possibly be frozen with regard to the defendants
that we have sued is minuscule and if you want to drop S. 1275
on that basis, I'm willing to talk to you about that.
Thank you.
The Chairman. Well, I thank both of you gentlemen for your
testimony, as well as Mr. Taft on behalf of the State
Department. You have helped us make an important record for
this legislation including advice for any other modifications
to it or for none at all, as you've suggested, Dr. Gerson,
which may be the best alternative. You certainly have given us
a great deal to think about. I will share your testimony and
the findings of the hearing with the other members of our
committee as they help me determine whether we should progress.
For the moment, our hearing is adjourned.
[Whereupon, at 11:17 a.m., the committee adjourned, to
reconvene subject to the call of the Chair.]
----------
Additional Statement Submitted for the Record
Prepared Statement of Senator George Allen
Mr. Chairman, I appreciate the opportunity to comment on the
Benefits for Victims of International Terrorism Act (S. 1275). To
begin, I would like to commend the chairman for focusing on this issue
and holding this hearing. Many victims of international terrorism
reside in the Commonwealth of Virginia and have been seeking
restitution for many years. Virginians were victims of the 9/11
attacks, the attack on the U.S.S. Cole, the hijacking of TWA flight
847, and the Iran Hostage Crisis, just to name a few.
I have personally been involved in this issue since I first took
office as a United States Senator. I have met with victims, victims'
families, victims' groups and their various representatives. I have
also maintained an ongoing dialog with the administration regarding
this issue. I am particularly pleased that the State Department Legal
Advisor is here to defend his Department's proposal. His presence, and
the positive and proactive step of finally sending a proposal to the
Congress allows me some hope that there will be a sincere dialog on
this most important issue.
Last year, along with Senator Harkin and a bipartisan group of our
colleagues in the Senate, I introduced a bill to clear the way for the
use of terrorist assets to be used to satisfy judgments against State
sponsors of terrorism who have been held liable for damages against
Americans in United States federal courts. The language of our bill was
introduced as an amendment to the Terrorism Risk Insurance Act, and it
was approved by the Senate by a vote of 81 to 3. The House of
Representatives voted to instruct conferees to retain the Senate
amendment by a vote of 373 to O.
The State Department's arguments were thoroughly debated last year,
and the Congress acted firmly to support a victims' rights to pursue
justice over State's objections. Having said this, however, I
understand some support for a minimum guaranteed disbursement to all
American victims of terrorism. I believe with appropriate changes, S.
1275 can be an act that provides the necessary assistance to victims of
international terrorism, provided, however, that it in no way
jeopardizes the right of victims to pursue legal recourse through our
court system under the 1996 Antiterrorism amendment to the Foreign
Sovereign Immunities Act, as amended in 1998, 2000, and 2002.
I do, however, have serious concerns about the bill as introduced
in the Senate. The policy reflected in the laws in place today is
sound. But since this policy is a composition of amendments over many
years, I welcome this initiative to clarify the process. In short, the
policy must not deny American victims the rights that they currently
have, but can include a form of disbursement program as proposed by the
State Department. My specific comments and concerns are include:
Participation in the disbursement program must be an option
and not a substitute for the current system. For example, it
must be clear that a victim who participates in the
administrative proposal will not be prohibited from bringing a
civil action in federal courts.
The 1996 Antiterrorism Act created a federal cause of action
against State sponsors of terrorism. Under the act, and the
subsequent amendments to it, American victims of State
sponsored terrorism may bring suit against the foreign
sovereign and attach its assets, including those regulated by
the U.S. Government, held here in the United States.
The determination or a terrorist event must be appealable.
A payment under the current proposal should be viewed as assistance
and, as such, should not bar an American's ability to prosecute foreign
State sponsors of terrorism and the individuals responsible for their
suffering. If in fact a victim successfully prosecute his or her claim
and receives compensation, moneys provided under this proposal should
be returned to the Treasury.
Congress has made its intentions clear that the U.S. Government
should not bar the use of terrorist assets to compensate victims. We
should not burden U.S. taxpayers for the terrorist acts of foreign
nations in the event adequate assets of these nations are under the
control of the U.S. Government.
The State Department has opposed every effort to attach the
regulated, blocked and frozen assets of State sponsors of terrorism.
They have made their views known, yet the Congress has overwhelmingly
acted to allow attachment in satisfaction of judgments against State
sponsors of terrorism. This bill should not be yet another chance to
undo past legislation, but must only be an opportunity to add to and
improve upon current law and policy.
