Bus on Jaffa Road

by Mike Kelly

  “Mister Flatow. Good to see you again.”

  Flatow knew he had only a minute or so to speak so he got right to the point. He mentioned the law that Clinton had signed in 1996 allowing him to file a lawsuit against Iran, then summarized his lawsuit and Judge Lamberth’s ruling and the problems of trying to lay claim to Iran’s assets in the US.

  Clinton looked Flatow in the eye and nodded.

  Flatow reminded Clinton that the president had promised assistance in helping him locate Iranian commercial assets that might not be blocked by the US State and Treasury Departments, although no help had been forthcoming.

  As Flatow finished, Clinton fell silent for a second or two. Flatow studied the president’s face. “You could see his mind working,” Flatow recalled.

  Clinton turned to Sandy Berger.

  “Let’s get this done,” Flatow remembers Clinton saying.

  Clinton then shook Flatow’s hand and walked down the hall.

  Flatow was elated. Perles had not been allowed into the hallway by the Secret Service and was waiting outside. Flatow couldn’t wait to tell him what happened with the president.

  “We hit a home run,” Flatow said as he approached Perles.

  Eight days later, the US Senate voted to acquit Bill Clinton of the impeachment charges. Almost as soon as the votes had been counted, another effort began to find a legislative solution to what was rapidly become known as Stephen Flatow’s dispute with Bill Clinton.

  On Capitol Hill, Frank Lautenberg and Connie Mack opposed each other on Clinton’s impeachment. Mack supported a guilty verdict that would have led to Clinton’s removal from office; Lautenberg sided with the majority and voted not guilty. But after the impeachment crisis passed, both reinvigorated their efforts to gain compensation for terrorist victims. Lautenberg and Mack also announced they planned to retire after their terms expired in 2000; like President Clinton, both wanted to finally settle the issue of compensation for terrorist victims.

  In many ways, Mack and Lautenberg had formed a perfect partnership to force the president to embrace some sort of plan to compensate the families. Mack’s fellow Republicans in the Senate and in the House of Representatives—especially conservatives—eagerly lined up behind any effort to embarrass Clinton and punish Iran for its support of terrorism and Fidel Castro for the shooting down of the Brothers to the Rescue Planes. Lautenberg, in turn, rallied Democrats in the Senate and in the House. With Lautenberg, a liberal and longtime Clinton supporter, taking a firm stance against Palestinian terrorism and opposing the president’s efforts to protect Iran’s assets, other Democratic liberals, who might have favored a more nuanced approach, felt free to follow.

  With the impeachment behind them, Clinton’s aides believed that the unusual alliance of conservative Republicans and liberal Democrats, could pose a formidable obstacle to attempts by the White House, or any arm of the administration, to continue blocking families from being compensated. What’s more, Lautenberg and Mack had proposed a new—and stronger—version of their bill, the Justice for Victims of Terrorism Act, which would remove White House and State Department roadblocks that had stopped the families from claiming the frozen assets and property of terrorist-sponsoring nations. For the White House, a key question was how to compromise without embarrassing the president. But as a Senate staffer involved in the negotiations, explained, “The White House knew we had all the votes in Congress. And if we voted, the president would lose ninety-nine to one.” The staffer was exaggerating on the ninety-nine-to-one vote tally, of course. But not by much.

  In October 1999, the Senate Judiciary Committee opened hearings on the Lautenberg-Mack bill. Flatow was invited to speak. So was Stuart Eizenstat.

  Eizenstat had not retreated from his belief that a dangerous political game was being played on Capitol Hill with terrorist victims recruiting political figures such as Frank Lautenberg and Connie Mack who would champion their causes. As Eizenstat saw things, the system was entirely unfair. It meant that many other victims, especially those who did not have the connections to hire an aggressive lawyer such as Steve Perles or the knowledge or financial wherewithal to come to Washington and lobby Congressional figures, would be left behind in what Eizenstat saw as a “rush to the courthouse.” Also, Eizenstat knew that the pool of potential assets was limited. Yes, millions of dollars were potentially available to victims. But, with the likelihood of another favorable ruling calling for a large payment in the Duker-Eisenfeld case, Eizenstat feared that only a small number of families would get their share, leaving little for others—including what Eizenstat said would surely be future terrorist victims.

