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In his final days in office, former President Bill Clinton, a man criticized throughout his two terms as someone who blew with the political wind, quietly made what appeared to be one of the most stunning reversals of his presidency. Clinton signed off on a deal that would compensate families victimized by Cuban and Iranian violence — after years of opposing those families’ efforts to seize foreign assets frozen in the United States. A combined $310 million was transferred to civil litigants who had sued those governments in federal courts and had won titanic judgments. But until Clinton capitulated, collecting on those judgments had been impossible. In one stroke of a pen, it became more than possible. It happened. The money was transferred from U.S. bank accounts the following month. Just like that, four years of fighting, lobbying, legislating, and negotiating were over. But still, the solution wasn’t a perfect one — even for the families who finally collected their money. One such litigant was Stephen Flatow, a New Jersey lawyer who sued the Iranian government after his 20-year-old daughter, Alisa, was killed by a terrorist bomb in the Gaza Strip in 1995. Clinton’s order allowed Flatow to receive $22 million — short of what Flatow had been seeking. Moreover, the bulk of Flatow’s money didn’t come directly from the blocked Iranian assets, but from U.S. taxpayer funds. That was something that the families had continually resisted. They had wanted to hurt Iran. “By the time it was all said and done, the administration was unhappy and I was unhappy, so I knew we had a good compromise,” Flatow says. That compromise was the result of an All-Star Game of Washington hardball, in which the families seeking to collect millions from hostile foreign nations joined forces with Capitol Hill legislators to force Clinton’s unconditional surrender. “I lived this every day for four years,” says Ronald Kleinman, a lawyer for the families seeking money from the Cuban government. “After 1997, it was a piece of my work every day, every single day.” BROTHERS IN ARMS The story begins in Miami, where a group of Cuban-American private pilots formed an organization to search the Florida Straits to assist rafters trying to make it to the American coast from Cuba. Called Brothers to the Rescue, the flyers ran afoul of the Cuban Air Force on Feb. 24, 1996. The Cuban fighters shot at two of the planes, blowing them to pieces and killing the four men aboard. The incident had immediate political implications. Congress passed the Helms-Burton Act, tightening the long-standing economic blockade of Cuba. And President Clinton pledged his allegiance to the victims’ families. To show his support, he gave them several hundreds of thousands of dollars each in assets belonging to the Cuban government frozen in U.S. government bank accounts and wished aloud that he had the authority to provide more. That wish would come back to haunt him. Meanwhile, a group of Miami lawyers including former Miami U.S. Attorney Roberto Martinez and noted aviation lawyer Aaron Podhurst banded together to bring a lawsuit against Fidel Castro’s Cuban government. The suit was made possible by a 1996 federal law allowing private lawsuits against so-called terrorist-sponsoring or “rogue” nations like Iran, Iraq, and North Korea. With the Cuban government declining to defend the suit in federal court, U.S. District Judge James Lawrence King socked Cuba with a $187.5 million judgment in 1997. Meanwhile, a similar action was making its way through the federal courts in Washington, D.C. In 1995, while on a trip in Israel, Alisa Flatow was killed when a suicide bomber rammed her bus. Her father sued the Iranian government — accusing it of sponsoring the terrorists who planted the bomb — and in March 1998 obtained a $247 million judgment. Both parties pressed to collect but were stopped cold when Clinton blocked access to Iranian and Cuban assets in the interests of national security in an October 1998 executive order. Clinton, advised by senior officials in the State Department, decided that the assets were needed as potential “bargaining chips” with the Iranian and Cuban governments. “We were not anxious to have that money taken,” says Stuart Eizenstat, the former deputy secretary of the Treasury and now a partner at D.C.’s Covington & Burling. Eizenstat had been a member of President Jimmy Carter’s White House when frozen Iranian assets were instrumental in obtaining the release of American hostages in 1980. The families were angry. So was then-Sen. Connie Mack, R-Fla. Mack says that Clinton had supported — and signed — the 1996 legislation that allowed the families to bring suit in the first place. He viewed Clinton’s last-minute obfuscation as a betrayal. “I just got furious,” Mack says. “In a sense, it became a personal cause.” Mack and his Senate office became the conduit for a legislative effort to overcome the White House’s “stonewalling,” as Mack puts it. They introduced the Cuban-American families to Flatow and the other families seeking Iranian assets, as well as to Terry Anderson, the former Iranian hostage who had sued Iran over his captivity. “Union is a good word for what we were,” Flatow says. That began a high-stakes assault on the administration’s hard line. Mack joined forces with then-Sen. Frank Lautenberg, D-N.J., who advocated Flatow’s case. They rounded up support on the Hill for their cause, backed by Jewish and Cuban-American lobby groups such as the Anti-Defamation League, the American Jewish Congress, and the Cuban-American National Foundation. One key weapon was a videotape of Clinton’s remarks after the shoot-down