Wartime Ustasha Treasury at Rome

Excerpt from The Fate of the Wartime Ustasha Treasury, which is a portion of the report: "U.S. and Allied Wartime and Postwar Relations and Negotiations With Argentina, Portugal, Spain, Sweden, and Turkey on Looted Gold and German External Assets and U.S. Concerns About the Fate of the Wartime Ustasha Treasury", from a U.S. State Department website.

D. The Ustasha Underground in Rome and Ustasha Gold

According to information gathered at various times by U.S. intelligence, the College of San Girolamo degli Illirici in Rome, which provided living quarters for Croatian priests studying at the Vatican during and after World War II, was a center of Ustasha covert activity and a Croatian "underground" that helped Ustasha refugees and war criminals to escape Europe after the War.[24] British intelligence information of March 1946 also identified San Girolamo as the church for the Ustashi managed by a brotherhood of Croatian priests, the "confraternita di San Girolama." This brotherhood issued identity cards with false names to the fugitive Ustashi, allowing them to evade arrest or detention by the Allies.[25]

Monsignor Juraj Madjerec, identified in intelligence reports as an Ustasha supporter, was head of the College, but the prime mover behind this Ustasha activity in Rome was the secretary of the College, Father Dr. Krunoslav Stefano Dragonovic, who was also an Ustasha colonel and former official of the Croat "Ministry for Internal Colonization," the agency responsible for the confiscation of Serb property in Bosnia and Hercegovina.[26]

Regarded by U.S. intelligence officers as Ante Pavelic’s "alter ego," the Croatian-born Father Dragonovic had been a Professor of Theology at Zagreb University. In 1943 he went to Rome allegedly as the representative of the Croatian Red Cross, but probably to coordinate Ustasha affairs in Italy. Taking advantage of contacts inside the International Red Cross and other refugee and relief organizations, Dragonovic helped Ustasha fugitives emigrate illegally to South America by providing temporary shelter and false identity documents, and by arranging onward transport, primarily to Argentina.[27] U.S. intelligence reports make much of Father Dragonovic’s role in helping the Ustashi who sought protection in Rome after the War. He was also reportedly entrusted with the safeguarding of the archives of the Ustasha Legation in Rome, which he hid somewhere in the Vatican, as well as with all the valuables brought out of Croatia by the fleeing Ustashi.[28]

Under Dragonovic’s leadership, the Croat underground in San Girolamo built up an effective covert organization which operated an escape service for Croatian nationalists fleeing from the Yugoslav regime. Dragonovic’s organization also worked with the "rat line" set up and operated by the U.S. Army’s Counter Intelligence Corps (CIC) to help Soviet and East European defectors, informants, and activists escape from Communist-controlled territory.[29] In 1951 Dragonovic worked with the CIC to organize the escape of anti-Communist informant and Nazi war criminal Klaus Barbie to South America.[30] In mid-October 1958, a few days after the death of Pope Pius XII on October 9, Dragonovic was ordered to leave the College of San Girolamo by the Vatican Secretary of State.[31] In 1962 the CIC dropped him as an agent "with prejudice, for security reasons and lack of control."[32]

Over the next few years, relations between the Vatican and Communist Yugoslavia improved and were finally normalized in June 1966. Dragonovic, who had broken with Ante Pavelic in 1955, benefited from an amnesty granted by the Tito regime in the early 1960s. In 1967 he traveled to Trieste and walked across the border to Yugoslavia. A few days later he made a speech over Yugoslav radio denouncing the Ustashi and praising the progress made since the end of the War by the Tito regime. The indications are that Dragonovic lived quietly in Yugoslavia where he died in July 1983.[33]

From early 1946 to late 1947, the Ustashi in Rome harbored Ante Pavelic, as well as other Ustasha leaders. Pavelic arrived in Rome in 1946 disguised as a priest with a Spanish passport. For the next two years he reportedly lived at San Girolamo and other quarters in Rome. The support of the Croat underground in Rome was critical for Pavelic’s escape from Europe to Argentina. In November 1948 he emigrated to Argentina on the Italian motorship Sestrire. In 1957, after an assassination attempt, he moved to Spain, where he died in 1959.[34]

