Germany makes progress on plan to settle Nazi reparations claims

Both Singer and German Chancellery Minister Bodo Hombach declined to comment on details of a possible agreement between the two sides that would settle all outstanding Holocaust and slave labor claims against German banks and industrial groups.

"We really didn't discuss any money today; we discussed the process," Singer said.

Hombach said his government's aim was to seek "material closure" but not "moral closure" to corporate Germany's role in Nazi-era atrocities against Jews and other groups. "What we're saying is how can we help those who have suffered, those who are needy, as quickly as possible," he added.

The delicate talks aimed at making a clean break with the Nazi past represent a major diplomatic challenge for German Chancellor Gerhard Schroeder, who was expected to discuss the issue with U.S. President Bill Clinton in Washington on Thursday.

Hombach, who is Schroeder's chief of staff, also met Monday with Undersecretary of State Stuart Eizenstat, the Clinton administration's point man on Holocaust settlement issues.

State Department spokesman James P. Rubin said Eizenstat and Hombach would review "a German proposal that German industry establish a foundation to resolve outstanding claims from the Holocaust era."

State Department officials described the talks with Hombach as "not a formal negotiation but a preliminary meeting we hope will lead to a process that will produce a swift and just outcome" to compensating victims of the Nazis.

The officials, speaking on condition of anonymity, said Schroeder's government, in office 100 days, was more positive and forthcoming on resolving this issue than its predecessor had been.

Hombach has said that if the visit goes well the German government might announce a solution to the claims issue by the end of the month. His objective appeared to avoid having the talks drag on as they did when the Swiss government and banks confronted compensating Nazi victims.

Hombach was accompanied by Rolf Breuer, chairman of Deutsche Bank, which is one of many German companies facing class-action suits in the United States filed by Holocaust survivors. The lawsuits accuse the companies of profiting from slave labor or the Nazi expropriations of Jewish assets.

The bank is facing new pressure to make restitution to Nazi victims after disclosing last week that it helped finance construction of the Auschwitz death camp during World War II.

Monday's negotiations appeared to have convinced the WJC not to follow through with its threats of sanctions against Deutsche Bank and its plans to buy Bankers Trust.

"Our compass is pointing in the right way and if it continues to point in this way, there should be no reason why we should even discuss (that)," Singer said. A WJC source in New York also said a boycott would be "very unlikely."

A tight-lipped Breuer also said he was optimistic that Deutsche's takeover of Bankers Trust could be wrapped up on schedule by the end of the second quarter.

In an interview published by the Hamburg daily Bild, Breuer was quoted as saying German businesses are ready to compensate some Holocaust survivors forced into slave labor by the Nazis through an industrywide fund. Those involved in the talks also said a foundation could be established or a combination of the two ideas.

Germany wants to find a way to satisfy Nazi survivors and block any future legal action. There are concerns that German businesses, which depend heavily on exports, could be severely damaged by claims. In addition, time also is running out for elderly concentration camp survivors.

Moves to resolve claims against Germany companies follow a series of initiatives to settle compensation issues outstanding since the Nazi era such as those involving gold and artworks.

Last August, Swiss banks agreed to pay $1.25 billion to settle lawsuits filed by Holocaust survivors and their heirs claiming the banks illegally kept millions of dollars deposited by their relatives before and during World War II.

However, the agreement came after almost two years of bitter recriminations and revelations about Swiss dealings with Nazi Germany that tarnished the country's image.