in 1996 in support of the families’ efforts to be compensated. At the same time, the Miami lawyers who had successfully snared the $187 million judgment against the Cuban government continued their campaign in the courts, trying to defend their judgment on appeal to the 11th U.S. Circuit Court of Appeals in Atlanta. Opposing them were lawyers for the Justice Department and the Cuban government — now, ironically, working on the same side. (Neither the Miami lawyers nor the Brothers to the Rescue families were available for comment. They are bound by a federal judge’s gag order in Miami.) The Senate coalition’s initial effort to counter the White House failed in 1999. An attempt to attach a rider to the Treasury Department appropriations bill didn’t go through when Clinton made clear he would veto the bill. But administration officials knew that they had only obtained a reprieve. “We knew very practically that these guys were not bluffing,” says Mara Rudman, who was a deputy to National Security Adviser Sandy Berger, who helped coordinate the administration’s actions on the issue. POISON PILL Mack and his staff were intent that Clinton would not beat them in 2000. Mack had become even more resolute after he decided that the year would be his last in the Senate. “This was a big deal. This was very important,” says Gary Shiffman, who served as a senior adviser to Mack and is now director of governmental relations for Greenberg Traurig in D.C. Mack and Shiffman focused on drawing up a bill that would enjoy wide support in Congress and alarm the White House enough to force it to the bargaining table. Mack, along with Lautenberg, introduced a bill that made it easier for terrorism victims to collect on judgments by altering the legal definition of a foreign asset. Before, the courtroom test for determining ownership was whether a foreign government had day-to-day control of an asset. The Mack-Lautenberg bill lowered the standard. Now, if a country owned 51 percent of an entity, it could be attached by creditors. The language was abhorrent to the administration. In the spring of 2000, Eizenstat’s confirmation at Treasury was pending before the Senate. Mack used that as leverage to force Eizenstat to come to the Hill for a meeting on the bill. He came with a group of senior officials from the White House, State, and Treasury. “Good laws are made with us working together,” Shiffman told them. “We don’t want to fight you.” Shiffman’s words rang hollow. Nothing happened. “The meeting did not go well. There was a lot of hostility,” Shiffman says. Still, the administration, Mara Rudman says, knew that it had to deal with the senators and the families working with them. While the White House appeared uncooperative to some, she says, there was an underlying effort to search for a solution. Part of the reason was that the Mack-Lautenberg bill enjoyed broad support in both the Senate and the House. And the administration’s lobbying efforts on behalf of its position were going nowhere. Members found the administration’s reasoning obtuse and legalistic, especially when compared with the plight of the families suing Cuba and Iran. “These were not arguments that can keep votes with you on the House and Senate floor,” Rudman says. Making it harder for Clinton officials was the president himself. By all accounts, Clinton was personally touched by the families’ situation. He had a daughter close in age to Alisa Flatow. He had pledged initially in 1996 to help the Brothers to the Rescue families with their cause, and still seemed empathetic. Flatow had met with Clinton at the annual prayer breakfast in Washington in February 1999. He, Clinton, and Sandy Berger talked in a hallway at the Washington Hilton Hotel for several minutes. “I was impressed,” Flatow says. “He showed more than a passing knowledge of what was going on.” A SEAT AT THE TABLE Convinced that Mack and Lautenberg had the votes in Congress to pass their bill as it was, the White House needed to temper the bill’s language. Eizenstat became the White House’s point man for the negotiations. On June 30, 2000, at a White House ceremony, Eizenstat took Mack aside and told him he had a significant proposal to make. Eizenstat suggested paying the families a small percentage of the compensatory damage portion of the judgments. In doing so, he said, the foreign assets would not be touched. Instead, the families would be paid out of appropriated monies — taxpayer funds. Mack said, “You can’t be serious.” But Eizenstat was. And over the next several weeks, he would fine-tune the proposal, increasing the amount of money each time. And each time he did so, the senators and the families rejected it. Kleinman, the Washington lawyer for the Brothers to the Rescue families, says the families never wanted taxpayer money; they wanted the Iranian and Cuban governments to suffer financial harm. They wanted to make terrorism expensive. “It would have been the equivalent of the terrorists winning twice,” says Kleinman, a partner with Greenberg Traurig. Flatow is even more direct. “The purpose was to buy the people off,” he says. “They wanted to give us pure taxpayer dollars. We wouldn’t stand for that. If you don’t make it expensive for the Iranians to continue sponsorship of terrorism, then it’s a mockery.” Mack’s office had decided to exclude the families from negotiating directly with the administration. So Kleinman and the families never directly met with Eizenstat. While Flatow’s lawyer, D.C. sole practitioner Steven Perles, met with Eizenstat several times, the majority of the negotiations were handled through Lautenberg’s office. “I wanted desperately to be at the table,” Kleinman says. The families vowed