So You Wanna Sue the Saudis?: Expect a fight from Foggy Bottom.

'It would be an obstruction of justice for us to get involved." That was State Department spokesman Gregory Sullivan last summer, discussing the $1 trillion lawsuit filed by the families of 9/11 victims against the Saudi royal family. What a difference a few months of Saudi diplomacy makes: State is now poised to seek dismissal of the families' quest for justice.

In a not entirely uncharacteristic move, State has decided to stick up for the Saudis -- against the most sympathetic of plaintiffs -- because the lawsuit would be bad for "bilateral relations," according to a senior State Department official. The current posture simply maintains State's opposition to the efforts of terrorism victims and their families. Just ask the families who have been battling State for years -- while the department protects its cache of frozen assets belonging to Saddam Hussein, the Iranian mullahs, and Muammar Qaddafi.

Lawsuits in response to terrorism have been brought for years, but the legal hurdles were often difficult to clear. Families of victims of Iraqi, Iranian, and Libyan terrorism (and the few lucky people who actually survived) spent much of the '80s and '90s in a fruitless pursuit of justice, until an event in 1996 galvanized Congress to come to their aid.

On February 24, 1996, two small planes operated by the group Brothers to the Rescue were searching for Cuban refugees, when they were shot down over the Florida Straits -- in international waters -- by Cuban MiG fighter jets. Four men perished: three of them American citizens, one a legal U.S. resident. President Clinton called Castro's act a "flagrant violation of international law" and proclaimed that the victims' families should have clear authority to receive some of the $180 million in blocked Cuban assets in the United States. Congress complied -- or at least it thought it did.

Looking beyond the immediate incident with Cuba, Congress broadened the scope of its legislation to include all victims of terrorism and their families. Two amendments were passed in 1996 -- supported by the State Department -- stripping countries officially named as sponsors of terrorism of their "sovereign immunity" (protection from lawsuits) in American courts for terrorist actions perpetrated against U.S. citizens. State even encouraged the victims' families to seek judgments, in some instances providing classified information to further the cases against the terror-sponsoring governments.

Since these regimes tend not to respect the findings of American courts, the clear intent of the 1996 law is that those who succeed in winning court judgments should then have access to frozen assets in order to collect on them. But once the families had won judgments and tried to seek damages, State's assistance came to an abrupt halt. The department, which wanted the money for its own purposes, argued that the law did not clearly specify that the families could collect from those assets. Congress responded by passing a new law in 1998 clarifying that blocked assets were in fact fair game. At the last minute, an anonymous ally of State on Capitol Hill sneaked in a "waiver" provision giving the president the authority to block the collection of frozen assets for reasons of national security. Clinton - - at the behest of the State Department -- effectively vetoed the bill right after signing it by declaring any use of frozen assets to compensate families of terrorism victims to be against "national security."

The saga did not end there. Having had enough of State's obfuscation, Congress took further action on behalf of the families in 2000, specifically designating 16 families -- including relatives of the Brothers to the Rescue workers and victims of Iranian terrorism -- who were finally to receive compensation. State relented on the Cuban assets, allowing those families to collect nearly $100 million from Castro's frozen funds in the United States. For the victims of Iranian terrorism, however, State insisted that the money not come directly from frozen Iranian assets, but rather from taxpayer matching funds tied to frozen assets. (If it sounds confusing, it is -- but the upshot was that none of the frozen assets being protected by State were reduced.)

The 2000 bill reiterated Congress's intent that the "waiver" provision not be used as a blanket denial of compensation, though the bill still allowed the president to refuse access to frozen assets when necessary to protect national security. Once again, Clinton decided to ignore Congress and sided with State, reapplying the waiver to all remaining cases -- a move that coincided roughly with his pardoning spree that made Marc Rich an unwanted man.

Clinton is of course not solely to blame for the sad state of affairs; the real obstacle is the State Department, whose obstructionism has carried over into the present administration. In a letter to Republican senator George Allen, deputy secretary of state Richard Armitage wrote that, although he "sympathizes" with the victims' families, the frozen assets of terrorist states should not be spent to satisfy judgments won by "victims whose lawyers happened to be successful in obtaining judgments against foreign states at a particular point in time." The December 2001 letter further "clarified" that the only reason any blocked assets had been used for such purposes in the past was "significant lobbying by certain victims' lawyers."

Armitage suggested that terrorism victims should be compensated -- but by the U.S. taxpayer, not the regimes responsible for the terrorist attacks. Why? "There is no better example [of protecting national security] than the critical role blocked assets played in obtaining the release of the U.S. hostages in Tehran in 1981," he wrote. In other words, Armitage believes that State needs those funds to give back to the regimes in question if they are smart enough to kidnap American citizens and demand ransom payments.

It does not appear that blocked assets have been used for ransom payments anytime in the recent past. But the supposedly off-limits funds have been used for a number of other, shady purposes.

The Chinese foolishly sold dual-use telecommunications equipment to Iraq -- foolish because Hussein never bothered to pay them. But State made sure that Communist China would not have to suffer from its unfortunate business decision: Officials at Foggy Bottom forked over $80 million of frozen Iraqi assets to Beijing, a fact brought to light by William Safire in his New York Times column in July 2001.

Blocked Iranian money has also mysteriously disappeared, and again none of it went to the families of terrorism victims. According to annual reports from the Treasury Department, the total amount of blocked Iranian assets held in the United States dwindled from approximately $350 million at the end of 2000 to about $200 million one year later. Though specific allocations of funds are not made public, private businesses are allowed to "license" blocked assets to recoup payment, typically for contracts that foreign governments never fulfilled. This is the most likely explanation for the missing money.

By far the worst of these deals, however, pertains to Cuba. As part of a 1992 effort to provide phone service to Cubans as a way of undermining Castro, Congress allowed telecom companies to equip the Cuban people to call friends and relatives in the United States -- with payment coming from Cuba's blocked assets. Over $100 million each year is paid out to phone companies, such as AT&T and WorldCom, for phone service -- more than $50 million of which then goes right into Castro's pocket, so that he'll allow phone service to continue.

Most remarkable, notes international law scholar John Norton Moore, is that "blocked assets receive more protection than regular assets in the United States belonging to foreign governments." Non-blocked assets, for example, cannot be protected from satisfying judgments for "national security" reasons.

Given State's track record, the families of 9/11 victims face formidable odds in going after the Saudi royal family -- even though there are no blocked assets involved, since Saudi Arabia is not technically a state sponsor of terrorism. In this case, State is likely to try to sabotage the case from the sidelines. The probable game plan is not to get directly involved and to wait for the court to ask for State's opinion -- an opinion that would advise the court to dismiss the lawsuit. Top State press flak Richard Boucher hinted at the department's strategy for torpedoing the Saudi lawsuit when he said, "Sometimes courts ask us for things, and obviously we would respond to the wishes of the court [to give our opinion]." If only State would respond to the wishes of American citizens victimized by terrorism.