PBS Interview with George Soros

He is a billionaire and philanthropist and Chairman of Soros Fund Management LCC, a private
investment management firm that serves as principal advisor to the Quantum Group of Funds.
He is the author of The Crisis of Global Capitalism. (Interview conducted in the spring of 1999.)

The global economic crisis, if we want to begin to understand the origins of it, from your point
of view, where should we look?
You have to look at the system of currency pegs--when a currency is tied to the dollar or to
another hard currency. This peg may not hold, but people assume that there is a fixed
relationship between the dollar and, let's say, the Thai currency or the Malaysian currency. They
then exploit the difference in domestic interest rates and the international market. They borrow in
dollars and they lend in the domestic currency. They make a fortune in the process, as long as the
peg holds. But because of, maybe, excessive borrowing, which allows a country to maintain a
trade deficit over an extended period of time, or to engage in a currency or real estate boom
financed by dollars, you have over-heating, trade imbalance, and then the capital flows reverse.
People want to take their money out, instead of putting it in, and you have a crisis.

You've written and spoken about the deeper trends that are going on in the financial markets
today.

I put forward a pretty general theory that financial markets are intrinsically unstable. That we
really have a false picture when we think about markets tending towards equilibrium.
Equilibrium is appropriate when a market deals with known quantities. But in financial markets,
you deal with unknown quantities. You're trying to discount the future. But the future depends on
how you discount it today. It's not something fixed, so your discounting can't correspond to the
future.
Now, there is the prevailing theory which holds that financial markets should be regarded as if
they were in continuous equilibrium. I think that is actually a false image. Because, in effect,
they are in continuous disequilibrium. Therefore, they are given to going to excesses in one
direction or another. You can have a boom and a bust. Now, in practice, we have learned that
that's the case. Through experience, we have evolved a system of central banking that prevents
these excesses from going too far. Controlling the money supply, dampening the boom so that
you don't get a bust. Then stimulating the economy [that] is in decline. You have various
regulatory authorities and so on.

We now have global markets. We don't have an appropriate international mechanism for
regulating the global financial markets. That's a problem. We have the Bretton Woods
Institutions--the International Monetary Fund and the World Bank. But they were created for a
different world, a world in which there were no capital movements. In fact, these institutions
were designed to make trade possible in the absence of international lending, and so on. These
institutions adopted themselves to changing circumstances.
You also had, at the time, fixed exchange rates. So the fixed exchange rate system broke down.
Global capital markets developed. The institutions, the IMF, is not adequate to meet these
circumstances. It adapted itself and did reasonably well in one crisis after another. There was a
big international crisis in the '80s ... mainly focused in America. Then you had the Mexican crisis
in '94. Now, you had this latest crisis. Here, the IMF method proved to be inadequate. So their
intervention became part of the problem, instead of being part of the solution.

You criticize people who you called, "market fundamentalists." Tell me what their theory is, and
why you're critical of it.

Well, market fundamentalists recognize that the role of the state in the economy is always
disruptive, inefficient, and generally has negative connotations. This leads them to believe that
the market mechanism can take care of all the problems. Get the state out of there. The markets
are perfect. In fact, they will take care of themselves.

The first part of the proposition is correct. The second part is false. Just because state
intervention is imperfect, is full of negative effects, doesn't mean that markets are either stable or
provide social justice. Or are appropriate for certain functions that society needs, but cannot be,
in my opinion, provided by the market. So it's carrying the belief in markets to an extreme,
which is, I think, today very, very dangerous.

So do you think that the markets today have too much power?

Well, they are too influential. They have penetrated into areas of society where they weren't
previously, or to a much lesser extent. For instance, they have come to dominate the professions.
Law has become a business. Health care has become a business. Unfortunately, politics has also
become a business. That really undermines society.

Since the middle of 1987, beginning in Thailand, it tends to be the countries, themselves, who
are blamed by many for the problems, for the crisis. You've seen some other unifying themes ...