Lastly, the current proposal gives the Department of State the
responsibility to receive, examine, adjudicated and render final
decisions with respect to claims filed. Such a program cannot be
handled by the State Department. Instead, this function should be
performed by the Justice Department which has much more expertise in
these matters. In fact, the Foreign Claims Settlement Commission is one
option for administration of this program. The State Department's
administration of the proposal has the potential to create the
appearance of a conflict of interest because of the Department's
dealings with those foreign sovereigns that had been designated State
sponsors of terrorism.
Mr. Chairman, I look forward to working with you and members of the
committee to develop a comprehensive program that addresses the rights
and needs of American victims of terrorism to pursue justice, while
minimizing the exposure to the U.S. taxpayer, and emphasizes
accountability for State sponsors of terrorism and those who victimize
innocent Americans.
----------
Responses to Additional Questions Submitted for the Record
Responses of William H. Taft, IV, Legal Adviser, Department of State,
to Additional Questions for the Record Submitted by Senator George
Allen
Question 1. Mr. Taft, I understand the position of your Department
and the Treasury Department is that under all circumstances the use of
terrorist assets regulated, to include ``blocked'' and ``frozen''
assets, to satisfy claims of U.S. nationals undermines U.S. foreign
policy and national security interests. But this has not always been
the position of the Treasury and State Departments, as I understand the
situation.
Are you aware that, in 1994, Mr. Newcomb of Treasury's
Office of Foreign Assets Control testified that there was a
``longstanding U.S. Government policy of preserving blocked
assets as a pool against which all claimants are given an
opportunity to seek recovery''?
Could you please explain how your current position to defeat
use of blocked assets is consistent with this ``longstanding''
U.S. government policy?
To the extent it is not consistent, what has changed since
1994?
Answer. I am not aware of Mr. Newcomb's testimony. I would refer
any questions you may have regarding his testimony to the Treasury's
Office of Foreign Assets Control. Perhaps the comment refers to the
historical fact that the United States has often retained blocked
assets as frozen pending negotiation of a lump-sum claims settlement
agreement with the foreign government when relations are normalized, at
which time we have obtained the agreement of that government to use
some or all of the assets to pay claims. This approach often furthers
the foreign policy interests of the United States as well as the
interests of claimants. The Executive Branch's policy that blocked
assets are to be preserved to further U.S. foreign policy and national
security interests is longstanding; naturally, where possible, we seek
to protect the interests of all categories of U.S. claimants as well.
As I stated in my testimony, the ability to block, and keep
blocked, a foreign state's assets is one of the primary and most
powerful foreign policy tools available to the President to deter
aggression and discourage or end hostile actions by such states against
U.S. citizens.
The leverage provided by blocked assets has proved central to our
ability to protect important U.S. national security and foreign policy
interests.
I note, in particular, the critical role that blocked assets played
in normalization with Vietnam after its assets had been blocked for
some 20 years. Not only did the blocked assets persuade Vietnamese
leadership to address important U.S. concerns, including accounting for
POWs and MIAs and moderating Vietnamese actions in Cambodia, they also
aided in the conclusion of a favorable claims settlement agreement,
worth over $200 million in U.S. claims, as had been adjudicated by the
Foreign Claims Settlement Commission.
As the Vietnam claims settlement illustrates, the leverage gained
by blocked assets can promote a settlement of claims. The Department
believes that if blocked assets are to be factored in to the payment of
claims, they should not be used on an ad hoc basis. Rather, they should
be preserved, and when circumstances warrant, be factored in to an
overall settlement of outstanding claims of our nationals upon
normalization.
Question 2. Mr. Taft, in proposing the Iraq Claims Act in 1994,
State proposed that the adjudication of claims be submitted to the
Foreign Claims Settlement Commission. Now you propose to establish some
sort of adjudication authority in the State Department.
Aren't we just creating new bureaucracy in placing this
authority in the State Department when the Foreign Claims
Settlement Commission is already in place and has the resources
and expertise needed to evaluate and adjudicate these claims?
What expertise does State have in adjudicating individual
claims by terrorism victims? Isn't it better to place this
function within the expertise of the Foreign Claims Settlement
Commission?
Given the clear antipathy of the State Department to these
claims of terrorism victims, why should victims believe that
their claims will be fairly adjudicated by the State Department
was Congress to agree to this portion of your proposal?
