When US tanks rumbled into Baghdad in early April and the heads on Saddam Hussein statues began to tumble, most Americans saw the city's capture as the symbol of the end of America's war against Iraq.

The Iraqi army had been decimated, the symbols of Saddam's power had been destroyed, and the Iraqi capital was in American hands.

As America's military gave the Iraqi regime its due, Iraqis set out to get their due, claiming anything they could lay their hands on in the ensuing chaos as compensation for three decades of despotic repression.

And while American soldiers in Baghdad were uncovering troves of gold-plated M-16s, seizing basements full of millions of dollars in cash, and taking control of the country's oil wells, a few Americans back home were getting compensated, too.

As part of an executive order that President George W. Bush issued on the eve of the Iraq war, payments were being issued to American plaintiffs who had successfully sued Iraq in US courts but had been unable to collect from reserves of frozen Iraqi assets in the US. Until the eve of the war, none of the American plaintiffs with lawsuits against Iraq had collected a dime. Many had won their cases - among them American civilians who were held in Iraq as human shields during the first Gulf War and American prisoners of war who suffered abuse at the hands of Iraqi soldiers during the 1991 conflict - but none had managed to get the US government to enforce the judgments on their behalf.

Then, on March 20, the president issued his executive order, releasing about $ 300 million in funds due in judgments awarded against Iraq while simultaneously confiscating all remaining Iraqi assets frozen in the US and designating them for the reconstruction of Iraq. By taking title to those funds, the president effectively transferred all remaining frozen Iraqi assets in the US into the coffers of the US Treasury, emptying the bank accounts against which other American plaintiffs with cases against Iraq had hoped to collect.

So while a few plaintiffs - those with post-judgment writs of attachment to specific Iraqi assets in the US - got paid, those who had not yet gotten to that late stage in their lawsuits against Iraq suddenly were deprived of the source of funds from which they had hoped to extract compensation.

"Now we need to look to other ways to collect on the judgments," says Daniel Wolf, an attorney representing hundreds of families with claims against Iraq. "Under the Terrorism Risk Insurance Act, it gave claimants a clear path to assets that had been frozen and could be identified and located here in the US. That clear path is no longer so clear."

That's bad news for victims and their families whose cases are still making their way through the courts. The road for plaintiffs seeking to collect damages for their losses is long, arduous, and quite costly, often requiring millions of dollars, stealthy detective work, and the passage of new laws.

Debbie and Jerry Willis are among the relatively lucky ones. Residents of Maine, the Willis's were in Kuwait when Iraq invaded the small Gulf kingdom in August 1990. As Iraqi forces took control of the country, the Willis's tried to flee to Saudi Arabia, but they were caught in the desert by Iraqi soldiers before they could reach safe haven. The couple was separated, and Debbie was sexually molested while her husband was taken to Baghdad and imprisoned. Debbie was subsequently released while Jerry spent three more months in Iraq under horrible conditions.

The Willises, both of whom still suffer severe symptoms of post-traumatic stress disorder, eventually decided to sue Iraq for compensation for their pain and suffering. They won their case, found assets in the US against which they could collect on their judgment, and finally were paid around the time the president issued his executive order.

But for plaintiffs whose cases did not reach the point of collection before March 20, the likelihood of their being able to collect on their judgments anytime soon is bleak. For them, the victory in Baghdad brought no end to their long legal battle for compensation. Instead, it raised the possibility that the focus of their legal battle now will turn toward a more powerful adversary: the United States.

EVER SINCE Congress passed the Flatow Amendment in 1996, Americans with terrorism-related claims against foreign countries have had the legal ability to sue nations on the US State Department's list of state sponsors of terrorism. Until then, foreign nations were protected from legal and financial liability under the Foreign Sovereign Immunities Act, which proscribed civil suits by Americans against any sovereign country - even outlaw nations such as Iraq and Iran.

Yet, despite the passage of the 1996 law, the State Department has vigorously opposed efforts by American citizens to recover monetary damages against frozen diplomatic assets in the US. The problem is that these civil suits complicate the delicate, complex relationships the United States has with foreign governments on the State Department's terror list. Not only does the State Department view these suits as obstacles to cautious, deliberate diplomacy, it is also fearful that if frozen foreign assets in the US can be given away, US assets abroad may well suffer the same fate. The State Department refused requests for comment on this story.

"The State Department is not the friend of the American victim," says Steven Perles, an attorney who has successfully sued Iran for killings carried out by Iranian- backed Palestinian terrorist groups. "I don't think it's consistent with the president's view in the war on terrorism," he says. "And for the victims' families it's really just dreadful."

While Congress repeatedly passed legal statutes requiring the government to enforce judgments against terrorist states, successive presidents repeatedly blocked payments on those judgments via the State Department. It wasn't until 2001 that the first payout was issued, when the family of Alisa Flatow, an American college student killed in a bus bombing in the Gaza Strip in 1995, collected the $ 26 million compensatory portion of a $ 248 million judgment against Iran. The money came from frozen Iranian assets in the US. The Flatows' legal battle required the passage of four separate legislative statutes to force the president's hand.