  “It’s grossly unfair,” Eizenstat said. “It’s a bad way to do the public’s business.”

  In particular Eizenstat was concerned about the family of Ira Weinstein, the dual Israeli-US citizen who was traveling on the same bus as Sara Duker and Matthew Eisenfeld and who died six weeks after the explosion of massive burns. Weinstein’s relatives had just begun to explore the possibility of a lawsuit but were far behind the others. What if Weinstein’s relatives gained a favorable ruling but all of Iran’s assets had been taken already?

  Another concern was Leah Stein Mousa, who had been badly burned in the blast on the Number 18 bus. Unlike Ira Weinstein, Leah Stein Mousa survived—and was even visited by the emergency medic, David Sofer, weeks later in the hospital. But Mousa had spent so much time trying to regain her ability to walk, see, and hear correctly that she was behind by several years in filing a lawsuit. Her attorney, John Karr, wondered if she was already too late.

  For months, Eizenstat had tried to shape the outlines of a compensation settlement that would allow the White House to save face and not set a legal precedent that might endanger US diplomats overseas. He fancied himself as a skillful negotiator of delicate policy and legal matters, not to mention an objective analyst of policy. But as Eizenstat pondered the issue—and its inherent dilemmas—he concluded that the fairest way to compensate the victims was to create a federal commission that would weigh claims and award money from the US Treasury, not from the frozen assets of Iran and other nations that had been labeled by the State Department as state sponsors of terrorism.

  “If you are going to do something, let’s be transparent, and say it’s worthy of taxpayer support,” Eizenstat said.

  When Eizenstat took a seat before the Senate Judiciary Committee, he was ready to test his proposal. He also knew he was reentering a debate that had become deeply politicized. It was now October 27, 1999. Two days earlier, in an op-ed article in USA Today, Senator Connie Mack outlined how the Clinton administration had first encouraged families to file lawsuits, then blocked their efforts to claim assets of such nations as Iran and Cuba. “The president has betrayed these American families,” Mack wrote. However, “the US government’s embarrassment could be over tomorrow. The president has the authority—indeed, the obligation—to respect the rule of law and the power of the courts.”

  Before Eizenstat spoke to the committee, Mack testified. He praised Eizenstat as “a most competent and dedicated government official” but Mack added that he was frustrated with Eizenstat’s negotiating style. “After waiting so long, I must say with due respect there must be action for me to believe his words,” Mack said. “To be frank, all I have noticed to date is a lack of response on behalf of the administration, and I sense no sincerity on their part at all.”

  Mack turned his attention to Clinton: “He has chosen to protect terrorist assets over the rights of American citizens seeking justice. This is simply not what America stands for. Victims’ families must know that the US government stands with them in actions as well as words.”

  Lautenberg was no stranger to Republican criticism of a Democratic president. But after listening to Mack, Lautenberg felt he had to come to Clinton’s defense.

  Calling Mack “my friend and colleague,” Lautenberg said, “I do not think
that one can say with impunity that the president of the United States, President Clinton, is willing to subordinate the victims’ rights to a grander scheme.”

  Lautenberg agreed with Eizenstat that victims’ families should not be allowed to claim ownership of foreign embassies. But then he turned to a key argument that Eizenstat had been making—that Flatow and others such as the Duker and Eisenfeld families could drain away the pool of available assets from Iran before other victims might have a chance to apply for them. “Unfortunately or not,” said Lautenberg, “that is the way American civil law treats all assets that are part of a court judgment, and, frankly, I agree with that, because perhaps by satisfying those claims, we can deter terrorist acts in the future.”

  Lautenberg noted that Eizenstat had proposed that Congress set aside a pool of US money—a Crime Victims Fund—to compensate American families for the loss of relatives to foreign terrorists. “But that proposal misses the point,” Lautenberg said. “Foreign countries that sponsor terrorist attacks should have to pay a price.”

