In the Holocaust compensation agreement reached between Israel and Germany, the Germans undertook to transfer a sum of $833 million, over a 12-year period and in the form of goods only. Not a single dollar was paid in cash. With the help of this sum, the State of Israel took huge steps in the development of its infrastructure - railway tracks and coaches, a merchant fleet, equipment for industry and the electricity economy, and more. Germany, for its part, made significant inroads on its way to rehabilitation and acceptance as a legitimate nation.From a financial point of view, however, the agreement was a complete Israeli failure, primarily due to the small "up until" phrase the Germans included therein.

Together with the collective agreement with the state, a personal compensation agreement for Holocaust survivors around the world was signed at the same time. In it, the Germans insisted that Israel be responsible for paying out compensation to Holocaust survivors who came to the country "up until January 1953."

Raul Teitelbaum, a former journalist and a member of the umbrella organization of Holocaust survivors in Israel who is currently writing a book on the reparation affair, notes that Israel consented to such a condition both because it feared losing the agreement in its entirety, and due to the fact that officials at the treasury estimated that it pertained to only a small group of people, around 3,000 in all. In practice, however, just in 2000, the state paid monthly allowances based on this clause to some 50,000 individuals, at a total cost of $400 million. In plain terms: Over the past two years alone, the State of Israel has paid out compensation to Holocaust survivors to an amount almost equal to the full sum it received in the reparation agreement.

Tomorrow, Holocaust Martyrs and Heroes Day, will mark 50 years, to the day, since the first meeting between Israeli representatives - then director-general of the treasury, David Horowitz, and Morris Fisher, a diplomat from the Israeli Embassy in Paris - and former German chancellor Konrad Adenauer, at the meeting that paved the way toward the agreement. The claims committee of the international Jewish organization that was set up to formulate the general (as opposed to Israeli) compensation claims from Germany also marks its 50th anniversary at this time. In retrospect, Teitelbaum says, "it is still difficult to understand how the Israeli and Jewish representatives agreed to some of the things; they can only be explained by a fear of letting an 'opportunity' slip by."

The most astounding detail, Teitelbaum notes, is the fact that German legislation, enacted in the wake of the agreements, makes no mention at all of the Jews, as a group, which is entitled to such reparation; it only speaks of individuals "who were persecuted by the Nazi regime on the grounds of race, religion or political viewpoint," he says. "This fits in with the fact that for a long time, there was no international recognition for the unique Jewish aspect of the Holocaust. In the Nuremberg trials, the issue of the extermination of the Jews was sidelined. Even Adenauer himself, in 1949, in his first speech in which he recognized German responsibility for the crimes of the Nazis, failed to mention the extermination of the Jews. What isn't clear is why did the Jews themselves agree to this?" Teitelbaum asks. Furthermore, he says, the Germans haggled over every detail, ending in total capitulation on the Israeli side in general; for example, Israel initially demanded reparation of $1.5 billion, based on a calculation of 500,000 Holocaust survivors at a rate of $3,000 per immigrant. Both estimations fell short; yet the Germans still rejected them. They immediately cut the numbers by a third, arguing that that was the responsibility of East Germany, which constituted one-third of the German people. Thereafter, they requested more reductions, bringing the compensation down to its eventual sum of $833 million.

Other details of the agreements are no less problematic, not merely the fact that Israel took it upon itself to compensate people who had come to the country prior to 1953. Even more humiliating was the agreement by Israel that the monthly allowances (as opposed to the lump sum) would be afforded only to "people of German culture." Teitelbaum: "This clause distorted the entire significance of the reparation and gave rise to an absurd situation in which the ones who had suffered the most received the least. The dead got nothing; survivors from Eastern Europe, who had suffered the harshest conditions for the longest period of time, only received a small one-off payment; while the German Jews, many of whom had fled Germany before the Holocaust and were spared the threat of extermination, were the only ones who were afforded monthly allowances."