"They say that statuets like this are an interference with presidential power, which is baloney," says Thomas F. Fay, a Washington attorney who worked with Perles on the Flatow case and represents several Americans involved in lawsuits against state sponsors of terrorism. "The idea that in some way a statute passed by Congress can be ignored or obfuscated is just wrong."

So, while many plaintiffs have won judgments in court - state sponsors of terrorism generally don't show up to defend themselves, so they're usually won by default - far fewer actually have collected on their judgments.

Terrorist states don't respond to demands for payment, and getting hold of foreign assets frozen in the US has required extraordinary legal wrangling, tricky investigative work, and, more often than not, a contest of will with the State Department.

Now that the war in Iraq is over and the focus has shifted away from making Iraq pay for its crimes and toward paying for Iraq's reconstruction, Americans with outstanding lawsuits against the Arab republic are worried they'll never see any money.

"The government believes that these assets now should be more appropriately used to rebuild Iraq instead of being paid to Americans who have been killed or injured by Iraq's government," Fay says. "They have opposed us on every piece of legislation. They will resist the collection of new judgments."

THE LATEST judgment in a case against Iraq came on May 7, when a federal judge in Manhattan awarded $ 104 million in damages to the families of two 9/11 victims. The judge, Harold Baer, said there was enough evidence in the case to establish that Iraq provided material support to Osama bin Laden and al-Qaida, which perpetrated the 9/11 attacks.

"Iraq was stretching out its hand to al-Qaida," says John Loftus, a terrorism expert and former Justice Department prosecutor who is helping plaintiffs in such cases obtain evidence linking defendants to terrorist organizations.

"After the Africa bombings in 1998, Iraq told al-Qaida it would give it any help it needed. It offered it the use of crop-dusting planes for the dissemination of chemical and biological weapons. Iraq certainly played a supportive role. The Saudis and Iranians funded al-Qaida, the Pakistanis supplied it, and the Iraqis trained it."

Because Iraq does not show up in court to defend itself in cases against it - at least not so far - plaintiffs are awarded default judgments as long as lawyers can "establish claim or right to relief by evidence that is satisfactory to the Court," as required by law.

For plaintiffs whose cases against Iraq are not yet resolved, Iraq remains legally responsible for the crimes its government committed, even though Saddam is gone and his government has been deposed.

"The Republic of Iraq exists in a legal sense. There's no question about that," Wolf says. "A state succeeds to the obligations of any former government. The state remains liable, just as Germany or Japan were liable for the debts of their predecessors in World War II. As a legal matter, it should not alter any of the merits of any of the claims."

Now that the Iraq war is over, legal experts are pondering the implications of the president's recent executive order on outstanding lawsuits against Iraq. Because there are no assets left from which to enforce judgments against Iraq, lawyers are hoping the judgments will be enforced in other ways, perhaps by new legislation requiring compensation by some other means, perhaps by diplomatic negotiation with the new government of Iraq.

(Box) Justice money

Lawyers for the victims and their families say these lawsuits are about more than just money.

"So far, the only people who have paid the price of terrorism have been the victims," says Allan Gerson, an attorney working on the biggest civil suit filed thus far by American victims of terrorism - the $ 1 trillion class action by families of September 11 victims against Saudi Arabian banks, charities, and government officials (Because Saudi Arabia is not on the list of state sponsors of terror, the Saudi government cannot be sued in US court).

"Hopefully, this will have a deterrent effect. The sponsors of terrorism will realize that they have a price to pay," Gerson says. "It's a question of justice."

When cases against terrorist nations first began to appear in US courts, most experts saw them as little more than publicity stunts with virtually no practical significance. But all that changed when plaintiffs actually began collecting on judgments.

Hundreds of millions of dollars already have been paid against judgments numbering in the billions of dollars, and claims against the seven nations on the State Department's list of terrorist sponsors - Iran, Iraq, Syria, Libya, Sudan, North Korea, and Cuba - number in the trillions of dollars. Not surprisingly, the attorneys behind many of these suits are the same lawyers who successfully pursued multi-billion-dollar litigation against the tobacco companies.

Now that the war is over, Iraq still must be held accountable for the crimes it committed against Americans, terrorism expert and former Justice Department prosecutor John Loftus says. To excuse one of the world's most brutal dictatorships from paying compensation to those it has harmed would send a very dangerous to other would-be terrorists around the world, he warns.

"The old regime obviously had billions of dollars of assets," Loftus says.

"We had similar problems in Japan and Germany after World War II. Then, the assets of the Nazi regime were pooled and paid. Why should this be any different?"

© 2003 The Jerusalem Post