  Finally, perhaps aware that he would soon announce his retirement, Lautenberg pointed out that time was slipping away. “Do we make the victims of terrorism like the Flatows and the others, wait years longer?” he asked. “Waiting is not the answer.”

  After Eizenstat spoke and answered questions, Flatow stepped forward. It had been almost ten months since his brief meeting with President Clinton at the Hilton Hotel. Flatow had heard nothing further from the White House, and, once again, he had reached a point where he doubted whether a settlement would ever be reached.

  “Am I frustrated and discouraged?” Flatow told the committee. “Absolutely. Am I going to quit? No, Mr. Chairman, I am not. A father’s responsibility to his child does not end with her murder.”

  Tom Fay sat in the audience in the room listening to Eizenstat and Flatow. During a break in the testimony, a man Fay had never met tapped him on the shoulder and asked him to step into the hall for a private conversation. Fay got up and followed the man into the hallway. The man said he’d listened to Eizenstat and Flatow but what surprised him were Eizenstat’s conclusions about Iran’s limited resources. Eizenstat did not mention a large pool of money left by Iran at the Pentagon decades before to buy warships, tanks, and other military weapons, the man said. The pool of money was more than $400 million.

  Fay couldn’t wait to tell Perles and Flatow. An Iranian account with $400 million was more than enough to cover Judge Lamberth’s order that Flatow should receive $247 million. It might even be enough to cover what he expected to be a large award for the Duker and Eisenfeld families, too.

  But how would this account be tapped? It would take another year to answer that question.

  The pathways of political deal-making are not always straight or obvious. In retrospect, participants in the compromise say that after Hillary Clinton formally announced in February 2000 that she was running for the US Senate in New York State, the obstacles that blocked Stephen Flatow and others from collecting the rewards for their lawsuits began to slowly vanish. Those legal and political barriers seemed to disappear even more quickly after the Dukers and Eisenfelds won their lawsuit in Judge Lamberth’s court.

  Hillary’s political career was not the only factor. Key figures in the negotiations point to Bill Clinton’s own desire to settle some unfinished business as he was winding down his presidency. Perles and Fay, meanwhile, believed they had a powerful trump card—the $400 million in Iranian funds in the Pentagon account with the obscure title of “Foreign Military Sales.” For the first time in more than two years, they had a firm target for their claim that was not considered diplomatic property.

  Then, Stuart Eizenstat intervened again.

  By 2000, Eizenstat had embraced two roles. First, he felt he needed to find a way to compensate the families. He also felt duty-bound to protect President Clinton—and future presidents—by setting a precedent that would automatically allow US citizens to take foreign assets if they won court judgments in terrorist cases. Eizenstat had a few trump cards of his own to play, however. “Politically there was tremendous support for paying the families,” he said.

  Eizenstat suggested that Flatow and the others could be paid with a specific funding appropriation’s bill, passed by Congress. But Flatow rejected the proposal.

  “I did not want any American taxpayers’ money used,” he said. “I want the Iranians to pay.”

  Eizenstat turned to Frank Lautenberg and Connie Mack for help.

  Lautenberg and Mack were moving ahead with their own proposal—a rewritten version of their Justice for Victims of Terrorism Act that included a provision for terrorist victims to lay claim to the $400 million in the Pentagon’s account as well as another $22 million in other properties owned by Iran in the US.

  Not surprisingly, this new proposal set off a debate between the White House and Congress over whether the US would be liable to pay Iran for the missing funds if the $400 million was turned over to the victims’ families along with the $22 million in diplomatic properties. No clear answer could be found. The White House offered one explanation; Congress offered another.

  For instance, the White House’s budgetary arm, the Office of Management and Budget, declared that the US would be liable if an international tribunal ruled in favor of an Iranian request for the US to return the money and diplomatic properties. Perhaps more ominously, OMB analysts pointed out in an internal memo that the amount of claims against Iran from the court judgments far exceeded the amount of money in the Pentagon account and the value of the Iranian diplomatic properties. Plus, other court judgments were likely to to come. “These subsequent judgments represent an unknown liability for the US,” the OMB memo said.

