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Under Secretary for Political
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European and Eurasian Affairs, Other Releases
(2007)

Property Restitution in Central and Eastern Europe
Bureau of European and Eurasian Affairs
Washington, DC
October
3, 2007

Introduction

During World War II, the
Nazis seized property, real and movable, from organizations and
individuals which the Nazi regime was persecuting -- Jews, members of some
Christian organizations, Roma, homosexuals, and others. Much of that
property in Western Europe was returned during the post-war period --
under occupation law in areas occupied by the Allies, and under the laws
of individual countries. This was not generally possible behind the Iron
Curtain, where the newly-established communist governments simply took
over property seized earlier by the Nazis. Those governments also
frequently confiscated additional property from their own citizens.

The collapse of communism in 1989-91 made it possible
to restitute property in the former Iron Curtain countries. Many countries
enacted legislation to provide for the restitution of both private and
communal property. (Communal property is property previously owned by
religious and other organizations. It includes churches, synagogues,
community halls, parochial schools, medical facilities, etc.)

The United States has strongly supported efforts to
restitute to rightful owners property confiscated by the Nazis 1933-45 and
by the subsequent communist governments of Central and Eastern Europe.
Positive action on property issues was one of the criteria used to judge
the progress of countries that aspired to North Atlantic Treaty
Organization (NATO) membership. The European Union (EU) also recognizes
the relevance of property issues in applicant countries.

A successful property restitution program is an
indicator of the effectiveness of the rule of law in a democratic country.
Non-discriminatory, effective property laws are also of crucial importance
to a healthy market economy.

We recognize that in rem property restitution may not
be possible in all cases. Payment of compensation is the obvious
alternative.

Property restitution is often complicated and
controversial. Changing the ownership and use of buildings and land from
one party or purpose to another can cause major disruptions that already
economically challenged countries can ill afford. There is no single
system of property restitution laws and procedures that can be applied to
all countries. In encouraging restitution, the U.S. government bears in
mind the following considerations:

Restitution laws should govern both communal
property owned by religious and community organizations and private
property owned by individuals and corporate entities.

To document claims, access to archival records,
frequently requiring government facilitation, is necessary. Reasonable
alternative evidence must be permitted if archives have been destroyed.

Uniform enforcement of laws is necessary throughout
a country.

The restitution process must be non-discriminatory.
There should be no residence or citizenship requirement.

Legal procedures should be clear and simple.

Privatization programs should include protections
for claimants.

Governments need to make provisions for current
occupants of restituted property.

When restitution of property is not possible,
adequate compensation should be paid.

Restitution should result in clear title to the
property, not merely the right to use the property.

Communal property should be eligible for
restitution or compensation without regard to whether it had a religious
or secular use. Some limits on large forest or agricultural holdings may
be needed.

Foundations managed jointly by local communities
and international groups may be appropriate to aid in the preparation of
claims and to administer restituted property.

Cemeteries and other religious sites should be
protected from desecration or misuse before and during the restitution
process.

The United States has been encouraged with the
progress many countries have made on this difficult, complex and
frequently controversial issue. Still, there is a great deal of work to be
done in this area. Some countries still do not have property restitution
laws. Others have laws in place but have found it difficult to administer
existing laws in a non-discriminatory manner. Achieving passage and
effective, timely implementation of restitution laws and procedures is
both a critical indicator of rule of law in a democratic society and a
crucial feature of a market economy.

Country-by-Country Summary of Property
Restitution in Central and Eastern Europe, October 2007

Bosnia and Herzegovina

No state-level law on restitution currently exists.

Municipal and cantonal governments dole out
property as political favors.

Inhibiting factor: Cost of Restitution.

The pre-World War II Jewish population
of Bosnia and Herzegovina (BiH) numbered approximately 14,000, of whom
only 2,000 survived. Prior to the 1992-1995 war in Bosnia, only 1,500 Jews
remained in Bosnia and Herzegovina, and over the course of that war 500
fled to Israel, leaving the current Jewish population of BiH at about
1,000. The majority, 700, live in Sarajevo and about 300 reside in smaller
communities in Mostar, Tuzla, Zenica, Banja Luka and Doboj.

Bosnia's current outstanding debt is a major
inhibiting factor in considering any restitution program. In addition to
restitution, BiH has yet to resolve three major categories of internal
debt: frozen foreign currency accounts, debts of formerly state-owned
companies, and war damages claims from the 1992-1995 conflict. These three
categories alone are estimated at 120 percent of GDP. BiH also has
external debt amounting to approximately 20 percent of GDP. In dealing
with its internal debt, BiH must comply with budgetary guidelines
established by the International Monetary Fund.

Private Property

In the spring of 2007, the Constitutional Court
declared unconstitutional the Law on Changes and Amendments to the Law on
the Sale of Nationalized Apartments enacted in 2006. The law provided that
tenancy rights holders of nationalized apartments (i.e. people assigned to
apartments that were nationalized by the former Yugoslav Republic in or
after 1948) could buy the apartments. Earlier owners would be given
"compensatory apartments" from the pool of unsold and unoccupied
apartments that are still state-owned. Applications were due six months
after the effective date of the Law.

The law contained an exemption for apartments
previously owned by vakufs (Muslim endowments) or religious foundations
(zaduzbine). This exemption only benefits the Islamic community.
Apartments owned by these religious foundations could only be sold with
the foundation's written consent. If the foundation refuses to sell,
tenancy rights holders will receive one of the "compensatory apartments."
The compensatory apartments are generally located on the outskirts of town
in newer neighborhoods; the nationalized apartments tend to be much more
valuable real estate in city centers. Implementation of this program would
be extremely difficult.

Communal Property

The country's four traditional religious communities
(Muslim, Roman Catholic, Serbian Orthodox, and Jewish) all have extensive
claims on property that was nationalized after World War II.

The 2003 State Law on Religious Freedom and Legal
Position of Churches and Religious Communities provides religious
communities the right to restitution for expropriated property "in
accordance with the law". A special multiethnic restitution commission
completed its mandate and delivered a draft restitution law to the Council
of Ministers in early 2007 for approval. As of mid-2007, however, no
action had been taken. Bosnia's two sub-state entity governments have not
made any real attempts to deal with this issue. In the absence of a
specific restitution law, the return of former religious properties
continued on an ad hoc basis at the discretion of municipal officials.
Local politicians often used property restitution as a tool of political
patronage, leaving religious leaders dependent on politicians to regain
property taken from religious communities.

The Jewish and Muslim communities have asserted
historic claims to many commercial and residential properties in Sarajevo
while the Catholic community maintained a large number of similar claims
in Banja Luka. The Jewish community has not benefited from the current ad
hoc system due to its small population and lack of political connections,
and maintains that it has not received any property from municipal or
cantonal governments since the current system of government was
established in 1995. At one point, Sarajevo Canton was considering
returning the building formerly owned by the Jewish charity La
Benevolencija, which currently houses the Cantonal Ministry of Interior
offices, but this remains a pending matter.

The Jewish community completed an extensive survey,
including legal documentation, of properties formerly owned by Jewish
institutions and organizations in May 2005. The community is prepared to
file claims as soon as a state-level restitution law is passed. Most
Jewish families with individual claims are waiting for the legal framework
to be established before deciding how to pursue their claims.

The Jewish community favors in rem or natural
restitution (return of the original land and/or property) but might be
willing to accept cash compensation if in rem restitution is not possible.
In the late 1990s, coupons were distributed by the state to many rights
holders of formerly socialized properties. The coupons allowed the holders
either to purchase socially owned apartments in which they had tenancy
rights or to buy shares in state-owned companies. The rights subsequently
proved to be nearly worthless.

The Jewish community is seeking the return of four
categories of property:

Communal property formerly owned by Jewish
institutions and organizations.

Individually owned property.

Heirless property, i.e. the entire family was
killed and there are no direct heirs.

Property that was forcibly "donated" to the
Yugoslav state in 1948-49. When the state of Israel was created, Jews
wishing to emigrate had to "donate" their property to the state
government in order to obtain the necessary exit visa.

In May 2007 the Islamic community began a second round
of proceedings against Banja Luka seeking damages of approximately $1.1
million for the wartime destruction of mosques in that city. An
out-of-court settlement failed when the city refused to admit guilt as
requested in the original suit filed in2000.

In recent months, the municipality of Travnik
partially complied with a 2003 decision by the Human Rights Commission of
the Constitutional Court ordering the municipal government to relocate a
public school housed in a building formerly owned by the Catholic
archdiocese. Only half of the building was returned. The court ordered the
public school to move by July 2006 but funding for a new school building
has not been allocated, and half of the building has remained in use as a
public school.

Bulgaria

Most private property claims have been settled.

A Government Commission made recommendations in
2006 to resolve outstanding communal property
claims.

