by Ronald Weber
Given Portugal’s authoritarian government and some high officials assumed to be partial to the Axis cause, Klaus considered the country a prime location for German efforts to transfer assets. This was especially so in the financial arena, where the country’s unregulated money market made it possible for Germany to move gold and currencies through local banks to locations elsewhere. Publicizing such financial transactions would have little effect, Klaus concluded, since “the Portuguese commercial community is alleged to be less idealistic and more venal than similar communities in other countries.” On the other hand, the bank he considered the primary collaborator with the Nazis, the Espírito Santo Bank, had business dealings beyond Portugal and might be vulnerable to Allied pressure, assuming the Americans and the British could agree among themselves on how to proceed.
After leaving Lisbon, Klaus and Cummings stopped in Tangier before returning home in early October without having visited, as planned, Switzerland and Turkey. Events on the battlefield in Europe were rapidly moving forward, and Klaus acknowledged in a final report about his journey that the main thrust of the Safehaven Program would be with control groups working in occupied Germany after the war’s end. The task left for ministries in neutral countries would largely amount to locating and recording German assets, and he called for local mission chiefs to assert their authority in setting legal attachés and OSS agents to work.
(Among the Reich’s assets were human resources. When after the war the first group of esteemed German scientists was brought to the United States under what was known as Project Paperclip, with a blind eye turned to their possible Nazi pasts, their visa applications were submitted by the military and—high irony—reviewed at the State Department by Samuel Klaus, now working with the department and still dedicated to the Safehaven principle of denying German assets secure locations abroad. Klaus turned down all the applications. For Paperclip to succeed, as it did, future visa submissions had to be reviewed by others.)
In the postwar period Safehaven work in Portugal was replaced by an Allied joint commission made up of representatives of the American, British, and French ministries in Lisbon and charged with liquidating German government property in the country and recovering monetary gold and other looted assets. In the fall of 1946 the Salazar government reluctantly entered into negotiations with the group. That part of the talks dealing with gold soon bogged down over exactly how much tonnage the Portuguese would have to turn over, if any. Portugal’s position was that its gold reserves, which had soared during the war from $93 million to $433 million, were the fortunate result of demand for wolfram and other products. Moreover, if it could be demonstrated that the gold it had received from Germany had indeed been looted, it expected compensation for whatever it turned over to the Allies since the acquisitions had been made as payment for legitimate trade.
Exasperating back-and-forth discussions staggered on for more than a decade. The Allies, concerned with continued military use of the Azores and with linking Portugal to the West in the cold war realignment of Europe, steadily cut back on the amount of gold they demanded, originally forty-four tons, and Portugal just as steadily resisted. In October 1958 an agreement finally was struck for turning over just under four tons, a trifling amount valued at the time at about $4.5 million. In October of the following year the deal went into effect, and the gold, for which Portugal was ultimately reimbursed by the Federal Republic of Germany, was delivered to an Allied gold pool.
*
While the matter of Portugal’s restitution of looted monetary gold had reached a conclusion, a comprehensive historical analysis of the country’s wartime economic cooperation with Nazi Germany would wait another forty years. Over time, growing scrutiny of the financial transactions between Germany and all the neutral nations had developed to a point where, in early 1997, the New York Times could headline an article “The (Not So) Neutrals of World War II”—and pointedly take note in a subhead about the accumulation of “Profits on the Sidelines.” In the United States the inquiry culminated in a study commissioned by President Bill Clinton and appearing in separate volumes in 1997 and 1998. Written by a number of government historians and coordinated by Stuart E. Eizenstat, who at the time of the second volume was an undersecretary in the State Department, the work—in all, some four hundred pages—became known as the Eizenstat Report.
In a foreword to the first volume, Eizenstat described the study’s overall aim as tracing the history of “confiscation by Nazi Germany of an estimated $580 million of central bank gold—around $5.6 billion in today’s values—along with indeterminate amounts in other assets during World War II.” He went on: “The picture which emerges from these pages, particularly of the neutral nations, is often harsh and unflattering. Many profited handsomely from their economic cooperation with Nazi Germany, while the Allied nations were sacrificing blood and treasure to fight one of the most powerful forces of evil in the annals of history.”
As summarized in the report, Portugal’s main role in serving German interests was through supplying a “variety of vital mineral resources for the Third Reich’s war machine, including ore for tungsten, a key additive used in the production of weapon-grade steel.” The usual explanation of the neutrals for trading with the enemy, said the report, was the threat of Nazi invasion or reprisals, but with Portugal this had little validity since among Continental neutrals it was the country which “had the least reason to fear a German invasion, particularly once it became clear that Franco’s Spain would not join the Axis.” As for later Allied efforts to recover looted Nazi gold, the report glumly noted that “discussions dragged on through the 1950s because of Portuguese resistance,” and it was not until the very end of the decade that gold was actually handed over to the Allies.