  In its own memo, entitled “Fallacies and Realities” of the Lautenberg-­Mack legislation, Congress’s own budgetary arm, the Government Accountability Office, offered an entirely different scenario. The GAO said the use of the Iranian assets to pay terror victims was permitted under US laws and would likely be approved by an international claims tribunal that handled US and Iranian disputes over frozen assets and other financial issues. “There is no likelihood that the United States would be liable to Iran for the amounts paid out to valid judgment creditors,” the memo said.

  Then came the July 11, 2000, ruling and $327 million award by Judge Lamberth in the Duker-Eisenfeld lawsuit—a confirmation that the size of the awards to terror victims far exceeded the pool of Iranian assets. Combined with the $247 million that Lamberth awarded to Flatow and additional rulings by federal judges in other cases such as one involving the journalist Terry Anderson, a hard reality began to frame the negotiations between the Eizenstat, Lautenberg, Mack and the Flatow, Duker and Eisenfeld families: There was not enough money to pay everyone.

  It was now August 2000. The group was well aware that time was running out for a solution. President Clinton’s last day in office was January 20, 2001, less than five months away. But the Congress would adjourn before then.

  A variety of participants in the negotiations began to seriously examine a compromise proposal that had first been outlined months earlier in a letter from Eizenstat to Connie Mack. Under the plan, Eizenstat wanted to address Flatow’s demand that no US funds would be used, and that the families involved in the lawsuits would be paid with the financial assets of Iran and Cuba. Eizenstat also hoped the families would take less money. As Eizenstat wrote, the families would “receive partial and advance payment for compensatory damages” from “blocked assets and other appropriated funds” from Iran and Cuba.

  But Eisenstat also invoked a murky legal term—“subrogation”—that would become a center of dispute in years to come. Under the proposed plan, the US Treasury would issue checks to the families, then try to recoup “these payments directly from the country concerned as part of any normalization of relations.” Left unsaid in the Eizenstat letter and in other negotiations was a basi
c question: How would the Flatows, Dukers, and Eisenfelds ever know that the US Treasury actually recouped the money from Iran?

  Lautenberg and Mack, meanwhile, began to worry that the Eizenstat proposal was little more than an elaborate diversion to curtail criticism from the families and allow the White House to stall until the end of Clinton’s term in office. The Justice for Victims of Terrorism Act had plenty of votes to pass both the Senate and the House of Representatives. But Lautenberg and Mack were concerned that, if the bill passed, Clinton would veto it before he left office and leave the families with no money. Their fears worsened when one of Mack’s staffers discovered that Clinton had received an internal White House memo that said “the bill’s passage is inevitable. Therefore we will continue with current tactics of running out the clock.”

  Mack’s staff also learned that the White House had reached out to a prominent Jewish leader and asked him to “get Flatow to back off.” In a follow-up memo to Mack recounting the incident, a staffer wrote: “I am skeptical as to whether we really have a negotiation ongoing. I think we are prepared to move forward and tell everyone we can that we have not been dealt with in good faith.”

  In the end, there was no dramatic reckoning, no meeting of adversaries, no handshakes. The deal was subtle and as deftly orchestrated as that phone call almost a year earlier inviting Stephen Flatow to the lunch with Hillary Clinton.

  The families bowed to a key pragmatic wish from Eizenstat. They agreed to take less money and allow the US Treasury to “subrogate” a claim on the blocked assets. The Lautenberg-Mack bill was rewritten to give the families the compensatory portion of the rulings, with an additional 10 percent bonus if they promised not to pursue the larger punitive damage claims in the United States.

  So, eventually, instead of $247 million, the Flatow family agreed to take approximately $25 million. Instead of more than $327 million, the Duker and Eisenfeld families would eventually collect about $27.4 million.