Private Property

Bulgaria was one of the first Eastern European
countries to pass private property restitution legislation. In contrast to
other former communist countries, Bulgaria did not generally nationalize
land, but instead nationalized businesses using the land while owners
retained title to the land itself. Current restitution law stipulates that
both Bulgarian citizens and non-Bulgarian citizens are eligible to receive
property confiscated during the fascist and communist periods. A
successful claimant who is not a Bulgarian citizen, however, must sell the
property. Only Bulgarian citizens can receive restituted forest and
farmland. Most private property claims have been resolved.

Communal Property

NGOs and certain denominations, including the
Bulgarian Orthodox Church, the Catholic Church, the Muslim community, the
Jewish community, and several Protestant churches, claim that a number of
communal properties confiscated under the communist government have not
been returned. In this category is a Muslim community claim for at least
17 properties. The Catholic Church claims six buildings in Sofia, three
buildings in Plovdiv, several buildings in other towns, and three
monasteries. In addition, the government reportedly retains properties of
several Protestant groups. The Congregational Church, for example, has an
ongoing dispute with the municipality over a building in Plovdiv.

In the spring of 2006, the Government appointed a
commission to examine the status of several properties claimed by Shalom,
the Bulgarian Jewish community organization. These properties had been
under discussion between Shalom and the Government for more than a decade.
One property that was not on the commission's agenda was the property on
which the Rila Hotel is situated. A court ruling in early 2006 rejected
the long-contested claim of the Bulgarian Jewish Organization, Shalom.

In regard to the other properties claimed by Shalom,
the Commission recommended that alternate property be identified to turn
over to Shalom to replace a synagogue and rabbi's residence in Varna. With
respect to a Sofia hospital restituted to Shalom in 1997 and leased to a
state hospital, the Commission suggested speeding the process of finding
suitable quarters for the hospital and transferring six rooms of the
existing hospital to Shalom. Despite the Government's recommendation,
however, the hospital's management, which ceased rental payment in 2002,
has neither transferred the rooms to Shalom nor has it agreed to a date
for vacating the premises in the future.

In 2003, the government restituted to Shalom all but
the top two floors of the building at 9 Saborna Street in Sofia. After
confiscating the building, the government added the top two floors, which
were therefore not eligible for restitution. In 2007, the government
decided to gift the top two floors to Shalom.

A central problem facing all claimants of communal
property is the need to demonstrate that the claiming organization (or its
legitimate successor) is the organization that owned the property prior to
September 9, 1944. Destruction of records during the war and the effort by
some groups to conceal ownership of assets because of communist hostility
to religion have complicated the documentation of ownership.

Croatia

Stalled legislation slows pace of private property
restitution.

Communal property claims remain largely unresolved.

Private Property

Due to Croatia's turbulent past, there is a large
amount of disputed property throughout the country. Croatia passed a
property restitution law in 1990, and subsequently amended that law in
1991 and 1993. Implementation of the law continues to proceed very slowly.

The 1996 "Law on Restitution/Compensation of Property
Taken during the Time of the Yugoslav Communist Government" prohibited
non-Croatian citizens from making claims. But in a 1999 ruling, the
Constitutional Court struck down six clauses deemed to discriminate
against foreigners. After a long delay, the Croatian parliament in July
2002 amended the law to extend to foreigners the right to claim
nationalized property or receive compensation, provided that Croatia and
the claimant's home country have concluded a bilateral agreement on the
issue. The amended law pertains to the communist era only and not to the
1941-45 period of rule by the Nazi-allied Ustashe regime, nor to the
period of civil unrest after the breakup of Yugoslavia.

The law initially created a six-month period from July
2002 until January 2003 in which non-Croatian citizens were eligible to
file claims. Croatia subsequently waived that deadline after determining
that it does not have an appropriate bilateral agreement with the U.S. or
any other country that would allow non-Croatian citizens to file claims.
The government did not provide any official response to U.S. requests
during 2004 and 2005 to negotiate such an agreement. In late 2005, Croatia
concluded an agreement with Austria that would have enabled Austrian
citizens to apply for property restitution. That agreement was not
submitted for ratification.

In early 2006, the Croatian government informed the
U.S. Embassy that Croatia had decided it would not pursue further
bilateral agreements. At that time the Croatian government instead
proposed amending the 1996 law in order to allow foreigners to file claims
under the Act's provisions without the need for a bilateral or
international agreement governing the issue. Under the amendment,
foreigners would be given a six month period to file claims, and the law
would allow the inclusion of claims for property taken as early as 1941.
As of September 2007, that amendment had not yet moved forward in
Croatia's parliament, leaving non-Croatians still unable to apply for
restitution under the 1996 law.

A number of individuals, who were not U.S. citizens
when their claims against Croatia arose but have since become American
citizens, are among those foreigners with outstanding property claims.

Two previous U.S.-Yugoslav settlement agreements
compensated many claims by American citizens. The first agreement
pertained to property expropriated between 1939 and 1948. The second
agreement, entitled the "Agreement between the USG and SFRY Regarding
Claims of US Nationals", became effective on January 20, 1965 and covered
the years from 1948 to 1964. Both agreements applied to claimants who were
U.S. nationals at the time the property was seized. The claims process
under these two agreements ended in the 1960s.

The issuance of permits by local governments for
construction on land with disputed titles complicates the restitution
process.

Communal Property

The government has worked separately with the various
religious communities to resolve communal property restitution issues.
Usually agreements between the government and the individual communities
govern the communal property restitution process. So far, agreements have
been signed with the Catholic, Serbian Orthodox, and Muslim communities,
but not with the Jewish and Baptist communities. The government maintains
that 19 percent of all communal property restitution claims have been
resolved.

The government employs three methods to restitute
communal property to religious communities: natural restitution (in rem
restitution of the actual property that was taken), replacement
restitution (transfer of like-kind property when the original property
cannot be restituted), and monetary compensation.

Of all the religious communities, the Catholic Church
is the largest holder of property. In 1998, the government signed a
concordat with the Vatican that provided for the return of all Catholic
Church property confiscated by the communist regime after 1945. This
agreement stipulates that the government would return seized properties or
compensate the Church where return is impossible. Some returnable
properties have been restituted, but there has been no compensation to
date for non-returnable properties. In April 2003, the Catholic Church
specifically requested the restitution of 43 properties, but three years
later only a few of those properties had been restituted. Many claims met
resistance from local authorities.

In exchange for nationalized property, the Church took
over a former hospital building in Osijek in June 2004 and in September it
renounced claims on its building used by the University in Rijeka in
exchange for another University building. In 2006, the Roman Catholic
Church received eight separate properties in restitution proceedings. A
Government offer of a 25 percent stake in the Croatia Osiguranje insurance
company as compensation for unreturned property remains under negotiation.

The Serbian Orthodox (SPC) community filed hundreds of
requests for the return of seized properties, but the community has
received only ten percent of what it claimed. An agreement between the
Orthodox community and the government established a commission to address
property claims. Several properties at issue in Zagreb are the subject of
court cases, which take many years to adjudicate. In 2004 one building in
Karlovac was returned, which housed County offices. Return of forests and
arable land is particularly slow.

The Serbian Orthodox Church held three meetings with
government representatives on restitution issues in 2007 but the results
were minimal. Early in 2007 Metropolitan Jovan Pavlovic asked both the
U.N. High Commissioner for Refugees and the Organization for Security and
Cooperation in Europe to propose changes to the 1996 property restitution
law. No further action has been taken.

SPC officials were particularly concerned about the
lack of progress in restitution of several valuable business and
residential buildings in downtown Zagreb, most notably the Zagreb Cinema
building and several apartments which have been the subject of contentious
legal proceedings, some undeveloped land, as well as some arable land and
forests..

The Jewish community in Croatia before World War II
numbered approximately 35,000 to 45,000. Some 6,000 Croatian Jews survived
the war, and the community now has about 2000 members, more than half of
whom live in Zagreb. Although Jewish groups in Croatia have received some
of their claimed property in Zagreb, several outstanding claims remain.
For example, land in Vukovar where a synagogue was once located has been
returned to the Jewish community, but an estimated 20 additional Jewish
property claims are still pending throughout the country. The Jewish
community is in the process of negotiating an agreement with the
government to address property restitution, and other issues. The Jewish
community reported that the processing of its claims for nationalized
property has made no progress since 2005, with the exception of the 2007
return of a commercial property in Osijek. Other claims remained stalled
in court.

The Muslim community of approximately 60,000 has not
filed any claims. It is not clear whether the Protestant churches have
claimed any property.

Czech Republic

The Rychetsky Commission resolved several issues
including transfer of some 200 Jewish properties, listing of 7,500 art
works for potential restitution, and creation of an Endowment Fund for
Victims of the Holocaust.

Catholic Church property claims remain outstanding,
but modest progress has been made in the last year. A Church initiative
to swap its properties for annual rent paid by the state, and draft
legislation proposed by the Culture Ministry to this effect, is to be
finalized by the end of 2007.

