Hungary to give pounds 19m in atonement for Holocaust

Hungary became the first country in Eastern Europe yesterday to atone for its part in the Final Solution by agreeing to compensate survivors of the Holocaust.

Nearly 60 years after the Paris Peace Treaty bound Budapest to offer compensation to victims of Nazism, the government pledged to set up a foundation with capital of 4bn forints (pounds 19m).

"We are satisfied because, given the country's current economic plight, this settlement goes beyond a mere gesture," said Gusztav Zoltai, Director of the Association of Jewish Communities in Hungary. "It will also serve as an example for the other countries in the region which have yet to take similar steps."

Mr Zoltai's organisation will contribute to the fund by selling some of the Jewish property returned by the state under a previous law compensating religious groups. A further sum is to be provided by a branch of the World Jewish Organisation.

"This accord brings several years of negotiations almost to their conclusion," said Mr Zoltai. "I say 'almost', because parliament must still approve the package in the autumn." Passage of the bill in the legislature, where the governing coalition has an overwhelming majority, is virtually assured.

The Hungarian parliament had undertaken a similar commitment in 1946, but did not deliver on its promise; at first the country was bankrupt, then the Communists took over in 1949. Even though - or because - the Communists were led by Jews until 1956, the issue of compensation was swept under the carpet. Token payments from Germany in the Sixties were distributed - and in many cases misappropriated - by the Communist authorities.

After the fall of the old regime in 1989, the priorities shifted once again. The incoming conservatives were quick to return confiscated property to Christian churches, but Jews were kept waiting. In 1993, Holocaust survivors won a ruling from Hungary's Constitutional Court forcing the government to pay compensation, but still the authorities refused to reach into their pockets.

Their tight-fistedness coincided with an upsurge of creative historiography in government circles which attempted to absolve Hungary of responsibility for the murder of an estimated 600,000 Jews during the war. The deportations to concentration camps and summary executions of Jews began after the country was occupied by German troops in 1944, but the machinery of oppression was manned mainly by Hungarian fascists. There are estimated to be between 80,000 and 100,000 Jews still living in Hungary.

The compensation package, which the government and Jewish organisations stress is only "partial", is intended to help the most needy. It will supplement the pensions of Jews aged over 70, and descendants of Jews who perished in the death camps will be partially compensated for family properties lost during the war. The deal will not, however, prevent Holocaust survivors from pressing their individual property claims with the government.

Schools, hospitals and Jewish charities also will be funded by the foundation, which will be headed by Ronald Lauder, a Hungarian Jew, and son of the cosmetics tycoon Estee Lauder.