If it has taken six years for the Clinton administration to realise economic sanctions against other nations generally do not work, the timing of the Pauline conversion cannot have been more ironic. It was reported last week that the White House and key members of Congress had concluded that sanctions - a key weapon of US foreign policy - were not really working, and that new strategies would have to be employed in the course of Washington trying to influence world events. They were not working in changing the attitude of rogue nations such as Burma, Iran or North Korea, and when they did have the desired effect - such as strangling foreign investment in Cuba - the anger they provoked among overseas allies made them hardly worth it. As for China, well, not a year goes by without the improving Sino-US relationship being threatened with derailment by some knee-jerk sanctions legislation being proposed on Capitol Hill. But in the same week Washington began to rethink its philosophy on sanctions, an historic agreement on the bitterly contested issue of the reparation of Holocaust survivors' assets was announced outside a Brooklyn courthouse. The two major Swiss commercial banks reached a US$1.25 billion (HK$9.66 billion) settlement in a class action lawsuit filed by survivors as compensation for deposits which were not returned after World War II and for the gold looted from Jewish victims by the Nazis and laundered through Switzerland. While the plaintiffs - and the world's Jewish community - celebrated the agreement, Washington privately breathed a sigh of relief that the three-year saga, which had soured relations with Bern, appeared to be over. But this was one case in which the threat of economic sanctions against Swiss companies finally pushed the two banks, Credit Suisse and Union Bank, into doing a deal. Washington was, for once, nowhere to be seen. Frustrated with foot-dragging by the banks and Swiss authorities, a group of cities and states, including California, New York and Pennsylvania, had either instituted or threatened to introduce sanctions banning business with Swiss financial institutions. Things looked bad when the two banks offered a US$600 million settlement in June, only to have it rejected. With the deadline approaching on the sanctions threat, they agreed to pay US$1.25 billion, in return for the dropping of other class action suits against Switzerland's central bank. The states and cities may not have had the State Department's blessing for weighing in, but their contribution finally looks like getting some survivors - average age, 81 - some small compensation while they are still alive. It is ironic that, as Washington's power to influence other nations' conduct is on the wane, a grass-roots intervention from below the federal government level has forced the wavering hands of the Swiss banks. If nothing else, it proves that when diplomacy fails, the power of the dollar - more precisely, the prospect of losing it - can still be counted on to fill the breach. And there are no nations which come close to America's power to use its economic muscle to get results. While economic and political basket cases like Burma may have little reason to take heed of Washington's bullying, Swiss bankers cannot ignore a state like California, which boasts a GDP bigger than most countries. America houses an estimated 100,000 Holocaust survivors, but the Nazi gold/Swiss bank accounts issue should by no means have become a bilateral fight between Washington and Bern when so many European capitals have played roles (often less than heroic) in the war and its aftermath. America's financial clout and the legal juggernaut that lawsuits become when filed in its courts pushed the US to the forefront of the assault on the Swiss authorities' obfuscation. Another thing the US had on its side was Al D'Amato, the Italian-American senator from New York who at first glance hardly looks like a natural champion of Jewish causes. But 'Senator Pothole' - so dubbed for his knack of getting constituents' problems fixed - took to the issue with the energy of a man whose every vote depended on it. As chairman of the Senate Banking Committee, Senator D'Amato had Swiss officials turning apoplectic with a long-running, high-profile set of hearings into the wartime conduct of the banks and the post-war cover-up. For the tiny nation so proud of its neutrality and reputation for social civility, the diplomatic cost of having itself described almost daily in Congress as a collaborator with the Nazis was probably more serious than any amount of compensation its banks would ever end up paying out. While the settlement may have cooled tempers and brought about a US-Swiss diplomatic cease-fire, many questions remain to be answered before any of the money is handed over. Lack of documentary evidence of wartime bank holdings makes it difficult to pinpoint which survivors merit how much, and a US commission sifting through the issue of dormant Swiss accounts has yet to file a report. Meanwhile, lawyers for the plaintiffs also have their guns trained on banks from other European nations, as well as insurance companies accused of withholding payments on policies taken out during the war by Holocaust victims. No dollar amount can do justice to the suffering of the victims or the role Switzerland played in the crime of the century. But perhaps, to quote a popular American phrase, the healing can now begin.