Private Property

The first restitution laws, enacted in 1991, covered
confiscations during the period 1948-1989 and were primarily concerned
with private property, farmland, artworks and property of religious orders
and sports associations. A 1994 amendment (Act 116/1994) provided for the
restitution of property taken by the Nazis from Holocaust victims between
1938 and 1945. The amended law still required that private property
claimants be Czech citizens.

The citizenship requirement effectively disallowed
property claims by Czechs who became American citizens, since a 1928
treaty between the United States and Czechoslovakia banned dual
citizenship. Both sides agreed to abrogate the treaty in 1997. In 1999, a
new provision in Czech law ended the ban on dual citizenship for
Czech-Americans, allowing Americans to reapply for Czech citizenship. By
that time, however, the filing period for restitution claims had closed.
It is unlikely that there will be any additional change in the restitution
laws affecting Czech-Americans since much of the property claimed by
Czech-Americans has already been restituted to other family members who
remained Czech citizens.

The Czech government maintains that 97% of all private
property restitution claims have been resolved, but there is no way to
verify this independently. Many American claimants have maintained that
the Czech legal system has adjudicated their claims in a slow and, at
times, arbitrary manner.

Beginning in November 1998, a national commission
headed by Deputy Prime Minister Rychetsky reviewed property restitution
claims arising from the Holocaust. Following the commission's
recommendations Parliament, in June 2000, enacted legislation that
authorized the government to transfer approximately 200 additional
properties to the Jewish community and allowed individual claims for
formerly Jewish agricultural property.

The law also restituted to the Jewish community 70
works of art housed in the National Gallery and provided a process for the
restitution of an estimated 7,500 works of art in Czech government museums
and galleries to Holocaust victims and their heirs. Unlike previous Czech
restitution laws, the claimants of looted art held by state institutions
are not subject to a citizenship requirement. The Czech government has
created an internet site with information and photographs of the works. In
2002, Parliament extended the deadline for filing artwork claims to the
end of 2006 and, subsequently, has removed all filing deadlines.

In 2001, the GOCR and the Federation of Jewish
Communities (FJC) established a Foundation for Holocaust Victims. The
Czech government contributed $11.7 million (300 million Czech crowns) from
its National Property Fund to support compensation claims. One-third of
the fund is dedicated to help pay for properties that cannot be physically
restituted. Approximately one-third of the fund has been designated for
maintenance of communal properties, and the final one-third is designated
for the social and educational programs of approximately 2,500 Holocaust
survivors. By March 2006, the Fund announced that it had concluded all
payments for unrestituted properties, which totaled over $4 million, to
some 500 claimants residing in 27 different countries.

Communal Property

Progress in resolving outstanding communal property
restitution claims by churches remained slow, partially because of the
difficulty of verifying the title of hundreds of claimed properties. The
Social Democratic government in 1998 created two national commissions to
address church-state related issues and to develop legislation on the
return of income-generating property claimed by the Catholic Church and
property claimed by other churches. The Catholic Church is seeking around
700 buildings and 175,000 hectares of land; state and local authorities
hold most of these properties. These claims remain unresolved due in part
to the reluctance of the Catholic Church to provide a list of all the
properties to which it maintains it is still entitled.

In 2004, Culture Minister Pavel Dostal proposed using
existing laws on restitution to return some properties to the Catholic
Church. The Church rejected the proposal and in February 2005 the
Ecumenical Council of Churches put forth a proposal that the state pay
churches an annual rent of approximately 1 billion Czech crowns ($44
million) for a period of 50 years. According to the proposal, churches
would be prepared to be financially self-sufficient after the 50-year
rental period. Churches would then agree to give up their claims for
property (100 billion Czech crowns or approximately $400 million) and to
forego the current state subsidy covering the wages of the clergy. Little
progress was made until the elections in 2006, when the government created
a special commission tasked with drafting new legislation before the end
of 2007 regarding restitution of communal property. After consultations
with representatives of the Church, the commission agreed that the final
legislation would include elements of both physical restitution and
financial compensation.

Czech legislation does not allow the national
government to compel municipalities to return communal property in
accordance with national policies. Thus, the Jewish community has received
most of the communal property once held by the Czech national government
and the city of Prague, but some properties held by local authorities
remain unrestituted, including two properties in Brno currently controlled
by the Ministry of the Interior and the Ministry of Labor and Social
Affairs.

Estonia

Private property claims generally resolved.

Communal property returned.

Private Property

Private property owners who filed their claims before
the appropriate deadline have been able to reclaim their property,
irrespective of present citizenship. Title to heirless property passes to
the local municipal administration of the area in which the property is
located. The administration is free to sell the property or retain it for
its own use. Property restitution in Estonia was carried out under the
Principles of Ownership Reform Act that was passed on June 13, 1991, and
has been largely completed.

Communal Property

Most Orthodox Church properties, including those in
use by the Estonian Orthodox Church -- Moscow Patriarchate (EOCMP), were
under the legal control of the Estonian Apostolic Orthodox Church (EAOC).
The Government transferred seven properties to the EOCMP in 2005-2006, and
the three remaining properties in 2006-2007.

According to leaders of the Estonian Jewish community,
property restitution has not been an issue for the community, since most
prewar religious buildings were rented, not owned.

Hungary

Communal property restitution complete for Jewish
community, nearing overall completion.

Private property laws being implemented.

Jewish community is considering a proposal on
heirless property.

Private
Property

The 1991 law also allowed for partial compensation for
private property. Successful claimants could receive a voucher for up to
$21,000 as compensation for their confiscated property. The vouchers,
issued in lieu of cash payments, could be used to buy shares in privatized
companies or to buy land at state land auctions. According to government
statistics there were 1,431,740 claims, of which 1,263,033 were approved
for payment; 168,666 claims were denied. Payments in vouchers totaled HUF
81.02 billion. In addition, there were payments of HUF 3.77 billion for
the purchase of agricultural land. Many claimants maintain that
adjudicators delayed decisions and made arbitrary rulings on claims.

Under the current law, heirless properties devolve to
the state, rather than to the deceased's community. Data privacy laws and
limited access to archival resources hinder the research necessary to
document claims. The deadlines for filing claims for both private and
communal property are now passed.

Communal Property

Hungary's
restitution process began in 1991 with the enactment of a law enabling
religious organizations to apply for compensation for real estate
nationalized after January 1, 1946. Twelve major religious groups
submitted 8,373 property restitution claims; 1,897 claimants received
property, 2,695 claims were denied, 1,953 claimants received cash payments
and 1,027 cases were settled without government intervention.

A 1997 amendment allowed religious groups to apply for
a government-funded annuity as compensation for unrestituted properties.
Between 1997 and 1998, the Hungarian government signed compensation
agreements with several religious organizations (Catholic, Jewish,
Protestant and Orthodox) specifying each organization's government-funded
annuity, which was understood to represent the value of unrestituted
properties previously held by that organization. The specific amounts are
in the chart below:

Organization

Amount of Annuity

Properties Waived

Value of Waived
Properties

U.S.
$

Hungarian HUF

U.S.
$

Hungarian HUF

Catholic Church

9.2 million

2.3 billion

1150

168 million

42 billion

Jewish Community

2.4 million

608 million

152

54 million

13.5 billion

Calvinist Church

5.2 million

1.3 billion

392

26.6 million

6.65 billion

Lutheran Church

2.8 million

700 million

74

17 million

4.27 billion

Budai Serb Orthodox Church

179,000

44.9 million

2

3.4 million

848 million

Baptist Church

80,000

20 million

2

484,000

121
million

In 2005,
the government adopted a resolution making it possible for religious
groups to fast-track property restitution negotiations to close
outstanding claims by the end of 2006, rather than the previous target
date of 2011. Three religious organizations made use of this new
procedure, resulting in the settlement of a further 435 church properties
by March 2006. The Catholic Church resolved 430 claims with a value of
$112 million, leaving only three property cases outstanding. The
Confederation of Hungarian Jewish Communities (MAZSIHISZ) resolved its
final three outstanding claims and the Budai Serb Orthodox Church also
closed the restitution process by resolving its two outstanding claims.
Neither the Reformed nor the Lutheran Churches opted for the fast track
procedure. Between them and the Catholic Church a total of 310 property
claims remain to be settled by 2011.

In light of recent progress, the Hungarian Jewish
community considers the process of communal property restitution to be
settled. However, while the process was regarded as generally fair,
members of the Jewish community would like to see compensation paid for
the estimated $2 billion to $16 billion in heirless Jewish property
specifically excluded from the restitution process. The community, in
cooperation with the World Restitution Organization, is discussing a
proposal with the Hungarian authorities.

