VZCZCXRO2628
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK
RUEHYG
DE RUEHPG #0473/01 2261310
ZNR UUUUU ZZH
P 141310Z AUG 09
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC PRIORITY 1650
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 03 PRAGUE 000473 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR L/CID: SDRAEMEL AND EUR/OHI: JBECKER 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON EFIN EZ
SUBJECT: PROPERTY RESTITUTION IN THE CZECH REPUBLIC 
 
REF: STATE 62772 
 
¶1. (SBU) Summary:  The United States has an interest in three broad 
categories of property restitution in the Czech Republic: U.S. 
citizen, religious communal (including Jewish communal) and Jewish 
private property.  The restitution process started in the early 
1990s, yet some restitution issues remain.  While most of the 
private property claims have been resolved, the economic development 
of many municipalities continues to be affected by the unresolved 
religious claims belonging predominantly to the Catholic Church. 
The claims of the Jewish communities have been mostly settled. 
Deadlines established by the Czech Government for private property 
restitution have expired, with the exception of Jewish looted art. 
It remains to be seen if Parliament will revisit the topic after 
elections on October 9-10, 2009.  End Summary. 
 
---------------- 
Private Property 
---------------- 
 
¶2. (U) The Czech Republic enacted laws to allow for restitution of 
property shortly after the 1989 fall of the Communist regime.  In 
1991, two major laws were adopted which covered private real estate, 
movable property and farmland (Act 87/1991 and 229/1991).  These 
initial laws covered confiscations during the Communist regime from 
1948-1989.  However, they did not allow for restitution of property 
confiscated by the Nazi regime during World War II.  A 1994 
amendment (Act 116/1994) provided for the restitution of real estate 
taken from Holocaust victims between 1938 and 1945.  Beginning in 
November 1998, a national commission headed by then Deputy Prime 
Minister Rychetsky reviewed property restitution claims arising from 
the Holocaust.  As a result, in June 2000, the Czech Parliament 
passed a law that provided for the restitution of farmland and works 
of art in state museums to Holocaust victims and their heirs (Act 
212/2000).  The law provided for the return of 7,500 works of art 
identified in Czech government museums and galleries as belonging to 
Holocaust victims before the war.  In 2001, the Rychetsky Commission 
also helped to establish a Holocaust fund with approximately  USD 15 
million in state money (Endowment Fund for Holocaust Victims). A 
third of the fund was used between 2001 and 2005 to provide symbolic 
compensation to non-citizens and others previously unable to regain 
real property seized by the Nazis. The money was divided among 
approximately 500 claimants residing in 27 countries. 
 
¶3. (SBU) While the deadline for filing claims for farmland according 
to Act 212/2000 expired in 2001, the deadline for artwork was first 
extended from 2002 to 2006 and later extended indefinitely. 
Deadlines for claiming real estate stipulated in the 1991 and 1994 
legislation expired in 1992 and 1995 respectively.  According to 
Czech officials, 97 percent of all private real property claims have 
been resolved.  The 1994 amendment which covered the real estate 
confiscated from Holocaust victims allowed for about 7,000 pieces of 
real estate to be returned, according to an unofficial estimate by 
the Ministry of Finance.  According to government officials and 
real-estate experts, the property market is not affected by 
unresolved private property claims.  However, it should be noted 
that the restitution process was very lengthy as the claims often 
had to be substantiated in court.  These court cases often dragged 
out for several years, or even a decade. 
 
--------------- 
The Special Cases of Works of Art 
--------------- 
¶4. (SBU) The restitution of works of arts of Holocaust victims and 
their heirs remains the only ongoing restitution process.  However, 
physical restitution of artwork remains difficult.  In several cases 
the Czech authorities have identified certain pieces (usually among 
the most valuable in a collection) as works of "national cultural 
heritage" which prevents them from being exported abroad.  These 
national heritage laws are similar to those in place in other 
European countries (notably France).  In these cases, the state has 
restricted export or offered to pay compensation in exchange for 
retaining the works, but some believe that the art would fetch a 
much higher price outside of the country.  A further complication 
stems from the fact that the law permits only restitution in direct 
lineage, e.g. to spouses or children, as opposed to a broader 
definition used in the 1991 and 1994 restitution laws concerning 
real estate.  Currently, the direct lineage requirement is being 
challenged in the courts by Michael Klepetar, who is claiming 43 
paintings which belonged to his great uncle who died with his wife 
and only daughter in the Lodz ghetto in 1941. 
 
--------------- 
Czech Citizenship Requirement 
--------------- 
 
¶5. (SBU) With the exception of art restitution, the restitution of, 
or compensation for, private property was restricted to those who 
could claim Czech citizenship.  This citizenship restriction 
unfairly impacted Czechs who obtained citizenship in the U.S., as 
 
PRAGUE 00000473  002 OF 003 
 
 
these naturalized citizens were required to forfeit their former 
Czechoslovak citizenship under the terms of a 1928 treaty between 
the two countries.  The treaty was finally abrogated August 1997, by 
which time the 1992 and 1995 deadlines for filing real property 
claims had already passed.  It enabled, however, Holocaust survivors 
and their heirs living in the U.S. to claim land according to the 
2000 law. 
 
