American POWs Blocked From Iraqi Assets

WASHINGTON – Americans who were POWs in the Persian Gulf War (search) are struggling to understand why the Bush administration is trying to block them from receiving a $1 billion settlement they won against Saddam Hussein's regime in July.

Despite a law overwhelmingly passed by Congress last year that would allow victims of state-sponsored terrorism to sue for frozen Iraqi assets, Bush is issuing a waiver to block compensation for POWs like Col. David Eberley (search), who was beaten, tortured and held captive by Iraqi forces for 46 days in 1991.

"It is unfortunate that they are now fighting the people they sent into combat," Eberley told Foxnews.com. "It would be nice if the executive branch stopped trying to fight this thing."

According to officials and outside experts, no matter who is in office, the U.S. government has always considered private lawsuits against foreign nations – even those on the State Department's list of states that sponsor terrorism – a nuisance to diplomacy.

"The basic principle is, that the executive branch does not want any interference in its ability to conduct foreign affairs," said Larry Rothenberg, international law expert for the Center for International and Strategic Studies (search).

Attorney Thomas Fortune Fay, who has won judgments and successfully pursued assets in at least four cases, said he did so against the "objections, shouting and screaming," of both the Clinton and the current Bush administrations, which "fought like hell to avoid payments."

Fay, along with attorney Steven Perles, won a judgment on May 30 against Iran on behalf of the families of the 241 American troops who were killed in a 1983 suicide bombing at the Marine barracks in Lebanon. Iran was found liable in the case after being implicated as a sponsor of terrorist group Hezbollah (search), which was blamed for the bombing. The plaintiffs have moved forward with collecting damages, Fay said.

In a rare departure, the Libyan and U.S. governments did sign an agreement this week to set up a $2.7 billion fund for families of the 270 victims of the 1988 Pan Am bombing (search) — a key step to lifting U.N. sanctions against Libya.

Fay said over the last decade, the U.S. government has stepped in to block payments in cases involving states deemed terrorist sponsors, including Cuba and Iran, but hasn't always won.

Even so, plaintiffs in other pending cases involving American victims of Iraq could lose out if the administration maintains its current position.

In the case of the POWs and their families, the U.S. District Court for the District of Columbia ordered Iraq to pay $1 billion in compensatory and punitive damages for beatings that included being struck with cattle prods and having eardrums burst, starvation, disease and long-term psychological trauma. The money was to come from assets that had been frozen in U.S. banks since 1990.

But the Bush administration stepped in after the judgment with heavy hitters like L. Paul Bremer (search), head of the coalition provisional authority of Iraq, to argue against freeing up the assets for the POWs. The administration said the frozen funds of the now-toppled Iraqi regime must be used for the reconstruction of Iraq. If not, U.S. interests and Iraqi civilians could be placed at risk.

"While the United States … regrets the injuries that they suffered at the hands of the former tyrannical regime in Iraq, these plaintiffs' interests in collecting on their private judgment do not outweigh the interest in using these funds to protect the safety and lives of U.S. personnel in Iraq and Iraqi civilians," Justice Department lawyers argued.

In a July 30 ruling, U.S. District Court Judge Richard W. Roberts accepted the administration's argument that it had authority under the supplemental war budget passed earlier this year to waive Iraq from any liability under the 2002 Terrorism Risk Assurance Act (search), which allows victims of terrorism to access frozen assets to satisfy their claims.

But the judge did express surprise about the government's stance.

"The [administration's] position that the POWs are unable to recover any portion of their judgment as requested, despite their sacrifice in the service of their country, seems extreme," Roberts wrote.

On Aug. 6, Roberts also refused administration requests to have the entire judgment thrown out of court.

The situation has drawn fire from members of Congress, some of whom are incredulous that Bush was able to receive a waiver for the Iraqi government when it was the intent of Congress to make Iraq pay for its brutality against Americans.

The administration's actions "undercut the vital, long-term objectives of deterring terrorist acts against American citizens, and achieving accountability against terrorist states which target Americans and which have tortured American POWs in war after war," wrote Sen. George Allen (search), R-Va., in a letter to the Treasury secretary.

Rothenberg said that with few exceptions, Congress and the courts have historically deferred to the executive branch in regard to international lawsuits, and any attempt to legislate on behalf of victims in recent years has turned out to be largely symbolic.

"Everybody wins politically, except for the people who it is supposed to benefit," he said.

Tony Onorato, an attorney for the 17 POWs, said his clients are willing to wait for their settlement, realizing the government's priorities in stabilizing post-war Iraq. However, "it's time that this moves up on the priority list," he said.

"Our POWs have been mistreated and killed – this is a way to finally say this is enough, you cannot have a free pass on torturing our guys."