That's right. I mean, of course, there is something wrong in the policies followed by those
countries. But the crisis affected a great number of countries, some of which followed very
different kinds of policies. There is, however, a unifying theme. That is the role of capital flows.

The capital flows themselves can be destabilizing. I mean, it's sort of an innate feature of
markets. It's very good to have capital flows, but you also have to recognize that they can be
destabilizing. Therefore, you need some mechanism to prevent them from creating these
dislocations ...

As you said, you consider this situation quite dangerous.

Well, I do.

Why?
Well, so far, there have been tremendous economic dislocations, tremendous human suffering as
a result of what happened in financial markets, affecting what is now called innocent bystanders.
Millions of people who are not entrepreneurs, who hadn't made any decisions, didn't borrow
foreign currency. A lot of them, rather poor people, who have actually benefited over the years,
in an improvement in their standard of living. Suddenly a collapse--losing their jobs, having
much less income, much higher prices, and so on. Losing their savings, in the case of currencies
that collapse.

So tremendous dislocations. They have occurred in what I call the periphery of the global
capitalist system. These are the countries that have been attracting capital or using capital
coming from abroad. It has, if anything, actually benefited us and our economy, because we have
had the benefit of cheaper imports. Its incipient inflationary tendency was nipped in the bud.
Actually, we were on the verge of perhaps having higher interest rates, which would have pushed
us into a slow-down. Because of the financial crisis, we actually got lower interest rates and a
new shot of stimulus.

So we, if anything, benefited. It's very hard right now to convince people that there is something
really wrong, because they don't feel it themselves. But if they look abroad, they can certainly
see it. In my view, there is a very good chance that the next crisis, which may happen in the next
few months, or the next new years ... we'll actually have a similarly or maybe not quite as
seriously disruptive effect, but a negative effect on our economy.

I say it's not going to be so serious because we gave a very effective institutional framework to
guard against it. So it's not likely to be as severe as it was, let's say, in Indonesia or Brazil. But
nevertheless, it could have a negative effect in our economy. If that were to happen before the
rest of the world has recovered, then you would have a worldwide depression similar to what
happened in the 1930s.

Because if we began to have problems ...

Well, because, right now, people suffer some dislocations in our economy. People lose jobs, as
we turn to cheaper imports from Mexico or from other parts of the world. But there's tremendous
new job creation. Actually, our unemployment is very low. The economy is really very
prosperous. We aren't overheating. It's probably the best of all possible worlds. But if you now
started to go into slowdown, and people who lost their jobs couldn't find new jobs, then the
outcry against cheap imports and the loss of jobs, would become politically much more
powerful.

As it is, we are imposing some restrictions, for instance, on imports of steel, because they are, in
fact, flooding our market. That protectionist sentiment would then become much stronger. Then
you would start disrupting international trade, as a result of the disruption of financial markets.
Then you would get into a problem that the countries that have to repay their debts would not be
able to earn the hard currency, which they need, in order to service their debts. So that you would
have financial distress, as well as interruption of trade.
... A lot of people marked the beginning of the current crisis is Thailand. But there are others
who say that ... the wrong lessons were learned in '94 and '95 in Mexico ...

Yes. Well, you see, what happened in '94-'95, Mexico had, again, a pegged exchange system,
had a trade deficit, and a current account deficit, and the peg couldn't be maintained. There was a
crisis. The IMF, under the leadership of the Treasury came in with a very large rescue package,
which allowed Mexico to service its debt, the Treasury bills that it had issued, in dollars. So the
people who had invested in Mexico came out scot-free. That gave rise to what is considered the
moral hazard--that it's safe to invest, even in an unsound economy, because if things go wrong,
the IMF and the Treasury is going to bail you out.

This is a particularly important factor in Russia, which was totally unsound, but people kept on
lending money, because they were convinced that Russia is so important geo-politically, that we
wouldn't let them default. It turned out to be false. But it led to this unsound lending and the
moral hazard.