In early 2003, the Hungarian government concluded an
agreement with the Jewish community to increase compensation payments to
approximately $1,860 to Hungarians whose immediate relatives were killed
in the Holocaust or in Soviet forced labor camps. In early 2006 the
government adopted a law which reopened the window to apply for this
compensation which was increased to $2,162 to reflect inflation. The June
30, 2006 closing date was extended to January 31, 2007 by which time the
Central Judiciary Agency had received more than 97,500 claims from 60
countries. By mid-2007, the Agency had issued 10,500 decisions and
distributed $9.2 million (HUF 1.7 billion) to eligible applicants. The
original program-initiated during the mid 1990's-distributed $100 million
to about 130,000 recipients before being reopened.

Latvia

In November 2006, Parliament rejected a property
restitution bill that would have provided compensation for or the
restitution of communal and heirless property to the Jewish community.
The community and the World Restitution Organization are considering
alternative proposals.

Private
Property

Two 1991 laws provide for the restitution of
confiscated property, both private and communal, to former owners or
heirs. The law does not discriminate on the basis of citizenship or
residency. In most cases, municipal authorities make the final decision on
property restitution; if they deem a property non-returnable, they may
offer alternative property or compensation in the form of vouchers.
Claimants, however, may be reluctant to accept alternative property
because of the difficulty in establishing comparative values. Claims for
private property occupied by economically productive facilities have been
particularly difficult to resolve.

Communal Property

In November 2006, the Government of Latvia introduced
legislation to return to the Jewish community property owned by the
community prior to World War II, or to provide compensation if return of
the property was not practical. The legislation would have also provided
compensation to the community for property belonging to individuals known
to have died without heirs during the Holocaust. The legislation contained
a list of over 200 properties which the Jewish community and the
government agreed should be returned, or for which compensation should be
paid. Although the newly installed Government supported the legislation,
the parliament failed to approve the legislation in first reading. As of
September 1, 2007, the government had not made a decision on how it wishes
to proceed on this issue.

Until now, Jewish communal property restitution had
been limited to the return of religious properties to the small observant
community, but not to the significantly larger non-observant community.
The observant Jewish community has received 16 religious properties and
compensation for two others.

Prior to World War II, the Jewish community of over
100,000 held 72 synagogues and 136 preaching houses. Approximately 70,000
Latvian Jews died in the Holocaust.

Non-Jewish communal property confiscated during World
War II has generally been returned, although some claims remain
outstanding.

Lithuania

Lack of alternative property with which to
compensate claimants delays private property restitution.

Government developing communal property law.

Private Property

The Lithuanian government has restituted to private
claimants most of the property that can be returned. Resolution of the
remaining private property claims will require the identification of
alternative property or the payment of compensation, estimated at
approximately 500 million USD (see below for details). The GOL-established
deadline for paying compensation for land, forest, and bodies of water is
2009, and 2011 for houses and apartments.

Under the current program the Lithuanian Finance
Ministry may pay compensation only to Lithuanian citizens, but citizens
qualify regardless of their place of domicile. Until recently, dual
citizenship was not recognized for ethnic Russians, Poles, and Jews who
emigrated from Lithuania to a country considered an ethnic homeland. For
example, Lithuanian Jews who emigrated to Israel or Lithuanian Poles who
emigrated to Poland lost their Lithuanian citizenship. This was challenged
in the court system. The Constitutional Court ruled in 2006 that,
according to the Constitution, dual citizenship should only be allowed in
limited cases. There is widespread popular support for dual citizenship
and there may be a referendum to amend the constitution. For now, however,
those who had dual citizenship may retain it, but under current law it
will only be allowed in special circumstances.

Citizenship limitations coupled with near
extermination of the Lithuanian Jewish population during the Holocaust
means that the vast majority of the thousands of private properties owned
by Lithuanian Jews prior to the Soviet and Nazi occupations were never
restituted.

The GOL-established deadline to submit applications
for property restitution was December 2001. The GOL's deadline to prove
kinship to the original owner was December 31, 2002. During the
application period, from 1991 through 2001, the Lithuanian government
received approximately 9,500 claims for private houses and over 57,000
applications for the return of land. In March 2002, the Parliament amended
the restitution law to provide that restitutable land not being used for
public purposes and located in urban areas must be returned to its former
owners.

The Government is legally obligated to compensate by 2009
private land owners whose land will not be restituted in kind. The
Government is obligated to restore ownership rights to or to compensate
house or building owners as well as compensate religious communities by
2011. The total obligation of the state is estimated at 2.3 billion litas
(approximately 0.9 billion USD). Through January 1, 2007 the Government
allocated 1.6 billion litas (0.6 billion USD) for the above mentioned
compensations. Approximately one-third of allocated funds (507 million
litas; 200 million USD) comes in the form of shares in large, state-owned
energy, telecom, and shipping companies.

For 2007, the national budget provides 171 million
litas (68.4 million USD) for compensation in relation to land restitution,
and 72 million litas (28.8 million USD) for restitution of property rights
to house owners and compensation to religious communities. Of these 72
million litas, religious communities will receive 5.3 million litas (2.1
million USD). In 2006, compensation to religious communities amounted to
15.6 million litas (6.2 million USD), 3 million litas (1.2 million USD) in
2005, and 1.6 million litas (0.6 million USD) in 2004.

Communal Property

A 1995 law permits only registered religious groups
(as opposed to secular groups) to apply for the restitution of religious
property. Several religious groups received properties. The Evangelical
Reform Church as well as the Jewish community assert that many of the
properties they held prior to WWII have not been restituted. From 1991 to
1996, Jewish communities claimed and received a total of 28 buildings,
mostly synagogues (three in Vilnius, five in Kaunas and the balance in
small towns).

In June 2002, a government commission, comprised of
cabinet ministers, commenced a review of Jewish communal property
(property owned jointly by the Jewish community, but not considered
"religious" property and, thus, not eligible under the earlier religious
property restitution process). Lithuanian and international Jewish groups
developed a list of unrestituted Jewish communal properties throughout the
country and submitted the list to the Government. These Jewish
organizations formed a foundation to assist in managing restituted
property and in aiding Jewish citizens in pursuing claims.

In September 2002, the government drafted amendments
to the existing property restitution law. The amendments would change the
1995 law to broaden the definition of religious property to include Jewish
communal property. The amendments would not change the current restriction
that prohibits religious groups from receiving restitution for property
without buildings. Similar amendments were considered again in early 2006,
but progress was slowed by the collapse of the governing coalition. There
are ongoing discussions between Jewish groups and the Government about the
possibility of introducing communal property restitution legislation to
Parliament in the fall of 2007.

In September 2002, the Lithuanian Government approved
a plan to restore parts of the historical Jewish quarter in Vilnius. Plans
included the restoration of commercial buildings, such as service offices
and workshops, hotels, and residential buildings. Originally scheduled for
completion in 2008, the project has received no funding since the initial
planning phase. The Vilnius municipal government has moved forward with
plans for a Jewish Cultural Center in the area and is working with the
local Jewish community on that and other potential projects. Overall,
however, the original, ambitious plans are on hold.

Macedonia

A 2000 denationalization law regulates private and communal property
restitution, and established the legal basis for a fund to compensate
for the property of heirless victims of the Holocaust.

Almost all communal property used for religious purposes has been
restituted.

The pace of private property restitution remains slow, often due to
lengthy bureaucratic procedures.

Private Property

A 2000 denationalization law regulates property
restitution to individuals whose property was confiscated by the Yugoslav
government. The law allows for physical property restitution where
possible or for the issuance of bonds equal to the market value of the
property. Restitution claims are often complicated because property has
changed hands many times or was developed since the time of seizure.

Lengthy bureaucratic procedures and political
influence within state institutions and the judiciary continue to slow the
pace of property restitution. A number of high-profile corruption cases in
the past year have revolved around privatization of property and
allegations of government officials abusing their authority for financial
gain.

The 2000 Law on Denationalization established a fund
to provide that regulates the restitution of heirless property for
Holocaust victims without heirs. The process of heirless property
restitution is slow, in large part because of the extensive documentation
required to show the chain of ownership and lack of heirs. In 2005 the
fund received a number of physical properties and over $2 million in bonds
from the government. The fund used this compensation to begin construction
of a Memorial Holocaust Center for the Jews from Macedonia. Construction
slowed in late 2006 as no further funds had been restituted since 2005.
The government authorized over $3 million in bonds to be issued as
restitution in the coming year, and is working with the Jewish Community
to reach a package agreement on all unresolved cases.

Communal Property

Virtually all religious buildings have been restituted
to their appropriate religious community. However, some religious
communities had other properties or extensive grounds that have not been
fully restituted. The Jewish community is the only religious group whose
community property has been fully restituted.

A number of communities cited greater difficulty in
obtaining ownership of previously owned property if the property was
located in a desirable location for investors or business owners, often in
urban areas.

