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This paper explores the legacies of historical trauma of the Second World War in Serbia and Croatia in relation to a largely under-researched issue: the restitution of Nazi-looted art. After the end of the war, the private property of war victims, including large Jewish minorities, was nationalized by the Yugoslav communist government. This property included numerous works of art that was declared “heirless”, and then handed over to national museums. Private Jewish cultural property then became seamlessly incorporated into Yugoslav national cultural heritage and formed the basis of public art collections of major state museums. As the international norms about art restitution developed and institutionalized in the 2000s, more and more claims for restitution and return started to arrive at these museums’ doors. The local response to these demands eventually diverged. In Serbia, these claims were violently rejected. The Serbian government and cultural institutions argued vehemently that these artifacts should remain in national museums as a form of “restitution in kind” for the trauma and violence Serbia suffered at the hands of both the Nazis and the Allies during the war. The diplomatic efforts here were uniformly geared toward rebuffing restitution claims and sustaining state narratives of righteous victimhood. In Croatia, restitution claims were met more favorably, as compliance with international policies, such as those about art restitution, served to signal liberal international identity and cultural belonging. In explaining different state attitudes regarding the same set of demands, this paper illustrates the long-term legacies of historical trauma and, more important, narratives about that trauma, on contemporary foreign policy choices and diplomatic negotiations.