to avoid making separate deals with the administration on their own behalf. Because Iran’s assets were tied to disputed proceeds from the sale of U.S. military equipment to Iran decades ago — and because the $400 million in that account was the subject of ongoing litigation in the World Court at The Hague between the United States and Iran — the administration took a harder stance on the Iranian assets than on the Cuban ones. “At one point, it became clear that the Cuban families were going to have a much easier time of it,” Mack says. “I told them at the time I was not going to split it. I didn’t want to end up making a deal to take care of the Brothers to the Rescue families and leave Flatow out of it.” Eizenstat was equally adamant that the military sales account couldn’t be touched. “Defense and State were completely off the wall on that,” he says. Negotiations dragged on. Mack recalls taking conference calls involving Eizenstat and Redman while standing on the floor of the Republican National Convention in Philadelphia. But after the senators had rejected Eizenstat’s offer involving taxpayer monies again and again, matters seemed to be at an impasse. But the political climate was changing. Clinton was leaving office, and his Democratic heir-apparent, Vice President Al Gore, had become locked in a tight struggle with then-Texas Gov. George W. Bush. One of the fiercest battlegrounds — as was proved after the election — was Florida. There, with its substantial Cuban and Jewish communities, the administration’s actions were a hot-button issue. Spanish-language radio stations in Miami had been stoking the fires of the Brothers to the Rescue cause for months. And the administration was already in hot water with Cuban-Americans because of the Elian Gonzalez affair. That further strengthened Mack’s hand. If Clinton were to veto his bill, Senate Majority Leader Trent Lott, R-Miss., and other Republicans would seize upon it as a campaign issue and accuse Clinton and Gore of being soft on terrorism. Flatow was beating the drum in New York as well, attempting to put pressure on Hillary Clinton’s New York Senate campaign. Hillary Clinton and Flatow met in December 1999 at a meeting of an Orthodox Jewish organization in New York City. Shortly thereafter, she made a public statement in support of Flatow’s cause, and Flatow kept communicating with her campaign throughout 2000. In addition, Sen. Joseph Lieberman, D-Conn., a co-sponsor of Mack’s bill, became Gore’s running mate. Today, Flatow believes that, ultimately, it may have been a “political decision” to cut a deal with the families. “You were looking at a lot of Jewish and Cuban votes,” he says. But the Clinton administration’s Mara Rudman says that Hillary Clinton was never involved in the matter. “That’s simply not accurate,” Rudman says. “I would expect that Mrs. Clinton heard from the victims’ families — so did many sitting members of Congress.” Sen. Clinton could not be reached for comment. It was an old hand of Hillary Clinton’s who would cement the deal between the senators and the families. In the fall of 2000, the White House replaced Eizenstat as lead negotiator with White House Budget Director Jack Lew. As a White House lobbyist, Lew worked with Hillary Clinton on health care reform efforts. “Jack had a very clear sense of what the president wanted,” Rudman says. The move was viewed by the families as a tremendously positive sign. Lew’s reputation was that of a troubleshooter, a “closer” who got deals done. Even more important, he was the money man. “This had been going on for a long time with the same players,” Lew says. “Sometimes, you need to bring a new player in. I had the ability to make something work or not work.” Lew entered into high-level negotiations with Mack and Lautenberg personally. In October, what Lew calls “a classic compromise” was reached. The administration agreed to redress the families’ compensatory damages, but refused to pay for the punitives. Under the deal, the Brothers to the Rescue families would be paid $97 million of their $187 million judgment, and the money would come out of frozen proceeds that several American long-distance companies owe the Cuban government. The Iranian situation was more complicated. Because much of the Iranian assets was part of a dispute in The Hague, the administration convinced Flatow and the other families to accept part of their $213 million in appropriated monies, the very taxpayer funds that Flatow had opposed. “That bothered me a lot,” Flatow says. But Lew says that the United States now will simply stand in the same shoes legally as the families and become a creditor. The U.S. has, in essence, fronted money to the families in exchange for the government’s right to collect the judgment from Iran at some future date. If and when relations are normalized with Iran, the U.S. will withhold a portion of the money to be returned to Iran. “There was an element of justice involved,” Lew says. “We tried to reflect that. It couldn’t be done without regard to dollars or the impact on foreign policy.” The Iranian government has already condemned the payments. For Flatow and Perles, that feels like justice. “It doesn’t matter,” Perles says. “As long as the Iranians believe it’s their money.” And while the Flatows and the other families have been paid, future claimants against Iran, Cuba, or other rogue nations will have to petition current and future administrations for similar help — and can only hope they receive the same kind of muscle that Flatow and the Brothers to Rescue families did. “There are,” Rudman says, “going to be other families knocking on the door.”

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