The CIC, which had responsibility for tracking down war criminals, knew of Pavelic’s presence in Italy and monitored his activities for nearly two years, attempting to learn his exact whereabouts. In late July 1947, after CIC reported that Pavelic was living in a particular Vatican-owned building in Rome, and after consultations in Washington, the State Department instructed the Supreme Commander of Allied Forces in Italy that "the United States should cooperate with the Italian authorities to the extent necessary in this particular case." The British Government concurred in this action four days later. The CIC agents assigned to monitor Pavelic’s activities in preparation for his arrest reported that he was enjoying the protection of the British as well as of the Vatican and advised against unilateral U.S. action to extradite Pavelic to Yugoslavia in order not to lose support among Catholic and anti-Communist émigrés. U.S. military intelligence concurred on the grounds that Pavelic's arrest would alienate the Croatians loyal to the Ustasha cause who were being increasingly employed as informants by U.S. intelligence agencies. In the end, U.S. forces withdrew from Italy without acting decisively to apprehend Pavelic.[35] However, CIC's interest apparently was sufficient to compel Pavelic to leave Rome for a monastery near the Pope’s summer residence at Castel Gandolfo, where he remained for several months prior to his departure from Europe.[36]

The figure of 350 million Swiss francs (over $80 million) of Ustasha gold that U.S. intelligence reported in 1946 remains the only attempt to estimate the total financial resources available to the Ustashi at the end of World War II. This figure refers to sums in Italy and Austria and probably does not include those funds sequestered by the Ustasha regime in Switzerland. Moreover, it remains unsubstantiated and may not include some or all of the sums reported elsewhere. Although the amount of the total financial resources available to the Ustasha leadership at the end of World War II cannot be determined, it seems clear from the available information that there was some quantity of gold at their disposal in Rome, Austria, and Switzerland. From the character of the Ustasha regime and the nature of its wartime activities, this sum almost certainly included some quantity of victim gold.

U.S. intelligence reports—many of them uncorroborated and speculative—portray the Croat underground in Rome as making use of a considerable quantity of gold, probably including victim gold, that the Ustashi sent or brought out of Croatia between 1943 and 1945. Sources available to U.S. intelligence authorities varied widely, even wildly, in their estimates of the total value of the gold available to the Croat underground in Rome. The largest estimate of Ustashi treasury reaching Rome was made in the October 1946 U.S. intelligence (SSU) report to the Treasury Department, which estimated that 200 million Swiss francs (about $47 million) "was originally held in the Vatican" before being moved to Spain and Argentina.[37] Another October 1946 intelligence report summarizing information on the whereabouts of former Ustasha officials identified an "Ustashi Financial Committee" living in Rome with a large amount of gold at its disposal.[38] On the other hand, a report derived from an alleged January 1947 interview with Ante Pavelic at his quarters in the monastery in Rome, claimed the Ustashi had only 3,900 gold Napoleons (some $25,000) in all of Italy.[39]

Ante Pavelic, Father Dragonovic, and other Ustasha leaders in Rome also derived moral and financial aid from many other countries, including from Ustasha sympathizers in the United States.[40] U.S. intelligence was also informed that the Ustashi in Italy were active on the black market.[41] Dragonovic may also have personally profited from his illegal activities, charging refugees as much as $1,500 for false documents and realizing $625 from each refugee he helped transport to Argentina.[42]

[24] The College of San Girolamo is located outside the walls of the Vatican and pays Italian State taxes.

[25] British Public Records Office, War Office Files, WO 204/11574. The British intelligence file identified Croatian priest Dominc Mandic as the Vatican representative to San Girolamo.

[26] Memorandum from AC of S, G-2 (CI) AFHQ (Allied Forces Headquarters) from AFHQ Liaison (IAI), November 26, 1947, Subject: "Dragonovic, Krunoslav Stefano; Information Report, Subject: "Dr. Krunoslav Dragonovich," July 24, 1952 (date of information is 1945-1952); memorandum from Deputy Director for Plans (CIA) to Deputy Assistant Under Secretary for Security, Department of State, "Dr. Krunoslav Stepan Dragonovich," January 9, 1968, all in CIA Operational Files. Dragonovic’s background and his wartime activities, including alleged connections with the Vatican and exchanges with British diplomats, are described, with extensive references to official British and U.S. documents identified in the archives of the two nations, in Mark Aarons and John Loftus, Unholy Trinity: How the Vatican’s Nazi Networks Betrayed Western Intelligence to the Soviets (New York, 1991), pp. 88-119 (pp. 308-314 for documentary citations). This report is not based on these authors’ book nor does it seek to evaluate how they interpreted the many documentary sources they cite.