The issue of compensation to individual victims of looted Nazi gold and other assets was also a core feature of the report, with Eizenstat ending his foreword to the second volume with a call to action while war survivors were yet alive. “The approach of the new millennium offers a clear window of opportunity to act,” he wrote. And added: “By completing the unfinished business of the middle of this century by its end, we can enter the new millennium having attempted a moral accounting of this lingering ledger of grief.”
In the wake of the Eizenstat Report, an official commission in Portugal determined in 1999 that no such moral accounting was due. After sifting through public records, the six-member panel—named some two years earlier by a post-Salazar democratic government and headed by Mário Soares, a former prime minister and two-term president of the country—found that Portugal was under no obligation to compensate Holocaust and other Nazi victims since it had not knowingly dealt in plundered gold. As its leaders had insisted at the time, gold had been acquired in good faith during a wartime period in which the country was free to trade with both sides. Newspapers around the world carried brief notices of the report under headlines reading “Panel Clears Lisbon on Nazi Gold Trade” and “Portugal Didn’t Launder Nazi Gold, Report Finds.” Also mentioned in some accounts was that the World Jewish Congress had immediately dismissed the report as a “whitewash of the Salazar regime and a betrayal of the Portuguese people.”
14
Where to Spend One’s Holiday
Among the many postwar problems, most of which will give grounds for anxiety, there will be at least one of a pleasurable nature—that of where to spend one’s holiday.
—Anglo-Portuguese News, September 30, 1943
When news came on May 8, 1945, of the end of the war in Europe, the only decision confronting Mário Soares was how to free himself from a student lecture hall at the University of Lisbon. After a friend in the corridor signaled the long-awaited event, Soares leaped to his feet and called for an end to the class session. At once a Nazi sympathizer among the students protested that, as a neutral nation removed from the war, Portugal had nothing to celebrate. A heated argument followed in the classroom, with the professor at last timidly suggesting that th
e students consult a higher authority about ending the rest of the lecture. His proposal was not popular, and when the debate dragged on Soares and a half-dozen other students walked out.
Soares’s father had been deeply involved in opposition politics, spending many years in prison or exile, and Mário Soares would follow a similar path in the slow progress to Portugal’s “Carnation Revolution” of 1974. During his early university days he had resisted the Salazar regime’s strict neutrality and lobbied for the Allied cause by getting tickets from cultural attachés for private film showings at the British embassy’s cinema and distributing them among classmates. From the American legation he procured a projector and films and conducted viewing programs in small working-class clubs. With the war ended in the Allied favor—and the time come, as Soares and some of his fellow students ardently hoped, for Salazar’s removal—he was not about to miss the great victory festival.
Waving flags of the Allied nations, Soares and his cohorts strode from the university to Rossio Square in the heart of Lisbon. A cheering throng greeted them, as did a force of police spaced about the square that sought to manage the crowd, though in an unusually civil manner. When a huge Portuguese flag materialized, the national anthem was sung to what Soares recalled as electrifying effect: “Within seconds there was a press of people around us clamouring for a triumphal march to foreign embassies. It was a sea of people, thousands upon thousands of them, chanting ‘Victory! Victory! Liberty! De-mo-cra-cy!’” On the main thoroughfare of the Avenida da Liberdade that giddy day, an estimated 500,000 joined in celebration. Among them might have been some of the many refugees still housed in Portugal.
Rejoicing went on for several more days, but for Soares and his growing band—schools and colleges were closed and it seemed the whole of Lisbon was in the streets—the next morning brought a more strident political element to the war-end elation. They marched to the Allied ministries with cries of “Death to Fascism!” and “Free the political prisoners!” Allied envoys were handed messages, which they received, as Soares recorded, with “purely formal thanks and acknowledged the cheering in a chilly sort of way.” The subdued response was an early sign for those wanting political change of the disillusionment that lay ahead.
*
A succession of church services and public events had led up to VE-Day. With the Allied landings in Normandy, the British and American colonies in Lisbon conducted an Anglican prayer service in the Church of St. George. Somber diplomats from both nations joined representatives of the Brazilian, Dutch, Polish, Norwegian, Greek, Belgian, and Free French missions. Outside the church Portuguese onlookers stood in bright sunlight while news of the invasion circulated among them. Boys selling newspapers in the city squares were mobbed, and all editions of the local papers were snapped up.
Less than a year later, on April 14, 1945, a memorial service was held at St. George’s following the death of President Roosevelt. Among the dignitaries and diplomats met at the door by the newly appointed American ambassador, Herman B. Baruch, were Salazar and many members of his government. At the end of the service the national anthem of the United States was played.
With news of Hitler’s suicide on May 1—reports from Bremen and Hamburg coming over Portuguese radio said he had died in action—Salazar leaned sharply in the other direction by ordering three days of national mourning and Portuguese flags flown at half mast on official buildings. While reaction was not expected from the controlled local media, reports coming from Madrid said Spaniards were so surprised by the Portuguese action that they suspected it was a hoax, or at least an exaggeration. Even the ultra-nationalist Falange party, it was pointed out, had not offered official condolences to Germany. The lone other neutral nation to stage a similar show of respect was Ireland, where Eamon de Valera in Dublin went to the home of the German minister and extended his sympathy (much to the puzzlement, it was said, of the minister). With the war’s end de Valera stood alone among neutral leaders in rejecting Allied requests for a public policy statement refusing asylum to fleeing Axis war criminals. Salazar had bowed to the request, though only after Sweden and Switzerland had done so.