Answer. In 1993 and 1995, the Department had proposed legislation
that would have directed the Foreign Claims Settlement Commission
(``FCSC'') to adjudicate all pre-Gulf War claims against the Government
of Iraq. This would have covered primarily commercial and expropriation
claims, along the lines of claims covered by other titles in the
International Claims Settlement Act of 1949, as amended. FCSC decisions
would have been based on evidence presented in each case, and would
have served as the basis for pro-rata compensation of claims; this
would have been the sole recourse allowed to those claimants. While the
bill passed the House in 1994, it was never passed by the Senate and
was never enacted.
The current legislative proposal (S. 1275) is different. It would
provide a benefit available to all victims of international terrorism
since 1979. Rather than require adjudication on a case-by-case basis,
the legislation would treat all victims the same, and would thus
provide simplified and expedited relief. While substantial staffing
might be needed in the initial years of the program to set up the
program and deal with cases from 1979 to present, once that is dealt
with we envisage that staffing requirements would be small.
While the State Department works closely with the FCSC and fully
supports it as a suitable mechanism for the adjudication of
international claims, the State Department also has long and deep
experience in handling international claims on behalf of U.S. citizens.
For example, the Office of International Claims and Investment Disputes
has administered claims programs with respect to Iraq, Iran, Germany
and Egypt, among many others. The Department considers supporting U.S.
citizens' claims under international law one of its important
functions.
It is incorrect to say that the State Department has any antipathy
to victims of terrorism. The program the Department proposes in S. 1275
would provide payment to hundreds of victims who presently have no
prospect of receiving any compensation from any source.
Question 3. In the Iraq Claims Act, the State Department never
proposed to be given authority to set fees of attorneys and agents
representing claimants.
Why is this provision necessary?
Assuming that this type of provision is necessary, isn't
there a distinction between future assets and existing cases--
in other words, is it constitutional to authorize an agency to
interfere with fee arrangements that have already been
established before the date of enactment and already performed
in whole or part by attorneys representing the claimants in
court, as opposed to setting the terms for future retention
agreements?
Answer. In contrast to the ``Iraq Claims Act,'' S. 1275 would
establish a new, publicly-funded benefits program in which victims of
terrorism would have the option of participating. The program is
intended to provide a streamlined process for awarding benefits that is
not dependent on the expenditure of attorneys fees in order to obtain
payment. In this regard, it is certainly appropriate for Congress to
want to ensure that claimants receive as much of the benefits to which
they are entitled under the program as possible. Section 12 of S. 1275,
which authorizes the Secretary to issue rules with respect to the
nature and maximum amount of fees that an agent may charge for
representing a claimant, is modeled after a similar provision in the
Public Safety Officers' Benefits Program (42 U.S.C. 3796c(a)).
In addition to the Public Safety Officers' Benefits Program,
Congress has lawfully authorized or provided for the regulation of
agents' fees in a number of other contexts, including under 22 U.S.C.
1623(f), which imposes a 10% fee cap on claims brought before the
Foreign Claims Settlement Commission. See, e.g., 38 U.S.C. 5904(d)
(veteran's benefits); 42 U.S.C. 300aa-15 42 U.S.C. 406(a) (social
security claims); see also 20 C.F.R. 725.366 (coal mining disability).
Any fees that would be capped under rules issued pursuant to
Section 12, would be for work performed in connection with obtaining
benefits under a program that has yet to be established. If the program
is established and a person chooses not to participate in it, such
rules would obviously have no legal effect on contractual arrangements
that he or she may have entered into in connection with other efforts
to seek compensation. Similarly, even if a person accepts benefits
under the program, such rules would not affect contractual arrangements
for representation in connection with litigation that he or she would
still be entitled to pursue, i.e., suits against entities other than
those set forth in section 12(c)(2)
Question 4. As I read the current language of the bill, as
introduced, the Treasury will pay compensation to American victims--
thereby increasing the deficit--and once the payment is made, a
responsible state sponsor of terrorism is immune from suit. Isn't this
creating an incentive rather than a deterrent for state sponsors of
terrorism?
You state that the blocked assets of terrorist states should
not be used for compensation. Has the U.S. government used any
of the regulated, frozen or blocked assets for any purpose such
as compensation to U.S. corporations? (If yes, what?)
What accounting is done for frozen and blocked assets
accounts? And for whom? I notice that the annual Treasury
Department report details only aggregate values. What
congressional committee exercises oversight over these
accounts? How are they audited and how frequently? Please
include Iran's sub account in the Foreign Military Sales
Account program in your response.