[27] U.S. Department of Justice, Criminal Division, Klaus Barbie and the United States Government: A Report to the Attorney General of the United States (Washington, D.C., 1983), pp. 136-139 [hereafter cited as The Barbie Report]; memorandum from Deputy Director for Plans (CIA) to Deputy Assistant Secretary for Security, Department of State, "Dr. Krunoslav Stepan Dragonovich," January 9, 1968, CIA Operational Files. U.S. Army Counter Intelligence Corps reports of 1947 on the extent of Ustasha involvement in the management of affairs at San Girolamo and aid rendered to fleeing Ustasha leaders are described in Susan Headden, Dana Hawkins, and Jason Vest, "A Vow of Silence: Did Gold Stolen by Croatian Fascists Reach the Vatican?," U.S. News & World Report, March 30, 1998, pp. 34-37.

[28] Information Report, Subject: "Dr. Krunoslav Dragonovich," July 24, 1952 (date of information is 1945-1952); Information Report, Subject: "Jugoslavia: Present Whereabouts of Former Ustashi Officials," October 11, 1946, both in CIA Operational Files.

[29] The Barbie Report, pp. 135-137.

[30] Memorandum, undated (c. April-May 1983), Subject: "DOJ/OSI Investigation of Klaus Barbie," CIA Operational Files; The Barbie Report, pp. 146-151; and James V. Milano, Soldiers, Spies, and the Rat Line: America’s Undeclared War Against the Soviets (Washington, D.C., London, 1995), pp. 201-206.

[31] Information Report, Subject: "The Priest Krunoslav Dragonovic being asked to leave the College of St. Jerome of the Illirici," December 11, 1958, CIA Operational Files.

[32] Memorandum, undated (probably c. April-May 1983), Subject: "DOS/OSI Investigation of Klaus Barbie," ibid.

[33] What appears to be the public record regarding Dragonovic's last years in Yugoslavia, including his praise for the Tito regime and the religious freedom he found in Yugoslavia, is identified in Aarons and Loftus, The Unholy Trinity, pp. 77-78, 86-87, and 143-150.

[34] Information Report, Subject: "The Organization of the Ustashis Abroad," November 4, 1946 (date of information is October 1946); Information Report, Subject: "The Vatican as an Asylum for War Criminals," August 8, 1947 (date of information is July 1947); Information Report, Subject: "Reported Arrival of Ante Pavelic in Argentina," December 2, 1948, all in CIA Operational Files. Aarons and Loftus, The Unholy Trinity, pp. 77-78, indicate that Pavelic joined most of the former Ustasha regime in Buenos Aires, including nearly every surviving Cabinet Minister.

[35] Memorandum from Bernard J. Grennan, Chief of Operations, CIC Headquarters, MTOUSA (Mediterranean Theater of Operations United States), to Supervising Agent, CIC Zone Five, July 7, 1947; memorandum from Joseph N. Greene, Jr., Acting U.S. Political Adviser to Acting Supreme Allied Commander, July 29, 1947; memorandum from P.W. Scarlett, British Political Adviser, to Acting Supreme Allied Commander, August 2, 1947; Informal Routing Slip from Major General L.C. Jaynes, Chief of Staff, to Commanding General, MTOUSA, August 8, 1947, with marginal comment by Commanding General; memoranda from CIC Special Agents Louis S. Caniglia and William E.W. Gowen to Officer in Charge, CIC Rome Detachment, August 28 and September 12, 1947; memorandum to Officer in Charge, CIC Rome Detachment, signed by Lieutenant Colonel G.F. Blunda, Assistant Chief of Staff, G-2, November 8, 1947, all in NARA, RG 319, Investigative Records Repository, CIC Dossier XE 00 11 09: Anton Pavelic.

[36] Information Report, Subject: "Reported Arrival of Ante Pavelic in Argentina," December 2, 1948, CIA Operational Files.

[37] Letter from Bigelow to Glasser, October 21, 1946, RG 226, Entry 183, Box 29, 1946.

[38] Information Report, Subject: "Jugoslavia: Present Whereabouts of Former Ustashi Officials," October 11, 1946, CIA Operational Files.

[39] CIG Intelligence Report, Subject: "Dr. Ante Pavelich," May 6, 1947, ibid. This is the same report that described the alleged British Army seizure of two truckloads of bar gold from the fleeing Croatian leaders when they reached Austria in early 1945.

[40] Information Report, Subject: "The Organization of the Ustashis Abroad," November 4, 1946, ibid.

[41] Information Report, October 16, 1950, ibid.