The Islamic Community of Macedonia (ICM) claimed it
was not able to regain rightful use of several mosques that the Government
had agreed to return. In addition, the ICM alleged that the Government in
some cases delayed the process of restitution by selling or starting new
construction on disputed property and by questioning the historical legal
claim of the ICM to religious properties.

Montenegro

A private property restitution law exists, but
awaits implementation.

Communal property is covered by the same law and
procedures as private property.

Private Property

Many American citizens with claims in Montenegro
received compensation under two settlement agreements concluded between
the United States and Yugoslavia in 1948 and 1965. The 1948 agreement
pertained to property expropriated between 1939 and 1948; the 1965
agreement covered property seized between 1948 and 1964. The claims
process under these agreements ended in the 1960s. Under these agreements,
the Socialist Federal Republic of Yugoslavia (SFRY) paid a total of $20.5
million. The two agreements do not hold Yugoslavia or its successor states
harmless from additional claims of current American citizens. Only
claimants who were American citizens at the time their property was taken
were eligible for these programs.

Montenegro returned to rightful owners all
agricultural land and most other undeveloped land where the value of
post-expropriation improvements was not controversial. Montenegro passed a
restitution law covering all property in June 2002, but the Constitutional
Court in May 2003 declared 13 articles unconstitutional, making the law
impossible to implement. To our knowledge no valid restitutions occurred
under that law. On March 23, 2004, Montenegro passed a new restitution
law. The necessary sub-acts were passed with effect from January 1, 2005,
and the Restitution Fund (which will provide cash compensation when
necessary) came into existence March 1, 2005. The basic restitution policy
in Montenegro is restitution in kind when possible, and with cash
compensation or substitution of other state land when physical return is
not possible. The new law establishes a set claims period, after which no
further claims will be possible Claims are to be submitted to the
municipal Restitution Commission in which the property is located within
18 months after establishment of the relevant Commission. The first
Commission was established (in Kolasin) in May 2004; two municipalities
out of 21 (Zabljak, Kotor) have yet to establish Commissions. The
Restitution Fund increased in 2005 as privatization revenues grew and the
municipal commissions have rendered several first instance decisions. None
of these are enforceable at the moment, and they therefore have not yet
been fully implemented.

The American Embassy in Belgrade is aware of eight
potential claims in Montenegro involving American citizens. As in Serbia,
heirless property reverts to the state.

Communal Property

In post-WWII Yugoslavia, religious communities were
limited to possessing 10 hectares of land or 30 hectares of religious
sites of cultural importance. In Serbia, a separate law is to regulate
restitution of religious and communal property. In Montenegro, the 2004
restitution law covers communal as well as private property, with
religious endowments and other non-commercial legal entities given the
same rights as individual claimants.

In mid-2006, the Serbian National Assembly adopted the
Law on Return (Restitution) of Property of Churches and Religious
Communities. The law calls for the creation of a restitution agency to
adjudicate claims.

Poland

Government has not yet passed private property
legislation.

Communal property restitution well advanced, but
slowing.

Private
Property

There is no legislation governing the restitution
of private property in Poland. Parliament has made several attempts to
enact such legislation and did pass a law in early 2001, but President
Kwasniewski vetoed it because of its budgetary implications. The
legislation imposed a citizenship requirement that would have made most
American citizens ineligible to file a claim. In 2006 the Polish
government expressed its intention to draft and submit legislation
regarding the restitution of private property, but the legislation was not
enacted prior to the dissolution of Parliament for elections in October
2007. Some private property claimants have successfully acquired their
property through suits in Polish courts. While approximately 500 claims
totaling $183 million have been settled in this manner over the past 10
years, the Polish treasury estimates that 56,000 potential claims valued
at approximately $16.7 billion remain outstanding pending the
establishment of a formal claims process.

The Conference on Jewish Material Claims Against
Germany, frequently known as the Claims Conference, held its annual
meeting in Warsaw in February 2007 to press for urgent passage of a
private property restitution law with more lenient filing requirements.
The group met with high level officials, including the Prime Minister, who
made his first statement in support of compensation for private property
stolen by the Nazis and the communist regime. The proposal the prime
minister backed would provide 15 percent of the current value of property,
a figure some in the Claims Conference indicated was too low. Action on
private property restitution legislation now awaits the formation of a new
government following the October election.

In 2006, the U.S. Second Circuit Court of Appeals
ruled in the class action suit Garb v. Poland that, under the Foreign
Sovereign Immunity Act, the Government of Poland has immunity against
suits filed in U.S. courts to recover property seized by the post-World
War II communist government.

Communal Property

During the 1990's, Poland passed legislation to
provide for the restitution of property held before the war by Poland's
major religious organizations. The legislation established five separate
commissions, comprised of representatives of the government and the
affected communities, to process the restitution claims. At the end of
2006, approximately 2,959 of the 3,063 claims filed by the Catholic Church
had been concluded, with 1,420 claims settled by agreement between the
Church and the party in possession of the property (usually the national
or a local government); 932 properties returned through decision of the
commission on property restitution, which rules on disputed claims; and
632 claims rejected by the commission.

The Lutheran Church, for which the filing deadline was
1996, filed claims for 1,200 properties. Of these, 842 cases were heard,
228 of which were resolved amicably and 136 of which were restored.

A total of 486 claims were filed with the commission
by the Orthodox Church, of which 215 have been closed in full or in part.

Processing of Jewish claims remains active. Thousands
of Jewish communal properties served Poland's 3.5 million Jews before the
Holocaust. The law governing the restitution of Jewish communal property
went into effect in May 1997 and provided a May 2002 deadline for
restitution applications. Because of the large number of properties and
the small size of the current Polish Jewish community, the community
sought the assistance of the World Jewish Restitution Organization (WJRO).
A joint foundation between the Polish Jewish community and the WJRO, known
as the Foundation for the Preservation of Jewish Heritage in Poland
(FPJHP) was established in late 2001 and registered in early 2002. The
founding agreement provided that the Polish Jewish community would file
claims in certain geographic areas, and the FPJHP would do so in areas not
reserved for the Polish community. The Polish community filed nearly 2,000
applications by the deadline, and the FPJHP filed nearly 3,500 claims.
Four years after the filing deadline, fewer than 25 percent of the cases
had been resolved.

By the end of 2006 the commission had concluded 1,143
cases, of which 316 were settled amicably and 336 properties were
restored. The remaining cases are still making their way through the
system.

Many of the properties to be restituted are "heritage
properties," primarily cemeteries. The maintenance of these properties
represents a potential cost of considerable magnitude. The Foundation and
the community may sell properties not needed by the community in order to
meet these expenses.

Some observers have complained about the slow pace of
restitution and the reluctance of the government to return valuable
properties in some cases. In contrast, restitution of Jewish communal
properties appears to be progressing well in cities like Warsaw and Lodz
where local governments are supportive of these efforts. The laws on
communal property also do not address instances where those properties are
now owned by private third parties, leaving several controversial cases
unsettled.

Romania

Implementation of Law 10/2001 (private property)
continues at a slow pace.

Implementation of Law 501/2002 (religious property)
and Law 66/2004 (communal property) began late, and is proceeding
slowly.

Property fund not yet operational.

Greek Catholic Church claims remain unresolved.

Private Property

Romania did not pass formal property restitution
legislation until 2001 for urban dwellings (legislation was passed
regarding farm and forest lands in 1991 and 2000, respectively). For the
first decade following the fall of the Ceausescu regime, a series of court
decisions, laws and decrees governed the return of property seized during
World War II and under communist rule. These decisions, laws and decrees
were frequently contradictory and led to considerable confusion.

In February 2001, Romania enacted Law 10 to govern
private property restitution for properties confiscated during the
1945-1989 period. While this law provides a systematic approach to private
property restitution, it is complex and places a considerable burden on
claimants. Initially, the law provided an application period of just six
months. There was no notification program outside of Romania, so potential
claimants found it difficult to learn about the application process.

At the suggestion of the United States, the Romanian
government extended the deadline, first to November 2001 and then to
February 14, 2002. But the overseas notification program was not
implemented until late 2001, making it hard for claimants to meet the
application deadline. Law 10 does not allow for the restitution of
agricultural or forested properties, which were covered by laws 18/1991
and 1/2000. Nor does Law 10 cover the restitution of properties belonging
to religious communities or minority groups. Article 16 of Law 10, which
exempted properties used for public purposes (such as hospitals, schools,
kindergartens, theaters, museums, and other such institutions) from
restitution in rem, was amended by Law 247/2005 to allow the
restitution of such buildings. The rightful owners have the obligation to
let public and cultural institutions use the buildings as tenants for
three years, and health care and educational institutions for five years,
after the restitution of the buildings. The owners are exempted from
property taxes during this period and receive rent.