Why are active duty military excluded under the current
proposal when they're not excluded from the 1996 Antiterrorism
Act? Shouldn't there be a distinction to military in uniform
engaged in combat and Americans who may be employed by the U.S.
military, but engaged in noncombat operations? Think about the
inequity of excluding an American service member on vacation,
for example, as you provide your answer.
Answer. Making blocked assets available to pay terrorism claims
will not have the desired effect of deterring terrorism. Blocking by
itself achieves the goal of denying state sponsors of terrorism the
benefits of the assets blocked for as long as they act in ways
antagonistic to U.S. interests. A permanent taking of those assets
would not constitute any greater denial of benefits and thus would not
increase the deterrent effect on the state involved. Indeed, as noted
above, Israel's compensation program for victims of terrorism appears
to be based upon payments made by the state. In developing such a
program, I doubt that Israel believes that it is creating an incentive
for stata sponsors of terrorism. Tough sanctions and strong preventive
measures affecting security and terrorists' ability to raise funds and
operate are the best available means to deter terrorism.
Blocked assets have not been used to pay compensation to U.S.
corporations, outside of the general claims settlements, referred to
above.
Since blocked assets are not U.S. funds, and are not expended by
the United States, naturally they are not accounted for in federal
authorizations and appropriations. The Department of the Treasury's
Office of Foreign Assets Control regulates such assets and imposes
reporting requirements on holders. That Office provides an Annual
Report to Congress concerning blocked assets of terrorist parties and
state sponsors of terrorism.
As Judge Lamberth held in Flatow v. Islamic Republic of Iran, 74
F.Supp.2d 18 (D.D.C. 1999), Iran's sub account in the Foreign Military
Sales program is U.S. Government property and, therefore, does not
constitute blocked funds.
The Defense Department takes the position that active duty military
should not be included in S. 1275. The Defense Department provides
benefits for the injury or death of its military personnel, whether or
not they are killed in combat.
______
Responses of William H. Taft, IV, Legal Adviser, Department of State,
to Additional Questions for the Record Submitted by Senator Joseph R.
Biden, Jr.
Question 1. Under Section 7(a) of S. 1275, benefits are to be
awarded ``in the same manner and the same amount'' as death benefits
are paid under the Public Safety Officers' Benefit Program (42 U.S.C.
3796 et seq.). Under 42 U.S.C. 3796(f), benefit payments are ``in
addition to any other benefit that may be due from any other source''
(with certain exceptions set forth in the statute). Other provisions of
federal law, however, appear to limit recovery by federal employees for
other death or injury benefits (e.g., 5 U.S.C. 8116(b)), which requires
beneficiaries eligible for benefits under more than one statutory
provision to elect which benefits they shall receive). What is the
intention of the administration with regard to benefits received by
eligible federal employees under S. 1275? Is it intended that they
could receive benefits under both S. 1275 and other applicable
provisions of federal law?
Answer. Except as otherwise provided for in S. 1275, benefits
received by persons, including federal employees, are intended to be in
addition to other amounts received from other sources, including under
the Federal Employees' Compensation Act (FECA), private employer
insurance programs, etc. If benefits received under S. 1275 were to
reduce or preclude receipt of other benefits, then the meaningful
relief S. 1275 is intended to provide could be substantially reduced.
Further, while 5 U.S.C. 8116 provides that the right to compensation
benefits under FECA is exclusive and in place of other legal liability
of the United States, it does not affect rights of recovery against
unrelated third parties. In contrast, section 12(c)(2) of S. 1275 would
require persons accepting benefits to forego suit against a foreign
state or government or its agencies or instrumentalities. If other
benefits were to be reduced by S. 1275 payments, persons might very
well be dissuaded from participating in the Benefits for Victims of
International Terrorism Program and choose instead to pursue litigation
against foreign state or government actors. This in turn would undercut
S. 1275's goal of moving away from a litigation-based system that has
proved inequitable, unpredictable, costly to the U.S. taxpayer, and
damaging to U.S. foreign policy and national security goals.
Question 2. a. The number of pending cases against state sponsors
of terrorism of which the Department of State is aware; and
b. Cases in which plaintiffs have received judgments against states
sponsors of terrorism but in which they have not recovered damages or
received payments under the authority of recent congressional
enactments cited in your testimony (and the amount of damages awarded
in each cases).
