Powerful financial and political interests in the United States yesterday served notice on the Swiss banking system that it would be hit where it hurts if it did not settle its differences with Jews over restitution for missing Holocaust wealth.
New York State and New York City financial officials told the Swiss banks that they would institute sanctions against them in 60 days unless they settled with Jewish groups. And in New Jersey, Governor Christine Todd Whitman ordered the state not to increase its investments in Swiss financial institutions until the dispute was resolved.
She noted in a statement that the New Jersey senate was expected this autumn to consider a measure calling for full divestiture of holdings in Swiss banks. Switzerland reacted with alarm at the threatened sanctions, describing them as illegal, and said they would certainly harm relations with the United States.
Holocaust survivors whose families lodged their wealth - in gold and currency - in Swiss banks during the war have been unable to get it back despite trying, in some cases, for over 40 years.
Swiss banks have made a settlement offer of $600 million, but the American Jewish groups are seeking a $1.5 billion settlement that would include the banks, the Swiss central bank and the Swiss government.
The Swiss government's position was backed yesterday by the US State Department, which opposes sanctions.
It urged the banks and Jewish groups to return to negotiations on a settlement, saying sanctions would be "unjustified, unwarranted and counterproductive".
"They will prevent our nation from speaking with one voice on matters of foreign policy, they will call into question the openness of our financial markets, and they may lead to greater inflexibility on the part of the Swiss institutions," spokesman Mr James Rubin said.