Opinion has turned very strongly against moral hazard now, which actually creates the opposite
problem, that the IMF is unable to come to the rescue, because if it did, it would be accused of
bailing out the speculators and the unsound lenders. So it's unable to come to the rescue.
Therefore, it's very risky to lend, and nobody wants to lend. So you now have a situation when
there is a reverse flow of capital fleeing from the periphery, coming back to the center. Whereas,
most of the remedies that are proposed are remedies against excessive investments, excessive
lending. The problem now is exactly the opposite ...

So what I am advocating is a more balanced approach, where you, on the one hand, do impose
some penalties on people who lend or invest in countries that are unsound. You make that clear
in advance. This will discourage them from investing. You prevent sort of unsound booms, but,
at the same time, you must also create conditions that will encourage people to lend or invest in
countries which are in need of capital and are following sound policies. For that, the IMF has to
develop into something like a lender of last resort for those countries which are sound enough
that it is appropriate to lend to them. Not to countries that are broke. This would correct the
imbalances which have developed.

The other thing that is wrong with the IMF policies is that they can only come in when there is a
crisis. They really have absolutely no standing until they are called in. They are only called in
after a breakdown. Now, the best way to prevent a bust is to moderate the boom. You really need
to come in earlier and to follow the correct policies. So if you have the IMF acting as a lender of
last resort for countries that meet the right conditions, then the IMF can exert influence to
prevent, let's say, excessive borrowing, and so on. This would give you a more balanced system
of rewards and punishments. Similar to the position of a central bank, that actually sort of
stimulates an economy, or dampens a boom, by changing the interest rates. So that is the new
architecture that you would need.

There is one major objection to this, that the distinction between good guys and bad guys is too
rough. There is too much discontinuity. That you actually have to create a more sort of nuanced
rating of the countries, match the facilities that you provide to the conditions in that country.
That would then be a balanced system. So that is what I am, generally speaking, proposing. It is
being considered. But politically, the idea of making the IMF more powerful, especially after it
has failed, is a very difficult thing to sell ... the IMF has failed, because it didn't have adequate
resources. I don't think that you can have a global market without a lender of last resort, and
something resembling a global central bank, which is what this would, in fact, be.

In general, what are the reactions ... to your diagnosis? To your saying that there's something
quite wrong here and that we need some new rules.

I think that they are very much aware of it. In fact, some of their statements went a long way in
that direction. When they talked about preventive lending, that's what they were talking about.
There is a danger that the calamity is not severe enough, and hasn't touched us directly enough to
gather the political will to do something about it. So the punitive or negative aspects are moving
forward.

For instance, there is discussion to change the nature of international bond contracts, so that it's
easier to restructure them and to delay payment. But the effect of that will be merely that people
will demand a higher risk premium. So while all these measures are useful, there has to be
something on the positive side. That is where it's difficult to gather the political will ...
Especially, to gather the political will in the United States, where Congress is very much
opposed to it.

Is the Treasury also opposed to it?

The Treasury is much more open minded. In other words, they are studying it, but they are aware
of the political realities. So while my ideas are being considered, I don't think they are
considered very realistic.

When you, as an investor, as a trader, look out at the world, six months, nine months down the
road, what kinds of things are you looking for?

The financial markets generally are unpredictable. So that one has to have different scenarios ...
The idea that you can actually predict what's going to happen contradicts my way of looking at
the market.

Actually, I see tremendous imbalance in the world. A very uneven playing field, which has
gotten tilted very badly. I consider it unstable. At the same time, I don't exactly see what is going
to reverse it. Certainly, a slowdown in our economy would leave the world extremely vulnerable,
because the U.S. economy is, today, the single engine that is driving this very big plane. So if
that engine were to conk out, you'd have a very serious problem. It's a question [of], can you
repair the other engines before this one gives out. Because even though people say that we live in
a new world, and the past is not relevant ... cyclical fluctuations are not eliminated. That's my
main concern.