The one-off payment given to the remaining survivors was also determined in humiliating fashion, based on a "compensation rate" of DM 5 (slightly more than a dollar in 1951 terms) for each day spent in a concentration camp or ghetto. Noah Flug, secretary-general of the umbrella organization of Holocaust survivors in Israel, says he once heard from one of the Jewish participants in the negotiations how such a rate was determined. "He told me that his initial demand was for compensation of DM 150 a day, equal to the wage of a German laborer at the time. He says that Adenauer went pale and started to tremble, explaining that the German economy could not afford such a sum and that he could only agree to symbolic compensation. Then he mentioned the amount of DM 5 a day. Nahum Goldman [then chairman of the Jewish Agency who led the negotiations on behalf of the Jews - Y.S.] didn't consult with anyone and hurriedly agreed, and so the sum was born," Flug relates.

Officially, the grounds for the reparations were given as "the denying of freedom" to the Jews. The agreements also explicitly released Germany of any responsibility for compensating for forced labor during the Holocaust. This oversight was the result of the determination by the Allied forces (excluding the former Soviet Union) that Germany would be exempt from paying such compensation prior to the signing of permanent peace agreements. The Western Allies wanted West Germany to join the anti-Soviet bloc and hence looked to ease the pressure on the already unstable German economy in the wake of the war. Permanent peace treaties were never signed, and Germany has held onto this clause to ward off claims for compensation for forced labor both in the reparation agreements it has signed and in its courts of law, which have dealt with private claims over the years.

Today, Teitelbaum is convinced that the Germans' eagerness for atonement could have led to far better agreements had the Israeli and Jewish representatives been less eager to get their hands on the money. Historian Dvora Hacohen's book, "The One Million Plan," which deals with the far-reaching plans of former prime minister David Ben-Gurion to bring one million Jews to Israel after the war, exposes some of the circumstances surrounding this eagerness.

Apparently, already in 1944, Ben-Gurion had planned to finance this grandiose plan with, among other sources, the reparation that Germany would be forced to pay after the war. The opportunity to realize his plan arose when Goldman informed him of Adenauer's willingness to pay compensation. Ben-Gurion had no intentions of letting the chance slip by.

"The Israeli government, which held numerous debates on the collective reparation agreement that the state should accept, never once discussed the particulars of the personal compensation for the survivors. Apparently, the matter was of so little concern to them that one may suspect that perhaps they feared that raising claims in this area would come at the expense of the reparation to the state." Teitelbaum charges.

Teitelbaum also points out that the negotiating team did not include a single Holocaust survivor.

The standard excuse for this was that they were not a formally organized group, with many even opposing the very idea. One can safely assume that had they been included in the negotiations, they would have been far more insistent in their demands. Furthermore, in 1972, Goldman persuaded the government to sign a document determining that the Jewish people and government of Israel waived all further claims against Germany concerning the Holocaust. "According to the original agreement, Teitelbaum says, "the option to submit claims for reparation ended in 1969. In 1972, Goldman came along and said there was a chance to get another DM 1 million from the Germans, compensation for immigrants from Eastern Europe who arrived after 1953, subject to a signature waiving all further claims; and the government of Israel agreed to sign it." Flug, who was working at the treasury in Jerusalem at the time, remembers: "I was approached by then finance minister Pinhas Sapir, who asked to consult with me on a certain matter, provided I undertook to keep quiet about it. After promising to do so, he told me about the German offer and asked for my opinion, as 'someone who came from there.' I told him that in my opinion, the document should not be signed as long as there was even one Holocaust survivor still alive. I was subsequently informed that he did indeed adopt my viewpoint and was the only member of Golda's inner cabinet who opposed signing the declaration. He even announced that although he was in the minority, he would not put his signature to the agreement. As a result, the cabinet appointed his deputy, Zvi Dinstein, to sign the document."