Answer. a. The Department of State is aware of 61 pending cases
against state sponsors of terrorism. Because the U.S. Government is not
a party to these suits, we are not served in the cases. It is,
therefore, possible that there are others of which we are not aware.
b. We are aware of 14 outstanding judgments against state sponsors
of terrorism for which plaintiffs have not recovered damages or
received payment through congressional enactment. The total amount of
damages awarded in those cases is $71 billion (including $9.4 billion
in compensatory damages and $61.7 billion in punitive damages).
Question 3. Under Section 4(a) of S. 1275, in every instance in
which there is a ``terrorist incident,'' the Secretary of State must,
in consultation with various other cabinet secretaries, determine
whether the incident constitutes an act of international terrorism
under the definition of the bill. Who will make the threshold
determination that a ``terrorist incident'' has occurred? Is that power
solely vested in the Secretary?
Answer. Yes, the decision is vested solely with the Secretary of
State, who will make his decision in consultation with the Attorney
General and the Secretaries of Defense, Homeland Security and the
Treasury.
Question 4. Under Section 4(a) of S. 1275, there is no procedure
set forth for a reconsideration of a negative determination in the
event that new evidence emerges that suggests the incident was, in
fact, an act of international terrorism. How does the Department
envision handling such cases?
Answer. If new information were made available, the Secretary could
make a new determination as to whether an act of international
terrorism occurred. While not addressed by the statutory language of
the bill, this situation could be addressed in the rules and procedures
that the Secretary may issue as necessary to carry out the act pursuant
to Section 12 of the bill (``the Administration Procedures'').
Question 5. Under Section 3(a) of S. 1275, an act of international
terrorism requires that the act be directed ``in whole or in part at
the United States'' or at an individual ``because of that person's
status as a U.S. national.''
a. How will such intent be determined?
b. Could this definition exclude cases--such as bombings of
buses in Israel on which U.S. nationals are passengers--in
which U.S. plaintiffs have previously sought recovery against
state sponsors of terrorism?
Answer. The determination of intent would be made based upon the
facts involved in the incident, similarly to the manner in which the
determination of whether an ``act of terrorism'' had occurred would be
made.
The intent component of the definition of an act of international
terrorism is designed to include the maximum number of U.S. victims who
become victims because the terrorists target U.S. nationals or the U.S.
Government. Victims who are not so targeted are not subject to these
same considerations. A U.S. national who is randomly injured or killed
by an act of terrorism not targeted at Americans or the U.S. Government
is in the same situation as an American who is injured or killed by
some other event abroad, such as during a robbery or a civil
disturbance. The losses resulting from both events are tragic for the
victims and their families.
If, for example, a bus that was generally known to carry American
tourist or student passengers was the subject of a terrorist bombing,
the act would qualify. If, on the other hand, the bus was known to
regularly carry only foreign nationals, and an American happened to be
riding the bus at the time of the incident, it would not be covered. I
would note, however, the potential for compensation through programs in
countries where the attack took place, such as the Israeli program
described in Answer #6.
Question 6. Do you know how other states which have long dealt with
terrorism--such as the United Kingdom and Israel--address the issue of
compensation for victims of terrorism, if at all? If so, please provide
a summary of such programs.
Answer. We do not have much information concerning how other
countries deal with issues related to compensation for acts of
terrorism. I would refer you to one useful law review article we have
been able to locate, entitled ``Providing Compensation for Harm Caused
by Terrorism: Lessons Learned in the Israeli Experience'' by Hillel
Sommer, 36 Indiana Law Review 335 (2003). The article describes the
main difference between Israel's program and the September 11 Fund. It
says that ``the Israeli program is a permanent system, continually in
place, the result of extensive and lengthy consultation, rather than an
ad hoc quick fix arrived at under severe time constraints in the
emotional aftermath of major terrorist attacks and causing multiple
issues of inequity.''
The article also states that in addition to Israeli citizens and
residents, all foreign nationals harmed by a hostile act while in
Israel or in the Territories administered by Israel are also eligible
for compensation, provided that they entered Israel legally. Thus, U.S.
nationals who become victims in Israel, but who may not be covered by
S. 1275 because they were not targeted as U.S. nationals, may be
eligible for compensation under the Israeli program.
We are not aware of any states that rely on victims bringing suits
against foreign states in their courts to provide compensation for
their injuries.
Question 7. To what degree were the U.S. nationals who were
hostages in the U.S. Embassy in Iran compensated by the U.S. government
and under what authority?