... I just want to clarify ... that what you have is a very uneven playing field. You have excess
liquidity at the center and a great deficiency of capital at the periphery. The money is still
flowing from the periphery towards the center. So we ought to find a way to inject liquidity in
the periphery. Instead of that, we can only inject liquidity at the center. The Federal Reserve can
lower interest rates, and has done so.

What you need is a mechanism to provide capital to countries like Brazil, which is where money
is fleeing. Interest rates are very high. The country is going into recession. So this is what creates
a tremendous imbalance, at the moment, which is not sustainable. It could lead to ... if this
engine now gives out, then you have a problem.

I mean, in fact, there is a certain danger that because of the injection of liquidity, our financial
markets have become overheated. You have signs of speculation, excessive speculation in areas
like Internet stocks, and so on. You could conceivably have at some point a crash that would
then have negative effects on the real economy ... In this country. And then, indirectly, on the
rest of the world ...

Let's talk about Russia ... Is there any way that what happened there could have been moderated?
That the fall could have been not so severe?

Well, you see, it's really a tragic situation, because again, everything that could be done wrong,
we have done wrong. We have failed to provide the kind of aid that Russia would have needed,
which would have been more in the nature of a Marshall Plan or something more intrusive than
the Marshall Plan was in Europe.

Instead of that, we left it to the IMF to provide support. The IMF deals with countries where the
government promises to fulfill certain conditions, and the IMF then lends them the money. But
actually, in Russia, you did not have a functioning central government. Therefore, they kept on
promising, but they couldn't possibly deliver. So the IMF was actually the wrong institution to be
helping Russia, but we were not willing to put taxpayers' money at work. We gave it to the IMF,
which had its own resources, so we could do it costlessly.

That's the background. Now, gradually, Russia tried to change from this robber-capitalist system
that prevailed, to something more legitimate. Just at the time that the crisis came, they actually
had the best government, the most honest, the most committed to reform, who actually tried to
do battle with the robber-capitalists, and tried to get them to pay their taxes.

The robber-capitalists then fought them. They controlled the media. They actually destroyed the
reformers and created or, let's say, coincided with the crisis. The IMF had a program which was
unfortunately short on money. The deficiency was not that great. I, at the time, estimated it to be
$7 billion, which is really peanuts in this context.

I think that providing that extra money could have given that government, let's say, six months
breathing space, during which they could have proven whether they are, in fact, able to collect
the taxes that they had to do. So, it would have been a very small price to pay. But for various
reasons, the international community didn't come through.
You then had a collapse, effectively a default, which shook markets. The government
immediately fell. You now live in a kind of a twilight period, when things are drifting. You have
a government that has proven itself quite good in sort of holding things together, so that
cushioning the rate of decline, but not showing any ability to turn things around.

So you just have a deteriorating situation. Also, a kind of a political vacuum. You have a drift.
There's very little you can do right now, except to hold the door open. Try to avoid an official
default that would isolate Russia, in a way that would be quite dangerous. Wait for some kind of
political resolution, and the emergence of a government with whom one could work towards
more active reform.

How do they get out of it, when essentially, they have no money?

Well, they can't. They don't get out. They get out of it by not using money, actually. You see,
practically everything is done by barter. So, as far as money is concerned, they are broke. But
since the economy doesn't use money, it kind of grinds along. I mean, it's very inefficient. Barter
is much more inefficient than a monetary economy, but it doesn't totally break down.When the
government began to issue its short term notes, the infamous GKOs, was that a mistake on the
government's part? How much did the U.S. Treasury and the IMF know about this hole that they
were digging themselves into?

It was not a mistake, because it's the only thing they could do. As long as people were willing to
lend to them, it's not a mistake to borrow, when you are broke. I would say that any observer
could see that the whole situation is unsound and unsustainable.