Law 10 required that applicants submit claims to
municipal authorities through a court having jurisdiction over the
property in question. This made it difficult for applicants who left
Romania at an early age or for heirs to know where to submit applications.
Despite these hindrances, about 202,000 claims were filed; of these,
120,000 claimants requested restitution in kind and 82,000 requested
financial compensation or other reparation measures. Only 38,400
applications were completely documented. The National Authority for
Property Restitution (ANRP) reported that approximately 97,000 claims had
been resolved by mid-2007.

The deadline for documenting claims was extended from
February 14 to July 1, 2003. In May 2003, the government published
reformulated implementing regulations. The late publication gave
applicants little time to comply prior to the July 1 deadline. These
regulations provide that individuals who "sold" their property to the
communist-era government in order to emigrate would not be compensated.
Claimants also had to submit official documentation showing that they did
not receive any compensation under prior claims agreements (such as the
1955 and 1963 U.S.-Romania Claims agreements).

In July 2005, the Romanian government passed Law 247
aimed at improving the property restitution process, clarifying and
simplifying procedures, establishing new deadlines for submitting
applications for the restitution of religious and communal property
(January 25, 2006), as well as of farm and forest land (November 30,
2005), and fines for officials who hindered the process. The 2005 law
eliminated some of the flaws of earlier property restitution legislation
that were repeatedly criticized, e.g., among others, it permits the
restitution of land on which now demolished buildings once stood, and
provides for compensation.

Law 247/2005 amended all the existing restitution
laws, i.e. law 10/2001, law 501/2002, law 66/2004, and the land
restitution laws.

Law 247/2005 eliminated the deadline (originally July
1, 2003) for the submission of documents supporting the applicant's claim.
Claimants can continuously submit newly obtained documents and proof of
ownership until a case is resolved.

Law 247/2005 also created a fund equivalent to Euros 4
billion ($5.3 billion) in registered capital to compensate owners whose
property cannot be returned. Payment for property that cannot be
restituted will be in the form of shares in a government-supervised
investment fund comprising 114 companies. As of September 2007, 2,457
claimants had received shares. These shares, however, cannot yet be
legally traded. As of September 2007, some 97% of the fund was still owned
by the state.

On June 28, 2007, the government adopted an ordinance
that should enable the fund to be evaluated and then listed on the stock
exchange by mid-2008. The ordinance also provides for cash payments in
lieu of restitution of up to about $215,000 (500,000 new lei), paid over a
two-year period. Larger claims are to be paid with stock in the property
fund. Other steps that have been scheduled for 2007 are the assessment of
the stock comprising the Fund's portfolio and, perhaps most importantly,
the selection of a firm with an international reputation to manage the
Fund. At the end of 2006, 31 different international firms were interested
in becoming the Fund manager.

Former owners criticize the Property Fund as being
only a means to delay further the compensation of property seized under
communist rule.

It is not clear how long it will take to adjudicate
claims or how transparent that process will be. Claimants reported that
local officials are reluctant to provide necessary documents and
frequently delay or refuse to turn over properties in which local
governments had an interest. Furthermore, some mayors charged with
adjudicating claims were reported to be pushing claimants to accept shares
in the fund instead of in rem restitution in order to avoid the
political and administrative difficulties associated with displacing
current occupants. There were also complaints that the central government
was inconsistent in imposing fines and other sanctions in such cases.

In numerous Romanian property restitution cases over
the past several years, the European Court of Human Rights has ruled in
favor of the former owners. There were at least eight such cases in the
first five months of 2007. In each case, the Court has ordered the
Romanian state to pay sizeable damages unless the buildings in question
were returned.

Communal Property

In late June 2002, Parliament approved Law 501/2002
governing the restitution of property to religious organizations. The law
covers buildings (such as schools and hospitals, but not houses of
worship) that the State confiscated from religious groups between March 6,
1945 and December 22, 1989. It did not cover the period between 1940 and
1945, when large numbers of Jewish properties were seized, nor does it
cover the restitution of Greek Catholic churches confiscated by the former
communist regime and now held by the Romanian Orthodox Church. Unlike Law
10, it covers only buildings that still exist and does not provide
compensation for buildings that were demolished. Under Law 501/2002,
religious denominations had requested restitution of 7,568 properties by
the original March 2, 2003 deadline. By the time the extended filing
period (January 25, 2006) lapsed, the number of applications reached
14,716, broken down as follows:

Orthodox Church

2,215

Roman-Catholic Church

1,203

Greek Catholic Church

6,723

Reformed Church

1,208

Jewish faith

1,918

Evangelical Church

1,133

Other denominations

303

Under Law 501/2002, by the middle of 2007, the Special
Commission for Restitution had restituted 599 of the 1700 buildings
claimed by Hungarian churches. However, the Hungarian churches were not
able to regain physical possession of many of these properties.

A foundation established by the Federation of Jewish
Communities in Romania and the World Jewish Restitution Organization to
follow restitution issues has received approximately 42 properties,
restituted by the four government acts passed between 1997 and 2000. The
Jewish community was able to take actual possession of only 36 of them.
Documenting ownership has been difficult for the foundation because of the
lack of access to archives. As of mid-2007, the Jewish community had
received only 51 of the 1,918 properties claimed under Law 501. For 16
other properties, the Jewish community will receive compensation. In
addition, under Laws 18/1991 and 1/2000, the Jewish community received 15
pieces of land in Iasi (sites of former synagogues and schools). Three
additional plots were returned to the Jewish community in 2005 and 2006,
but 18 other land claims remained unresolved.

In March 2004, Parliament adopted Law 66 covering the
restitution of properties that belonged to ethnic communities and were
confiscated between September 6, 1940 and December 22, 1989. Confiscation
between 1940 and 1945 was included at the suggestion of the Jewish
community. By the filing deadline-which was extended to January 25,
2006-2,154 claims were filed, 1,856 by the Jewish community alone. As with
Law 502, there is no provision for compensation for demolished buildings.
Actual restitution under this law began in 2006 and 156 claims were
resolved by June 1, 2007.

A 1990 government decree established a joint Orthodox
and Greek Catholic committee to address the issue of former Greek Catholic
churches. The committee met only sporadically in the 1990s and its work
has been at a virtual standstill since 2004. There were 2600 properties
(churches and monasteries) on the original list of Greek Catholic claims.
By the middle of 2005, the Greek Catholic Church had reduced its claims to
fewer than 300. The Greek Catholics report that only 16 churches have been
restituted as a result of the joint committee's work. The Orthodox Church
has continued to demolish Greek Catholic churches under various pretexts.

Of the 6,723 properties claimed by the Greek Catholics
under Law 501/2002, 103 had been returned by mid-2007. In eight other
cases, the Greek Catholic Church will receive compensation. Since 1989,
fewer than 200 churches have been returned to the Greek Catholics. The
Greek Catholic Church, however, did obtain an important cathedral in
Oradea in November 2005 with the help of interventions from the Prime
Minister and the Minister of Culture and Religious Affairs, and a
cathedral in Satu Mare in February 2006, after 16 years of lawsuits.

Lawsuits and protests by current occupants have
impeded the restitution of many properties to their rightful owners.

Russia

4000 communal property buildings returned.

Religious organizations continue to pursue claims.

Communal Property

Despite considerable progress in this area since 1991,
a number of religious communities remain concerned about unrestituted
religious property confiscated during the Soviet era. According to the
Presidential Administration, the Russian government's Restitution
Commission returned approximately 4,000 buildings between the time the
decree on communal property restitution went into effect in 1993 and March
15, 2001 when Prime Minister Kasyanov ordered the commission to cease its
activities.

Approximately 3,500 of the restituted buildings were
returned to the Russian Orthodox Church. Smaller numbers of buildings and
houses of worship were returned to non-Orthodox Christian, Jewish, and
Muslim communities. While the Russian Orthodox Church has had the most
success in securing restitution, the Ministry of Culture has not restored
to the Church full control over several of its most high profile
properties. For example, Moscow's Kremlin cathedrals (St. Petersburg's
Peter and Paul Cathedral, and Vologda's Archbishop's Courtyard) remain
state-run museums. Two large museum complexes -- Solovetskiy Monastery and
Ryazan Kremlin - have been returned. The Russian Orthodox Church continues
to claim 44 monasteries, 12,665 parishes and two million hectares of land.

The Federation of Jewish Communities of Russia reports
that federal officials generally have been cooperative in the community's
efforts to seek restitution of former community property; the level of
cooperation of regional and local officials varies from region to region.
One obstacle to restitution is the need to find new premises for
organizations currently housed in former religious buildings.

Examples of restitutions to the Jewish community
include a synagogue in Oryol in 2003, and in 2004-2005 a synagogue in
Vladivostok and school buildings in Rostov-on-Don and Orenburg. Even with
these modest successes, the Jewish community faces the same obstacles as
other religious communities in obtaining the restitution of properties
seized during the communist era. Some in the Jewish community assert that
only a small portion of the total properties confiscated under Soviet rule
has been returned.