Only a combination of two events, which coincidentally occurred close to one another, caused things to change in the late 1980s. On the one hand, in 1989, the survivors consolidated into a stronger representative body, the umbrella organization for Holocaust survivors in Israel. But the event that really allowed the negotiations to be reopened was the reunification of Germany in October 1990, providing an excellent excuse for raising new claims in the name of East Germany's obligation that had not been upheld. In such a manner, for example, the road to compensation for forced labor was paved.

Following the reunification, the German Supreme Court ruled that the recognition of a united Germany by the four historical "Allies" was tantamount to a permanent peace agreement and therefore facilitated the payment of compensation for forced labor. Even then, Teitelbaum notes, German courts tended to reject claims that were submitted on this issue. It took the class action suits that were submitted to U.S. courts and the American threat to boycott German companies that refused to compensate the forced laborers to give rise, two years ago, to negotiations that ended in the establishment of the German fund for compensation to such individuals, he says.

At the same time, the reunification also facilitated talks on compensation for other groups of survivors that had been neglected in the original agreement. One-off payments of DM 5,000 were afforded to 225,000 survivors around the world, while another 50,000 "needy" survivors have received monthly allowances of DM 500 since then. Restricting the monthly allowance to the "needy" is still a disputed matter on the grounds that compensation for suffering should not be conditioned on an individual's present situation.

The same argument also goes for a series of other conditions that the Germans determined for the additional compensation. "The agreement stipulates, for example, a criteria of having had spent six months in a concentration camp or ghetto as a condition for receiving compensation," says Rabbi Azriel Miller of the Holocaust survivors' umbrella organization. "And now we, as a Jewish organization, have to tell the people who spent 'only' four months in a concentration camp that they are not entitled [to compensation]. Naturally, this places us in very difficult situations." And what about those individuals who refuse to accept compensation, those who seemed to number many at the time of the dramatic debate over the agreement? There are no accurate figures, but all the people and organizations involved in the matter estimate that the number of individuals who are refusing compensation is negligible. In this context, Flug says that all in all, some 4,000,000 claims for compensation, of all kinds, have been submitted to Germany over the years (some survivors may have submitted more than one claim on different grounds), and that some 2,000,000 have been upheld. With such numbers, bearing in mind that the total number of East European Jews who survived the Holocaust stood at around 3,000,000, it appears that there are indeed very few survivors who have refused to accept compensation. "With the present level of ties with Germany as it is," Flug says, "refusing [compensation] has simply become pointless."

Rafi Pinto, the director of the Finance Ministry's department for the rehabilitation of Holocaust survivors (the unit responsible for those entitled to compensation from the government), also estimates the number of individuals who are refusing compensation at close to zero, putting this down, primarily, to pressure from the second generation: "Those survivors who at the time refused to accept compensation have also grown old since then; the children, who bear the responsibility of taking care of their parents, do not necessarily share the same sentiments and they have pressed the parents into submitting the claims, sometimes even submitting the requests themselves."

Taking everything into account, Teitelbaum says, both those who opposed the agreement and those who supported it were right. "The opponents were right in saying that the agreement afforded Germany renewed rehabilitation, at a low price, albeit much higher one than the Germans themselves estimated. They thought that all the agreements would cost them around DM 7 billion. In the end, till today, they have paid - prior to the establishment of the new fund for compensating the forced laborers (DM 10 billion] - more than DM 100 billion.

"On the other hand, Ben-Gurion was right in saying that the agreements allowed Israel to develop vital infrastructure during the initial years of the state. It is impossible to know whether without it, the state would have survived or not, but it certainly helped the country. The ties with Germany benefited Israel not only due to the direct reparation. Since then, Germany has provided Israel with much economic and military assistance and has even become Israel's most important political ally in the European Union."

In this context, Teitelbaum points out that for many years now, Israel has been one of the most ardent proponents of the final German rehabilitation target - the acceptance of Germany, as a world power, into the exclusive club of permanent members of the UN Security Council. A starker historical irony is difficult to conceive, Teitelbaum says