The only question was whether they could actually start implementing the reforms which they
were promising ... The tragedy was that ... in the spring of '98, they started raising the cost of
electricity and collecting taxes ... Then they got involved in this fight with the so-called
oligarchs, the robber-capitalists, which preoccupied them, and the reform effort kind of fell by
the wayside. Then came the global crisis. Through hook and crook, they managed to get a new
government in place which was, actually, as I say, a very good government. But it had no chance
to see whether they can actually deliver on their promises.

... That new, reformist prime minister said the first numbers that he was shown showed that what
they owed to repay their debts was billions of dollars more than they were bringing in.

Correct. Right.

I mean, from day one of his ...

There was a hole, actually ... You see, the IMF plan assumed that the maturing treasury bills will
be rolled over or can be rolled over, even if the interest rate is atrociously high. That [at] some
interest rate, there will be some buyers. But what they've left out of account is that the holders of
the GKOs were banks that borrowed dollars to buy the GKOs, couldn't repay the dollars. The
foreign banks were not willing to lend them any more money. So they could not roll over the
GKO at any price. So there was a hole there. As the Russian public started withdrawing its
savings from the national savings bank, the hole got bigger. What started out as a hole of $7
billion, within a week or two became a hole of $15 billion. Would have even become bigger.

So you began to understand that they were in deep trouble ... What did you think was going to
happen? ...

Well, you see, I made probably the worst miscalculation of my investment career, because I
invested in the Russian telephone company, in the expectation that they were going to make this
transition from robber-capitalism to legitimate capitalism. Then it would have been a very good
investment. They turned to me and wanted to borrow some money against the next tranche of the
telephone company to be privatized. That prompted me to look at the situation. I realized that it
was beyond redemption. Except through another additional [loan] package. I thought at first that
it could perhaps be put together as a public-private partnership.

Then, when the situation got worse, I concluded the only way would have been to introduce a
currency board and stabilize the situation. So right up to the last minute, the situation could have
been at least temporarily stabilized, but it would have been a very, very high risk. Lending
money to people who have consistently failed to deliver on their promises, in the hope that this
time they'll do better. So the political risk of throwing good money after bad was just too much,
with a very hostile Congress. With Germany preoccupied with the elections, and Chancellor
Kohl didn't want to deal with this issue at all. There was no support from Germany. So it was
impossible to put a package together.

You wrote a famous letter that was published in The Financial Times, when you proposed this
currency board, but you also said that people did not understand the urgency of the situation ...

Well, you see, I wrote a letter to The Financial Times, proposing a currency board. As part of the
currency board, a 15%-25% devaluation, which would have been necessary, because the
currency had become overvalued. Also, would have taken into account this moral hazard
problem, because people who had invested in the local Treasury bills would have lost at least
15%-25% of their money. So I thought that that was necessary. Unfortunately, people didn't
understand what a currency board was, but they understood what devaluation was. I then got
blamed for the collapse of the market, which actually is somewhat unjustified, because it would
have collapsed without my letter, but it just happened to coincide with the collapse.

What would have happened if Russia had devalued back in the spring? Back in April, May?

I think it would have helped.

... Tell me something about that last weekend, before Monday, the 17th of August ... of the
feelings that were going on in your conversations with people.

Well, it was clear to all parties concerned that this was a crisis of the greatest magnitude. There
were a number of conversations about what could be done. I know of an international conference
call among the G-7 countries, who discussed this issue. But, as I said before, no package could
be put together. Whereupon, the Russians took it up on themselves to act unilaterally.
That really shocked the market, because it was effectively a unilateral default. The shock then
reverberated through the financial markets. Banks became very anxious about their outstanding
loans. Certain relationships between different markets, which had been sort of moved way out of
normal. At the same time, you had a number of hedge funds, investment banks that had
speculated on those relationships going back to normal. They had large positions, which
normally turned out to be profitable. At this time, disparities, the divergences, just grew out of all
proportion, since these operations are carried on with very high leverage meaning that it's all
done with borrowed money.