Answer. In 1980, while the hostages were still in captivity,
Congress passed the Hostage Relief Act, which provided some
compensation regarding tax liabilities and other benefits. In 1981,
following their release, the President established a special commission
to make recommendations as to how the hostages should be compensated
for their ordeal. The commission issued its report that same year and
recommended that additional compensation be paid. It was also noted
during hearings on the Algiers Accords before the Senate Foreign
Relations Committee that ``[t]raditionally American hostages and
prisoners of war have not looked to the country of their detention, but
have looked to the United States for compensation.'' (Hearings before
the SFRC, p. 49 (Feb. 17, 19 & 25, Mar. 11, 1981).)
In 1986, the Victims of Terrorism Compensation Act was enacted.
Section 802 provided for payments to the hostages of ``$50 for each day
any such individual was held captive,'' section 803 provided for
additional compensation to include medical, educational and other
benefits. Pub.L. 100-399, Sec. Sec. S802,803, Stat. 853 (1986). The
hostages received compensation according to these laws, which amounted
to an average total amount of $50,000 per individual.
Question 8. Would assets of terrorist organizations (which are not
sovereign states) that are frozen or blocked in this country by statute
or Executive Order be available to compensate victims of terrorism?
Under what authority? Did the Administration consider including such a
provision in its legislative proposal?
Answer. Based on the language of section 14 of the bill, assets of
any terrorist party, including non-state parties, would not be
available for attachment under Terrorism Risk Insurance Act (TRIA) or
the Foreign Sovereign Immunities Act (FSIA). Our real focus, however,
was in providing victims or their families with an immediate benefit
and steering them away from the often unsatisfactory experience of
pursuing litigation against state sponsors of terrorism and
particularly, attachment against blocked assets. It would also allow
compensation for terrorist acts committed by groups with no state
sponsor. I would note that section 12(b)(2) provides that anyone who
accepts benefits may not begin or maintain a civil action for the act
of terrorism against a foreign state or the United States. It does not
prevent individuals from suing non-state terrorist parties.
Making non-state terrorist party assets available for the fund from
which payments would be made merits consideration. We have actually
begun looking at this question and have some initial observations.
First, though terrorist party interests in property are blocked, as
with blocked assets of states, there may be ownership and other claims
by third parties to those assets. Second, there may be other statutes
or regulations that already provide for the disposition of those assets
that would conflict with this idea. The Patriot Act, for example,
provides that such assets may be forfeited, but it is not clear whether
once forfeited, they are to be used for some other designated purpose.
But as I indicated, this idea merits further consideration and
consultation with other elements of the Executive Branch.
Question 9. Why will the program be funded out of the State
Department budget? Will additional resources be sought for this purpose
in the Department budget if S. 1275 is enacted?
Answer. Because the program addresses international terrorism and
implicates U.S. foreign policy and national security considerations,
the Administration decided that the Victims of International Terrorism
Benefit Fund (``Fund'') should be located in the International Affairs
150 Account. Under the proposed legislation, the Fund would receive an
appropriation separate and additional to other Department
appropriations; awards and the administration of the program would be
funded exclusively out of the Fund. Thus, additional resources will
need to be appropriated for the Fund for the program to function if S.
1275 is enacted.
Question 10. What are the anticipated costs of administering the
program contemplated by S. 1275?
Answer. We anticipate that more administrative resources would need
to be devoted to the program particularly during the first two-three
years in order to start up the program, including developing rules and
regulations. Also, because the program would cover acts of
international terrorism dating back to November 1, 1979, we expect that
there would be a large number of requests for Secretarial
determinations of terrorist acts and an even larger number of
retroactive claims to process during this initial three-year period. In
order to handle this up-front workload, we anticipate that the average
annual cost of administering the program for the first 3 years would be
approximately $1,333,000, which would include the hiring of 5 new
attorneys, 4 analysts or paralegals, and 2 support staff. Of course,
the level of future terrorist attacks could have an impact on the
program's administrative costs.
Question 11. Section 10(a)(3) of S. 1275 would authorize the use of
``unexpended balances of expired appropriations available to the
Department'' for payment of awards under this program. If the
legislation were enacted today, what would be the anticipated amount of
such balances that would be available?
Answer. Unexpended balances of expired appropriations include the
amount of unobligated appropriations and undelivered orders outstanding
for Congressional appropriations provided to the Department. These
accounts incur adjustments for obligations and expenditures relating to
undelivered orders for goods or services ordered but not yet received
for five years after the availability of a fixed appropriation account
ends, at which time the accounts are cancelled. At the end of FY 2002,
the Department cancelled $45 million in FY 1997 expired appropriations.
Based on experience, we project that a similar amount will be cancelled
in FY 2003.
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