When the crème de la crème of art collectors gather at Christie's in New York Wednesday evening, it'll be one of this autumn's premier society events. The world's largest auction house expects more than 1,500 potential buyers to attend its "Impressionist and Modern Art Evening Sale" at the Rockefeller Center, not far from Fifth Avenue. Up for auction will be works by Paul Gauguin, Pablo Picasso, and Gustav Klimt, as well as a painting by Ernst Ludwig Kirchner that was on display in Berlin's Brücke Museum until Aug. 1.

The evening's sales could well exceed $300 million. Christie's expects the 1913 Kirchner painting, "Berlin Street Scene," which the Berlin Senate returned to the granddaughter of Jewish art collector Alfred Hess, to fetch more than $20 million.

When this icon of German Expressionism changes hands, it will inevitably reignite a debate in Germany over the difficulties Germans face in dealing with a singular aspect of their Nazi past. Indeed, the Kirchner case is only the beginning.

Jewish heirs have laid claim to many valuable pieces of art currently hanging in German museums. Those charged with reaching a decision over the artworks -- whether they are museum directors or local politicians -- face a dilemma. On the one hand, there are the claims of the descendants of persecuted or murdered German Jews, who want works returned that were once taken from their ancestors under duress. On the other hand, it is in the public interest to ensure that important pieces of art remain in the country. Museum directors accuse some of those involved of being more concerned about the millions at stake than moral issues -- business-minded lawyers eager to satisfy an art market hungry for new material.

Morality versus money

The core issue revolves around whether the act of returning the works on moral grounds is not being morally discredited by art deals running into the millions. But one thing is certain, and that is that German museum directors have come under considerable pressure as a result of the Berlin museum's return of the Kirchner painting, especially when one considers how many works could face the same fate. Experts estimate that up to 50 famous works now in German museums could eventually end up in the mansions and safes of collectors around the world. The heirs of the former owners of paintings by Ernst Ludwig Kirchner, August Macke, Lyonel Feininger and Franz Marc have all demanded that the works be returned. Stuttgart's Staatsgalerie Museum, for example, was asked to hand over Marc's 1911 oil painting titled "The Little Blue Horses." The Wilhelm Hack Museum in the central German city of Ludwigshafen received a claim for the restitution of Kirchner's "Judgment of Paris," and the Sprengel Museum in Hannover has been asked to return Marc's "Cat Behind a Tree." More than a dozen state-owned museums are affected by the claims.

But no one knows whether the current list is exhaustive. The one thing all the parties involved -- the attorneys of the heirs, as well as museum directors and politicians with an interest in preserving Germany's cultural heritage -- have in common is confidentiality. Not even Christian Democrat (CDU) Bernd Neumann, State Minister for Culture and the Media, knows exactly which museums have been confronted with which claims. Alarmed by vocal public criticism of the Berlin museum's return of Kirchner's painting, Neumann plans to invite the directors of major cultural institutions and museums, as well as legal experts, to a meeting at the Chancellery this month to discuss the situation.

Neumann is in a tight spot. After all, it was the German government, at a conference in Washington in December 1998, which had promised to return artworks to the descendants of Nazi victims. It was a conference that German government officials attended with great apprehension. While the then State Minister for Culture Michael Naumann was passionately in favor of returning such artworks, the Foreign Office was worried that Germany would end up playing the role of the accused in Washington. According to the minutes of a preliminary meeting involving several government ministries, officials were "concerned" that the US approach "could signify the establishment of new, unlimited claims for restitution."

Unimpressed by the staggering figures

Diplomats at least managed to defuse one sensitive issue. Following one of the preparatory meetings in Washington, they sent a cable home to Germany, writing that there would be no "rhetorical connection made between Nazis and Germany." But in another telegram they warned that the return of about 110,000 pieces valued at $10 to 30 billion was up for discussion.

But officials in Berlin were unimpressed by these staggering figures, and their instructions to Germany's representatives in Washington remained the same. The Germans, together with delegates from 43 other countries, signed an eleven-point statement. According to the essence of the statement, artworks confiscated during the Nazi era were to be searched for, identified and the rightful heirs determined. Once that had taken place, "a fair and just solution" would be reached with the heirs.

Elation over the consensus of 1998 has since turned into irritation over the wave of restitution claims. Experts now suspect that at least some of the parties involved in Washington were interested in more than just the well-being of the descendants of Nazi atrocity victims. After reviewing old records, officials at the Chancellery came across the name of a man with apparently multiple motives.