There was a hedge fund, Long Term Capital Management ... this entity lost a lot of its capital ...
The banks started asking for additional collateral, which they didn't have. There was tremendous
danger that if these positions had to be liquidated, then the disparities would get even bigger. Not
only would the Long Term Capital Management be unable to meet its obligations, but a lot of the
banks, and investment banks, that had lent to Long Term Capital, and also had similar positions
in their own proprietary trading debts, would also be called up on to liquidate their positions.

So you would have sort of an avalanche of selling, where you wouldn't know who is a good
counterpart and who isn't. You wouldn't know which institution is solvent and which is broke.
That would have been a meltdown of the financial markets. That would have then had a
devastating effect on credit all around.

Seeing it develop, the New York Fed intervened, and got the major counterparties of Long Term
Capital Management to put in addition capital. So that they didn't have to liquidate their
positions. That move prevented this meltdown.

You've written that not only were you disappointed in the response of the G-7 countries to the
Russian crisis, but that there was a loss of control, as you've called it, that was quite scary. Can
you tell me what you meant by that?

... Well, the consequences of this unilateral default showed up in the market, where there was a
flight to safety. The normal relationship between lower grade bonds and high grade government
bonds, widened. The stock market was shaken and started to fall. We actually came very close to
what I call a meltdown of the system, as a result of the problems connected with Long Term
Capital Management.

So, not only was it, let's say, a reasonable gamble, to give some additional support to Russia, in
order to help Russia from a breakdown, but it also would have saved us from that particular
incident.

Now, the Fed was more effective in intervening in the domestic market, than the G-7 was
intervening internationally. So the worst outcome was avoided. The effect on Russia, we have
seen. But actually, the effect on the financial markets proved to be very transient.

The Russians were basically told by Monday morning, August 17th, that they were on their own,
that nothing was going to be put together.
Yeah. I think that on Sunday, they were told. They went to Yeltsin, and got his consent for this
default action. So Sunday night, it was announced Monday morning, it was a fait accompli.

You lost a bunch of money in Russia.

Yes. Yes.

You said it was the worst investment decision in your life.

Right. Right ...

Do you think people understand the seriousness of what happened in Russia, that there are still
potential repercussions?

I think that people generally realize the situation is pretty hopeless right now. It's probably not
quite as hopeless as it seems to us, who have sort of orderly minds, and we want to see ... Russia
seems to be able to get by.At the time, a lot of people were aware how serious the internal
situation was. That's why the markets fell. But it was a temporary panic. Through the
intervention of the Fed, bailing out Long Term Capital Management, and very shortly thereafter,
lowering interest rates, which was a very important move--markets took heart. It's now sort of
like an episode that's almost forgotten.

But shouldn't be?

Well, it should not be forgotten, because these kinds of episodes are liable to reoccur. No reform
will ever eliminate the risk of some kind of a breakdown. But when you identify what has gone
wrong and what could be done to fix it, you actually do need to fix it. Because without it, we
couldn't have developed the financial markets we have.

Financial markets have always failed from time to time. Then, they got fixed by some advance in
central banking or in a regulatory environment. As a result, financial markets got increasingly
sophisticated, refined and effective. If you now allow this belief that markets are best left alone
to predominate and refuse to fix the deficiencies, then you run the really serious risk that you will
have a very serious breakdown.

"The Capitalist Threat" by George Soros

Atlantic Monthly, Volume 279, No. 2, February 1997

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What kind of society do we want? "Let the free market decide!" is the often-heard response. That
response, a prominent capitalist argues,undermines the very values on which open and
democratic societies depend.
IN The Philosophy of History, Hegel discerned a disturbing historical pattern -- the crack and fall
of civilizations owing to a morbid intensification of their own first principles. Although I have
made a fortune in the financial markets, I now fear that the untrammeled intensification of
laissez-faire capitalism and the spread of market values into all areas of life is endangering our
open and democratic society. The main enemy of the open society, I believe, is no longer the
communist but the capitalist threat.