On May 6 Portuguese radio announced that the government had informed the German minister in Lisbon that the legation and all consulates in the country were to be closed immediately and staff members considered persona non grata. Portugal held control of German buildings and their contents until early June, when they were handed over to a joint Allied commission charged with liquidating enemy property in the country. On May 14 Portugal enacted a decree freezing all German assets in the country, and on May 23 it was extended to include the Portuguese colonies. The German minister in Lisbon was not caught unawares by the rapid wave of such developments. On May 1 he had hosted a farewell cocktail party for some seven hundred of his countrymen and informed several hundred workers for German propaganda that their services were no longer required.
*
On VE-day Salazar solemnly addressed the national assembly, thanking God for keeping Portugal “in the margin” of the conflict and expressing joy that Britain was in the vanguard of the victors. Other Allied nations went unnamed. In the early evening a British thanksgiving service was held in St. George’s, with the British and American ambassadors in attendance and the national anthems of both countries sung. The official British memorial service, ordained by the King and the Archbishop of Canterbury, was conducted five days later at St. George’s, with Salazar present together with the Allied diplomatic corps.
Ten days after his national assembly speech Salazar again addressed the group, now about Portugal’s future. In the area of foreign policy, he said he meant to strengthen the alliance with Britain while keeping friendly relations with the United States and France. Although Portugal’s position during the war had been what he termed collaborative neutrality, in any future European war his country could not and should not attempt to remain neutral. As for Portugal’s corporative-style economic system, it would not be abandoned. “We hope,” said the prime minister, “that cleansed of some abuses and excesses, it will return to the purity of its principles from which, to some extent, through wartime circumstances, it had departed.”
Those friendly relations with the United States and France as well as Britain were challenged in the immediate postwar period by the vexing issue of repatriating German state personnel. Portugal staked out a position with four main points: it wanted assurance from the Allies that German nationals would not be sent to the Russian zone of occupied Germany; it would assist in repatriating only those Germans who wanted to return home; it would allow those who refused repatriation to stay in Portugal as political refugees; and it would force repatriation only in cases where it was proven that an individual was a war criminal or dangerous to Portugal. All of this the Allies, not surprisingly, found unacceptable. Their common position was that they would draw up a list of those they wanted returned to Germany and demand their repatriation. Ambassador Baruch told Washington that Portugal had to be reminded that the “German surrender was unconditional and the Allied nations therefore must have the right to prevent Germans throughout the world from again putting themselves in a position to renew their harmful activities against the Allies and civilization in general.”
The specter of German postwar rebirth taking place in Portugal was raised by an American military intelligence report in July 1945. After noting that Nazis working in the country before the war ended were still freely moving about and had large sums of money and connections with Portuguese sympathizers, the report turned to a group calling itself the “Iron Nazis.” The ringleaders were said to be three “dyed-in-the-wool” Hitlerites who had been active before the collapse and were trying to revive the party in Portugal, though so far their efforts had amounted to nothing more than meetings with fellow Germans.
By mid-August 1945 repatriation matters were still unresolved, and Baruch was complaining to Washington that the “position of ex-German officials [in Portugal] is becoming
an open scandal and detrimental to Allied prestige.” Later in the month Robert Solborg, winding up his duties as the military attaché of the Lisbon embassy, reported that he had a list of six hundred Germans for repatriation, with eighty considered such dangerous figures that the Portuguese government had placed thirty of them in a restricted residence in a small town in northern Portugal until they could be sent home. (OSS’s X-2 files in Lisbon listed nineteen hundred enemy agents and two hundred enemy officials in Portugal at war’s end.) Those Germans remaining in Lisbon, Solborg added, were able to come and go as they wished, had ample money, cars, and gasoline, and possessed “influential Portuguese friends and … the notorious International [secret] Police agents give them a great deal of protection.” Finally, on September 25, the American embassy reported that Portugal had designated a captain of the secret police to work with the Allies on a repatriation program and that transport was ready to fly the Germans from Lisbon to Paris. (How to get them on to Germany was still unsettled.)
But in March of the following year the second secretary of the Lisbon embassy, H. L. Rose, would tell Washington that though progress had been made—recently a ship, the Highland Monarch, had left Lisbon carrying Germans—he had followed State Department instructions by expressing American displeasure to the Portuguese foreign minister over the country’s failure “to seize every opportunity to deport obnoxious German nationals” who had been involved in espionage and sabotage operations. In a personal aside at the end of his dispatch, Rose noted that the foreign minister had “left no doubt in my mind that we may expect no further assistance from the Portuguese Government in the repatriation of German nationals.”