An American and one of the world's most prodigious art collectors played a key role in making the conference happen in the first place. Ronald Lauder, 62, is the heir of the cosmetics fortune of his mother Estée Lauder and the company named after her. Lauder, a billionaire whose Jewish family has its roots in Austria, was also the treasurer of the World Jewish Congress, which established a "Commission for Art Recovery." German diplomats discovered that the person behind this commission was "installed at Lauder's instigation," as officials at the German consulate in New York reported to the Foreign Office in Berlin.

It took many art experts years to realize the true extent of Lauder's involvement, especially in the efforts of Jewish heirs to recover five paintings by Viennese Art Nouveau painter Gustav Klimt owned by the Austrian government. The heirs finally prevailed this year, and rightfully so. Lauder, who had served as US ambassador in Vienna in the past, boasted over having served as "a sort of unofficial advisor" to the family that had reclaimed the paintings. The success of Lauder's efforts became all-too-apparent in June, when he acquired one of the paintings, "Adele Bloch-Bauer I," for $135 million.

Simple change in terminology

Michael Naumann was the man in Germany who wanted to ensure that the Jewish restitution claims were handled fairly. At his instigation, a "Joint Declaration of the Federal Government, the States and the Central Associations of Municipalities for the Retrieval and Return of Cultural Assets Confiscated as a Result of Nazi Persecution, Especially Those Under Jewish Ownership" was adopted in December 1999. An advisory commission was formed to settle potential disputes.

But when the Washington declaration was implemented, the options for restitution in Germany were expanded through a simple change in terminology. The phrase "works of art confiscated by the National Socialists" was replaced by the phrase "cultural assets lost as a result of Nazi persecution." The new wording meant that claims could also be applied to so-called "refugee art," in other words, paintings that Jews who had emigrated from Germany during the Nazi era had sold to support themselves.

Part II: "Brutal Moral Cudgel"

In addition, strict conditions were imposed on the fate of disputed paintings in museums. In the case of works that had been sold during the Nazi era, the museums in question were required to prove that not only had they agreed to pay a fair market value for the paintings, but that this price had in fact been paid. The problem was that for most of these works, receipts were either never issued or have since been lost -- as in the case of Kirchner's "Berlin Street Scene," which was sold in 1936. Unable to provide a receipt for the work, the city of Berlin was forced to return the painting.

Many German museums lacked more than just receipts. "In the postwar years," says Naumann, "there was no awareness of injustice in German museums." In January 1999, Naumann wrote: "To my knowledge, German museums have yet to undertake any satisfactory efforts to address this concern, namely by taking precise and comprehensive inventories of artworks of dubious or questionable origin, that is, those looted by the Third Reich."

This has since changed, though not necessarily in a way Naumann would endorse. Many museums are now doing their own research as part of an effort to fend off claims for restitution. Their directors have complained about "shrewd attorneys" and the "brutal moral cudgel" they have used to back up their threats.

In fact, it is often the attorneys who encourage heirs to file claims for restitution in the first place. This was apparently the case with the Kirchner painting and other works that once belonged to the collection of Alfred Hess, a shoe manufacturer in the eastern city of Erfurt. As recently as six years ago, Hess's granddaughter, Anita Halpin, showed no interest whatsoever in her grandfather's paintings. In the meantime, she has filed restitution claims for several dozen paintings from the former Hess collection. Halpin is represented by David J. Rowland, an attorney with offices on New York's Park Avenue who specializes in restitutions.

"Subject of forced sale"

While the Berlin Senate is acting in the spirit of Naumann's earlier efforts, there is one case in which the federal government has behaved like many museum directors -- by simply refusing to return works claimed by the descendants of their former owners. Indeed, it is such a high-profile case that even German President Horst Köhler became involved.

Several years ago Juan Carlos Emden, a Chilean, demanded that the German Ministry of Finance return two valuable 18th-century paintings. Emden's grandfather, Jewish businessman Max Emden, was forced to sell the works by Italian painter Bernardo Bellotto, better known as Canaletto, after emigrating from Germany to Switzerland. The German government has owned the works since 1949 (West Germany owned them until 1990). But returning the paintings to Emden, Finance Minister Peer Steinbrück's bureaucrats informed Emden's attorneys in a final decision in August, was out of the question. The paintings, they argued, had not been the "subject of a forced sale."