¶6. (SBU)  A provision of the 1928 treaty suspending its application 
during time of war, combined with the fact that Czechoslovakia did 
not sign a peace treaty with Japan until 1957, allowed some 
Czech-Americans who naturalized before 1957 to reclaim Czech 
citizenship and file timely claims.  However, this provision did not 
apply to their U.S. citizen descendants or protect those who 
emigrated later.  In a positive step, Parliament passed an amendment 
to the citizenship law that authorized dual citizenship in August 
¶1999.  Deadlines for filing real property claims had long since 
passed and efforts to reopen the period for filing restitution 
claims have failed due to the reluctance of many Czech legislators 
to revisit this issue.  The former Deputy Prime Minister and current 
chairman of the Constitutional Court, Pavel Rychetsky, stated that 
most of the real property concerned has already been restituted to 
the U.S. nationals' relatives who retained Czech citizenship. 
According to him, reopening the issue would only lead to court cases 
within families. 
 
¶7. (U) The U.N. Human Rights Committee held in 1995 and again in 
2001 that the Czech citizenship restriction, as formulated, violates 
the International Covenant on Civil and Political Rights.  However, 
the Czech Constitutional Court in 1997 and the European Court of 
Human Rights in July 2002 both held that the Czech citizenship 
requirement was not inconsistent with Czech human rights 
obligations. 
 
--------------- 
Jewish Communal Property 
--------------- 
 
¶8. (SBU) On the whole, the Czech Government has dealt positively 
with the return of Jewish communal property.  The process of 
restitution of Jewish property began in 1992.  The Federation of 
Jewish Communities (FZO) put together dossiers covering about 800 
properties including synagogues, schools, cemeteries, and other 
communal buildings.  The list was pared down to 202 parcels because 
the FZO supported the continued use by some current occupants 
(including Christian denominations) and concentrated on its highest 
priority properties.  While the national government has agreed by 
decree to restore all property in state hands, many municipalities 
have refused to follow suit.  In 1994, the national government 
returned the Jewish Museum in Prague to the FZO. 
 
¶9. (SBU) As mentioned earlier, the national commission headed by 
Deputy Prime Minister Rychetsky reviewed property restitution claims 
arising from the Holocaust.  Following the commission's 
recommendations in June 2000, the Parliament enacted legislation 
that authorized the government to transfer approximately 200 
additional properties to the Jewish community.  It also provided for 
the return of 70 works of art housed in the National Gallery to the 
Jewish Museum.  The Endowment Fund for Holocaust victims was 
established with state money one year later.  While one-third was 
spent on private property compensation by 2005, the rest is 
dedicated to the restoration of Jewish sacred sites and to Jewish 
community life in the Czech Republic. 
 
--------------- 
Other Religious Communal Property 
--------------- 
¶10. (SBU) The larger issue of the restitution of church properties, 
however, has yet to be resolved.  Certain property of religious 
orders, including 175 monasteries and other institutions, was 
restituted under laws passed in 1990 (Act 298/1990), but this 
generally did not include income-generating properties.  The 
Catholic Church seeks the return of some 700 buildings and 175,000 
hectares of forests and farmland.  Claims by Protestant 
denominations are much smaller.  The disputed farmland is affected 
by a provision of the 1991 law on restitution of land (Act 229/1991, 
Article 29) which stipulates that: "property belonging originally to 
churches, religious orders and congregations cannot be transferred 
to the possession of other persons until a special law on this 
property is adopted."  This has an immense impact on the real estate 
market in many small towns and villages.  In effect, it inhibits 
their development, as the land is frequently located inside their 
boundaries.  No one can build on it, cultivate it, etc., even if 
they have the church's permission.  This legal restriction on former 
religious property also affects many historical buildings located in 
the municipalities.  Because municipalities in effect do not have 
the legal title, they are unable to obtain reconstruction grants 
from European structural fund or even cover the reconstruction costs 
from their own budgets.  Instead, the municipalities can only watch 
the gradual decay of historical buildings that could otherwise 
 
PRAGUE 00000473  003 OF 003 
 
 
attract tourists and enhance the municipality's quality of life. 
 
¶11. (SBU)  After many years of Czech administrations avoiding the 
issue, the Topolanek coalition government made church restitution 
one of its priorities when it won Parliamentary confirmation in 
January 2007.  The government prepared and approved necessary 
legislation in April 2008 and submitted it to the Parliament for 
approval.  However, due to severe political infighting in the 
Chamber of Deputies, the bill had not been approved before the fall 
of the Topolanek government in March 2009. The interim caretaker 
government of PM Jan Fischer, which will be in place until the 
October 9-10 early parliamentary elections, stated it would not seek 
to address the issue.  Thus, the whole process will have to start 
anew. 
 
¶12. (SBU) Comment:  The future of church restitution is unclear. 
Resolution of the issue depends on the results of the upcoming 
elections, which are impossible to predict.  It can be said with 
some certainty that a left wing minority government with the Social 
Democrats (CSSD) and tacit support of Communists would not be good 
news for champions of restitution.  The Communists have always 
believed in the supremacy of collective ownership and have never 
supported any restitution legislation in the past twenty years.  How 
other possible electoral outcomes, such as a grand Civic Democratic 
(ODS)-CSSD coalition, might affect restitution issues is less clear. 
 Many Social Democrats and even some members of the center-right 
(ODS) do not believe in the importance or necessity of church 
restitution.  End Comment. 
 
Thompson-Jones