[42] The Barbie Report, p. 140; Milano, pp. 52-54; Information Report, Subject: "Irregular Activity of Krunoslav Dragonovic," October 1, 1953, CIA Operational Files. According to a March 1948 report of the U.S. Military Attaché in Argentina (?), quoted in U.S. News & World Report, March 30, 1998, p. 36, Ustasha refugees in Argentina were being assisted with funds in a Swiss bank.

Excerpt from the Special Briefing by Under Secretary Stuart Eizenstat upon release of the report: "U.S. and Allied Wartime and Postwar Relations and Negotiations With Argentina, Portugal, Spain, Sweden, and Turkey on Looted Gold and German External Assets and U.S. Concerns About the Fate of the Wartime Ustasha Treasury"

The fifth set of findings involves something not discovered at all in the past; and that is the strange story of Ustasha gold. As we were going through the millions of pages of documents, we came across the issue of Ustasha gold. This therefore raises, in this chapter, questions about the aspects of the Vatican's record during and after the war to which answers may only exist in Vatican and Croatian and Serbian archives.

The Ustashi regime was Nazi Germany's wartime puppet state in what was then called Croatia. This puppet state systematically and mercilessly robbed, murdered or deported its Serbian, Sinti-Romani, Gypsy and Jewish populations. Gold and other valuables of all these victims became a part of the Ustashi treasury, and may have amounted to as much as $80 million. Portions of this treasury appear to have been transferred to Switzerland in the last year of the war. Very little of it was accounted for in the post-war arrangements made by Yugoslavia with the Allies and Switzerland.

With the defeat of Hitler in May 1945, and his satellites, including the puppet Croatian regime, the leaders of the Ustashi regime fled to Italy, where they found sanctuary at the pontifical college of San Girolamo in Rome, which was run by Father Dragonivic. This college was most likely funded, at least in part, by the remnants of the Ustasha treasury, the stolen assets, and may have operated, at least with the tacit acquiescence of some Vatican officials. It helped fugitive Croatian war criminals, including the Ustashi leader himself, Ante Pavelic, escape to South America in the early post-war years. This pontifical college also cooperated with the "rat line," as it was called, used by the US Army Counter-Intelligence Corps after the war to assist the escape from Europe of anti-Communists, including the infamous Nazi war criminal, Klaus Barbie, to South America. Nothing better demonstrates how Allied and US policy dramatically changed after the war from a focus on war-related issues to the Cold War against the Soviet Union.

The record of this terrible legacy of the Ustasha assembled for our study is incomplete, and a full accounting should be made to achieve a complete understanding of the issues raised. The opening of relevant archives in Croatia, Serbia and the Vatican and cooperative international research will be essential in this effort, and we're very pleased that the Croatian Government has recently announced the establishment of an historical commission to look at this issue.

Excerpt from the Summary of the report: "U.S. and Allied Wartime and Postwar Relations and Negotiations With Argentina, Portugal, Spain, Sweden, and Turkey on Looted Gold and German External Assets and U.S. Concerns About the Fate of the Wartime Ustasha Treasury"

The Fate of the Wartime Ustasha Treasury

The so-called independent state of Croatia, established on April 10, 1941, as part of the German conquest and dismemberment of the Kingdom of Yugoslavia, was denounced by the U.S. Government. Throughout World War II, it was U.S. policy to avoid any action that might imply acknowledgment of the Croatian protectorate, and to support the guerrilla forces seeking to overthrow the German-backed regime.

The Fascist Ustasha political movement in power in wartime Croatia carried out a murderous campaign aimed at Serbs, Jews, and others. As many as 700,000 victims, mostly Serbs, may have died in the camps. The Ustasha Croat campaign started with the internment of 35,000 to 40,000 Croatian Jews in the spring and summer of 1941, followed by the deportation of remaining Jews to Germany in 1942 and 1943. Only a few thousand Croatian Jews escaped after first finding temporary sanctuary in the Italian portion of the Croatian protectorate.

The Ustasha regime in Croatia accumulated a treasury that apparently included valuables stolen from the dispossessed and deported Jewish and Sinti-Romani victims of the ethnic cleansing campaign. A variety of wartime and postwar U.S. intelligence reports confirm a Ustasha regime treasury of some size, but no authoritative quantification proved possible. Nor was it ever clear how much came from Croatian Jewish victims -- although one U.S. intelligence report speculated that it might be as much as $80 million in gold, mostly coins. Official and postwar information does confirm that the Croatian regime transferred gold to Switzerland toward the end of the War, and at least 980 kilograms of gold (worth about $1 million), taken by the Croat officials from the Sarajevo branch of the Yugoslav National Bank in 1941, was transferred to the Swiss National Bank in 1944. In July 1945 the Swiss National Bank returned the gold to the new Yugoslav Government.