The Moscow Diocese of the Russian Orthodox Church
(ROC) has been quite successful in restituting properties. The ROC now
owns more than 1400 buildings, compared to 130 in 1998. Property claims
for the ROC are legally complicated, since there was no separation of
church and state before the revolution. Most of the Orthodox Church
buildings that have been returned to the ROC were not considered ROC
property before 1917. The ROC was only entitled to use these buildings.
The ROC now owns only churches built, bought, or received after 1991.

The Roman Catholic Community reports 44 disputed
properties, most of which were used for religious services. While most
state-owned property has been returned, the community has had no success
with buildings that have been privatized. For example, an oil company
currently occupies the Saint Peter and Saint Paul cathedral in Moscow and
the Catholic parish is meeting in a former disco hall. The Church is
making some progress toward building a new Catholic Church in Moscow to
replace the cathedral. In Vologda, Catholic authorities have not succeeded
in achieving restitution of a pre-revolution church that now houses a
restaurant. In March 2004, Tula City Duma Deputies returned a church to
the local Catholic community. The church was officially given to the Tula
Catholic community in 1994, but the building was occupied by a forensic
medical practice until 2003.

The St. Petersburg Russian Orthodox Old Believers'
Community has not been able to re-obtain its church building, which Soviet
authorities confiscated in 1922, only 7 years after the community
purchased it. In a positive development,
an Old Believer community in Samara has regained its pre-Revolution
church.

The Russian
government has returned approximately 15,000 religious articles, including
icons, Torahs and other items, to religious groups. Many other religious
artifacts, however, remain in state museum collections.

Although Russia passed a law in 1997 proclaiming that
all captured foreign cultural objects from World War II were property of
the Russian Federation, the law permits the restitution of three important
categories of property: (a) objects that originally belonged to countries
that were themselves victims of Nazism; (b) objects that were the private
property of individuals persecuted by the Nazis on racial or political
grounds, and (c) cultural artifacts that belonged to churches and
religious organizations that did not serve the political of military
interests of the Nazis.

In 2005, Russia returned the Sarospatek library
collection to a Catholic educational institution in the Czech Republic. An
interagency council is reviewing Hungarian claims for archives. Two
American claims remain to be reviewed.

The international Chabad Lubavitch organization as
well as the U.S. Government has repeatedly sought return of the
Schneersohn Collection, a large collection of revered religious books and
documents of the Lubavitcher rebbes. The government has rejected this
request, maintaining that the Collection is part of Russia's cultural
heritage.

Serbia:

Private property restitution has not begun, pending
passage and implementation of necessary laws.

Communal property restitution law awaits
implementation.

Private Property

Many American citizens with claims in Serbia received
compensation under two settlement agreements concluded between the United
States and Yugoslavia in 1948 and 1965. The 1948 agreement pertained to
property expropriated between 1939 and 1948; the 1965 agreement covered
property seized between 1948 and 1964. The claims processed under these
agreements ended in the 1960s. Under these agreements, the Socialist
Federal Republic of Yugoslavia (SFRY) paid a total of $20.5 million. The
two agreements do not hold Yugoslavia or its successor states harmless
from additional claims of current American citizens. The agreements
provided access to settlement to claimants who were American citizens at
the time their property was taken. Under Serbian law, heirless property
reverts to the state.

The military conflict of the 1990s delayed
consideration of property restitution legislation in many of the former
Yugoslav republics. Serbia does not yet have restitution legislation.
However, a law providing for the registration of potential claims went
into effect on June 8, 2005. The law covers property taken through
confiscation, nationalization, agrarian reform, sequestration,
expropriation and other regulations that became effective after March 9,
1945. The legislation set a June 30, 2006 registration deadline, and
allowed deprived owners, their legal inheritors or legal successors to
register claims. According to the law, registering a claim for seized
property does not represent a request for restitution or compensation for
that property. The Embassy is concerned that the 1945 date may
disadvantage Jewish claimants who generally had property seized prior to
that date, and Jewish and Muslim groups have opposed this benchmark.

The most recent proposed draft law to govern the
restitution of private property was presented by the interim government in
May 2007, but was not accepted by the current administration. A Serbian
government working group will begin revising that latest proposed draft
law in early autumn 2007. The draft presented in the spring provides for
regional commissions to adjudicate claims, awarding in rem
restitution when possible and compensation in marketable bonds if the
property is being used for a public purpose or has been purchased in good
faith by an individual. Bond compensation would be limited to Euros 1
million per claimant and 1 million per property. The proposed draft law
also provides for consideration of claims dating back to April 6, 1941. A
number of claimants have objected to compensation in the form of bonds,
the limit of Euros 1 million per claimant, as well as a number of other
provisions in the draft law.

In addition to considering the various objections and
suggested modifications to the latest draft, the government working group
is also contemplating breaking the current proposed draft law into two
separate laws: one on privatization of urban construction land and the
other on general denationalization. Both could be approved by the end of
the year in the most optimistic estimates.

The Finance Minister has publicly estimated the value
of nationalized property in Serbia at between $60 billion and $150
billion, a daunting amount compared to Serbia's current total public debt
of $13 billion and $23 billion GDP.

Several U.S. citizens have raised ownership claims on
commercial properties that are in the process of being privatized. The
American Embassy in Belgrade is aware of 32 potential claims in Serbia
involving U.S. citizens. These claimants were not able to benefit from
previous legislation and/or bilateral agreements because they were not
U.S. citizens when their claims arose. These claimants often accuse the
Government of Serbia of delaying a restitution law until claimed assets
have been sold.

Serbian officials have expressed concern that
restitution would delay completion of privatization. Serbian law provides
that 5% of all privatization revenues must be placed in a compensation
fund for eventual restitution. The Embassy has raised restitution
repeatedly with officials at the municipal, republic and state union
levels, urging authorities to move ahead with a fair restitution law.
Several EU member state embassies have also become engaged on behalf of
their citizens.

Communal Property

In post-WWII Yugoslavia, religious communities were
limited to possessing 10 hectares of land or 30 hectares of religious
sites of cultural importance. In Serbia, a separate law is to regulate
restitution of church and communal property.

In mid-2006, the Serbian National Assembly adopted the
Law on Return (Restitution) of Property of Churches and Religious
Communities, seeking to expedite the restitution of property to Serbia's
religious communities. The law calls for the creation of a Restitution
Agency, which will adjudicate claims.

With the exception of the Igumanova Palace, which was
returned to the Serbian Orthodox Church by Milosevic as a goodwill
gesture, no church properties have been restituted in Serbia.

Slovakia

Majority of religious property returned.

Government and Jewish community agreed in 2002 on
restitution package for heirless property.

Private Property

Slovakia took over the laws passed by Czechoslovakia
in 1990 and 1991 for the restitution of Jewish and non-Jewish properties
confiscated by the communist regime. But those laws did not include
provisions for the disposition of property for which no heirs could be
identified. In April 2000, the government and the Slovak Jewish community
established a Joint Commission to discuss heirless property, among other
restitution issues. The commission consisted of Slovak government
representatives and ten Jewish representatives -- seven from the Slovak
Jewish community, including the Union of Jewish Religious Communities in
the Slovak Republic (UZZNO), two representing the American Jewish
Committee (AJC) and B'nai B'rith International, and one representing the
World Jewish Congress and the World Jewish Restitution Organization
(WJRO).

Following an agreement reached in the inaugural
meeting, experts reported that heirless Jewish movable property and real
estate, excluding agricultural lands, was valued at approximately 8.5
billion Slovak Crowns ($185 million). The Slovak Jewish community agreed
to accept ten percent of this amount, equal to 850 million Slovak crowns
($18.5 million), as payment for the unrestituted property.

In September 2002, the Cabinet agreed to this
proposal. Final negotiations between the government and UZZNO concluded in
July 2003. The entire amount has been deposited at the Slovak National
Bank. One-third of it was made available immediately due to the advancing
age of Holocaust survivors. The Jewish community will draw interest on the
account for 10 years before receiving the remaining principal. The
community intends to use the funds for compensation to some community
members as well as to fund social, educational, and cultural programs.

Communal Property

A 1993 law covers communal religious property. The
implementation of these laws led to the restitution of a majority of
eligible property throughout Slovakia, with a few important exceptions.

The Orthodox Church received six of its seven claimed
properties. The Catholic Church received nearly 90% of its claimed
properties; the remaining claims were denied since the properties were
undeveloped at the time of their confiscation but have since been
developed. The major obstacles facing Slovakia's outstanding restitution
claims are the government's lack of financial resources to pay
compensation, current tenants occupying restituted property and
bureaucratic resistance to specific claims.

The Reformed Christian Church continues to complain
that its restitution claims remain unresolved. Though acknowledging that
the new restitution law adopted in May 2005 has helped resolve some
complex claims, the Church maintains that its claims on approximately 70
properties that were owned by individual parishes before being
nationalized have not been addressed.