After the Ustasha regime collapsed at the end of the War, its leader, Ante Pavelic, and some companions fled to the British zone of occupation of Austria from where, according to intelligence reports, he escaped or was released after surrendering some or all of a quantity of gold he had brought from Croatia. Intelligence reports vary widely in the amount of gold Pavelic brought -- $600,000, $5-$6 million, or even $35 million. None of the information on the amount or makeup of the gold Pavelic was carrying or turned over to the British, some of which has the quality of legend, has been confirmed. What is known is that no gold was reported by British authorities to have been recovered, and none was turned over to the Tripartite Gold Commission for restitution. Pavelic made his way to Rome, where he arrived in early 1946.

U.S. and British intelligence reports agree that the College of San Girolamo degli Illirici in Rome served as a place of refuge and support for the Croatian refugees. San Girolamo, which is located outside the walls of the Vatican and pays Italian State taxes, provided living quarters for Croatian priests studying at the Vatican. After the War, it was the reported center of an extensive and effective underground that assisted Ustasha fugitives, including Ante Pavelic, to flee from Europe to South America. Pavelic hid in Rome at various locations from 1946 until his flight to Argentina in November 1948 without any decisive action by the U.S. or British authorities to apprehend him and make him available for a war crimes trial.

A prime mover of the Ustasha activity in Rome was Father Krunoslav Dragonovic, secretary of the College of San Girolamo. Taking advantage of his contacts inside the International Red Cross, Dragonovic helped Ustasha fugitives emigrate illegally to South America by providing temporary shelter and false identity documents, and by arranging onward transport, primarily to Argentina. In the late 1940s and early 1950s, the U.S. Army Counter Intelligence Corps and the Ustashi collaborated in running a "rat line," an escape route for defectors or informants who had come to Austria from the Soviet zone of Germany or from Soviet bloc countries. In 1951 the anti-Communist informer and Nazi war criminal Klaus Barbie escaped to South America over the rat line. Some intelligence reports indicate that gold from the Ustasha treasury may have been used to finance the postwar underground activities involving Father Dragonovic at San Girolamo. There is no evidence in U.S. archives that the Vatican leadership knew of or gave support to the Ustasha activities outside its walls, but, given the location of the College, troubling questions remain.

The postwar fate of Croatian Ustasha fugitives, with or without portions of their wartime treasury, depended to a significant extent upon U.S. as well as British policies regarding Croatian Ustasha war criminals and escapees. In the first postwar months, U.S. and British policy was to turn over to the new Yugoslav Government of Marshal Tito anyone for whom the Yugoslavs could make a prima facie case of collaboration with the Nazis. This policy began to change in 1946 as the prisoner of war camps emptied. The standards for turning over Croatian prisoners of war steadily rose, and few were returned to Yugoslavia by late 1946. By May 1947 the U.S. Government became convinced that the Yugoslav Government was meting out unduly harsh treatment to its political enemies and perverting justice. U.S.-Yugoslav relations had cooled as a result of the Yugoslav regime’s hostile actions, including harassment of U.S. Embassy personnel and accusations of espionage, the arrest and trial of Yugoslav employees of the Embassy on charges of espionage, attacks on unarmed U.S. aircraft over Yugoslavia, Yugoslav efforts to annex Trieste, and Yugoslav unwillingness to settle outstanding claims of American citizens for confiscated property. In addition, the U.S. and British intelligence services were relying increasingly on former Ustashi as sources of information and were consequently reluctant to antagonize these informants by extraditing their leaders to Yugoslavia. As a result, the policy of surrendering Ustashi was ended -- a policy with which the British concurred. Even when the Allies learned the precise location of Ante Pavelic, the leader of the murderous Ustashi regime, they refrained from taking any action to bring him to justice.

U.S. official records provide only an imperfect understanding of the fate of the Croatian Ustasha treasury and the uses to which it may have been put. Evidence presented by the Croatian delegation to the December 1997 London Conference on Nazi Gold gives encouragement that more can be learned from Croatian sources. The bizarre circumstances attending the movement of Croatian State gold to Switzerland during the War and the flight of Ustasha leaders to Austria at War’s end as well as the underground activities of Ustasha priests in Rome give rise to the hope that more information on the fate of Croatian Ustasha gold, including any possible victim gold, may come from the records of the Swiss National Bank and the British occupation forces and intelligence organizations, as well as from the archives of the Vatican and the Croatian State Archives.

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