In 2005, Slovakia passed a law enabling registered
churches and religious communities to make a claim to agricultural land
and forests, as well as any administrative buildings or construction on
those sites, if the land was nationalized between May 8, 1945, and January
1, 1990 (in the case of the Jewish community, the start date is November
2, 1938). The filing deadline was April 30, 2006. Parliament also approved
a proposal declaring that after the April 30, 2006 filing deadline the
restitution of church and religious community property would be considered
complete.

Recent laws benefit mainly the Catholic Church. The
Jewish community had difficulty identifying additional properties, or the
funds with which to maintain any additional properties (many of which are
in disrepair).

In 1998, UZZNO won a ruling for the reimbursement to
the Slovak Jewish community of the Slovak Jewish deposit, the forced
deposit of Slovak Jewish money and gold into the national bank in 1940.
The deposit ($600,000) is being used for a retirement home in Bratislava
and a day care center in Kosice, both of which serve Holocaust survivors

Slovenia

Over 95 percent of private property claims have
been resolved; government studying how to advance restitution of Jewish
private property.

Some communal property returned; Jewish communal
property remains unrestituted.

Private Property

Slovenia passed and began implementing a law on the
restitution of property (the Denationalization Act) in 1991 soon after
independence. Court backlogs, a lack of trained judicial and
administrative personnel, amendments to the Denationalization Act, and
inadequate records of land ownership have slowed the processing of claims.
In recent years, the government has devoted additional resources in a
successful effort to accelerate the processing of claims. As of June 30,
2007, the government had completed processing 37,776 cases (95.4%) of the
39,617 property restitution claims filed.

Unresolved cases include those in which the courts
have not reached a final decision and those pending appeal. Claimants have
complained of a general lack of transparency and procedures that are
inconsistent with the law.

In summer 2007, the Government submitted to the
Parliament a proposed law that, if adopted, would further accelerate the
denationalization process by imposing strict deadlines on courts and other
administrative bodies hearing these cases.

Heirless property currently devolves to the state.

Communal Property

Under current regulations, communal property claims
are treated in the same manner as private claims, with the same rights to
appeal and compensation. The unresolved communal property claims of the
Catholic Church are currently being litigated in the Slovenian courts. In
July 2001, the Ministry of Agriculture returned over 8,000 hectares of
land in the Triglav forest to the Catholic Church. The Ljubljana
Administrative Court annulled this decree in May 2002, ruling that roads
built on the land were public goods and therefore not restitutable.
Following the annulment, the Minister of Agriculture stated that he still
expects to return to the Church all but about one percent of the land in
question.

The Slovenian Jewish community has never been very
numerous and remains small today, numbering approximately 150. The limited
population led to only a small number of Jewish communal property claims;
there has been no restitution of those properties to date. In October
2005, the Ministry of Justice created a new Department for Restitution and
National Reconciliation to study the issue of restitution of Jewish
communal and heirless properties.

In 2006, the government issued a tender for a research
institution to compile a historical inventory of heirless and communal
Jewish properties seized or nationalized after World War II. This research
is expected to be completed during fall 2007. The World Jewish Restitution
Organization (WJRO) is doing a separate study. The two sides plan to
compare the studies and then devise a solution to the communal and
heirless property issue.

Ukraine

Ukraine has no legislation governing the
restitution of private property.

Many places of worship have been restituted but the
resolution of more complex restitution cases remains
slow.

Private Property

Ukraine has no laws or decrees governing the
restitution of private property, nor has the government made any proposals
in this regard.

Communal Property

Ukraine has no state religion. The Ukrainian Orthodox
Church - Moscow Patriarchate (UOC-MP), Ukrainian Orthodox Church - Kyiv
Patriarchate (UOC-KP) and the Ukrainian Greek Catholic Church are the
predominant religious organizations. These churches can exert political
influence at both the local and regional levels, and most religious groups
allege that local governments discriminate in favor of the predominant
religion of the region.

Registered religious organizations are the only
entities permitted to seek restitution of property confiscated by the
Soviet regime, and restitution is generally limited to buildings and
objects immediately necessary for religious worship. A 1992 decree
commenced Ukraine's restitution program for religious buildings. In August
2007 the Interagency Commission on Restitution of Property to Religious
Organizations instructed the Ministry of Justice and State Committee for
Nationalities and Religions (SCNR) to draft a law on restitution of
property to religious organizations.

The slow pace of restitution was partly a reflection
of the country's economic situation, which limited funds available to
relocate occupants of seized religious property. Most groups asserted that
there was slow progress in the restitution of property. However, the SCNR
has now declared that the majority of buildings and objects in question
have been returned to religious organizations and that many of the
remaining properties for which restitution was being sought were
complicated by that fact they were occupied by state institutions, were
historic landmarks, or were previously transferred to private ownership.
The SCNR also noted that restitution claims frequently fall under the
jurisdiction of local governments. All major religious organizations
called on the Government to establish a transparent legal process to
address restitution claims.

In October 2006, with the urging of representatives of
various denominations, Prime Minister Viktor Yanukovych called for the
resumption of activity of the Interagency Commission on Restitution of
Property to Religious Organizations. The commission, established in 2002
but active only intermittently, resumed its work in March 2007. The
commission's primary goal was to return property to religious communities,
and it took 316 restitution cases under consideration. Some observers
expressed concerns about its effectiveness and the transparency of its
procedures. According to the government, 3, 600 religious properties and
more than 12,000 religious items were transferred-in ownership or in
usage-to religious organizations between 1992 and 2006. In July 2007 the
SCNR estimated that religious organizations of all denominations had 68.9%
of the required number of houses of worship. Between 1992 and 2004,
government funds and donations were used to rebuild or construct 4,398
places of worship. However, Jewish and Baptist groups have complained that
such funding has been allocated for Orthodox Church buildings only.

Intra-communal competition for particular properties
complicated the restitution issue for Christian, Jewish, and Muslim
communities. For example, the UOC-MP and UOC-KP have not resolved
differences concerning the Holy Trinity Church in Rokhmaniv Village in
Ternopil Oblast despite an August 31, 2006, ruling by the High
Administrative Court that overturned a 2005 resolution by the Ternopil
Region State Administration that parishioners of the two churches should
share the church on a rotational basis. On June 22, 2007, while commenting
on the events in Rokhmaniv, the Chairman of the SCNR stated that although
he hoped to see an end to the practice of various denominations sharing a
house of worship, the Government should not intrude into
interdenominational disputes.

Representatives of the UOC-KP complained that local
authorities in Kyiv ignored its requests for return of a former monastery
building at Tryokhsvyatytelska St. to the St. Michael's Monastery.

The Government has not transferred ownership of St.
Nicholas' Cathedral and a former residence of bishops in Kyiv to the Roman
Catholic Church. However, the Church was permitted to use the cathedral
for daily morning Mass, on weekends, and during major religious holidays.
Church representatives also expressed frustration about unrealized
restitution claims of buildings formerly belonging to St. Oleksander's
Church in Kyiv, which they stated were improperly privatized in the 1990s,
as well as in Chernivtsi, Dnipropetrovsk, Lviv, Mykolayiv, Sevastopol, and
Simferopol. The Government continued to refuse to facilitate the
restitution of Odesa's Roman Catholic seminary, which was confiscated by
the Soviet regime.

Ukrainian Greek Catholic Church leader Cardinal Huzar
told the press that authorities in Lviv had not returned its former
premises adjacent to the St. George's Cathedral in Lviv. Local officials
declared that the Government did not have the money to resettle more than
a dozen families residing there since Soviet times.

According to Bishop Bronislav Bernatsky, the
Government continued to refuse to facilitate the restitution of Odesa's
Roman Catholic seminary, which was confiscated by the Soviet regime.

Jewish community representatives report that some
progress has been made, on the restitution of Jewish communal properties,
although the process is slow. Competing claims by different Jewish groups
is a complicating factor. Muslim community leaders have also complained of
unresolved restitution claims involving several mosques. For example,
representatives of the Muslim community asserted that the Government's
slow pace of communal property restitution undermined the authority of
moderate Muslim leaders. Muslim community leaders complained in particular
about unresolved restitution claims involving a 118-year-old mosque in
Mykolayiv, a famed mosque in Dnipropetrovsk, a 150-year-old mosque in the
Crimean town of Masandra, a mosque in Yalta, and the ruins of an
18th-century mosque in the Crimean coastal city of Alushta.

There were some positive developments in 2007 in
resolving long-standing restitution claims. For example, in May the
Prosecutor General's Office dropped its investigation into claims that the
All-Ukraine Baptist Union had illegally acquired its headquarters in
downtown Kyiv. In February 2007, Odesa's Presbyterian community won a
court ruling on the local actors' guild effort to gain ownership of the
recently renovated historical Presbyterian Church building, and the
actors' guild appeal of the verdict was overruled.

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