The term "open society" was coined by Henri Bergson, in his book The Two Sources of Morality
and Religion (1932), and given greater currency by the Austrian philosopher Karl Popper, in his
book The Open Society and Its Enemies (1945). Popper showed that totalitarian ideologies like
communism and Nazism have a common element: they claim to be in possession of the ultimate
truth. Since the ultimate truth is beyond the reach of humankind, these ideologies have to resort
to oppression in order to impose their vision on society. Popper juxtaposed with these totalitarian
ideologies another view of society, which recognizes that nobody has a monopoly on the truth;
different people have different views and different interests, and there is a need for institutions
that allow them to live together in peace. These institutions protect the rights of citizens and
ensure freedom of choice and freedom of speech. Popper called this form of social organization
the "open society." Totalitarian ideologies were its enemies.

Written during the Second World War, The Open Society and Its Enemies explained what the
Western democracies stood for and fought for. The explanation was highly abstract and
philosophical, and the term "open society" never gained wide recognition. Nevertheless, Popper's
analysis was penetrating, and when I read it as a student in the late 1940s, having experienced at
first hand both Nazi and Communist rule in Hungary, it struck me with the force of revelation.

I was driven to delve deeper into Karl Popper's philosophy, and to ask, Why does nobody have
access to the ultimate truth? The answer became clear: We live in the same universe that we are
trying to understand, and our perceptions can influence the events in which we participate. If our
thoughts belonged to one universe and their subject matter to another, the truth might be within
our grasp: we could formulate statements corresponding to the facts, and the facts would serve as
reliable criteria for deciding whether the statements were true.

There is a realm where these conditions prevail: natural science. But in other areas of human
endeavor the relationship between statements and facts is less clear-cut. In social and political
affairs the participants' perceptions help to determine reality. In these situations facts do not
necessarily constitute reliable criteria for judging the truth of statements. There is a two-way
connection -- a feedback mechanism -- between thinking and events, which I have called
"reflexivity." I have used it to develop a theory of history.

Whether the theory is valid or not, it has turned out to be very helpful to me in the financial
markets. When I had made more money than I needed, I decided to set up a foundation. I
reflected on what it was I really cared about. Having lived through both Nazi persecution and
Communist oppression, I came to the conclusion that what was paramount for me was an open
society. So I called the foundation the Open Society Fund, and I defined its objectives as opening
up closed societies, making open societies more viable, and promoting a critical mode of
thinking. That was in 1979.

My first major undertaking was in South Africa, but it was not successful. The apartheid system
was so pervasive that whatever I tried to do made me part of the system rather than helping to
change it. Then I turned my attention to Central Europe. Here I was much more successful. I
started supporting the Charter 77 movement in Czechoslovakia in 1980 and Solidarity in Poland
in 1981. I established separate foundations in my native country, Hungary, in 1984, in China in
1986, in the Soviet Union in 1987, and in Poland in 1988. My engagement accelerated with the
collapse of the Soviet system. By now I have established a network of foundations that extends
across more than twenty-five countries (not including China, where we shut down in 1989).

Operating under Communist regimes, I never felt the need to explain what "open society" meant;
those who supported the objectives of the foundations understood it better than I did, even if they
were not familiar with the expression. The goal of my foundation in Hungary, for example, was
to support alternative activities. I knew that the prevailing Communist dogma was false exactly
because it was a dogma, and that it would become unsustainable if it was exposed to alternatives.
The approach proved effective. The foundation became the main source of support for civil
society in Hungary, and as civil society flourished, so the Communist regime waned.

After the collapse of communism, the mission of the foundation network changed. Recognizing
that an open society is a more advanced, more sophisticated form of social organization than a
closed society (because in a closed society there is only one blueprint, which is imposed on
society, whereas in an open society each citizen is not only allowed but required to think for
himself), the foundations shifted from a subversive task to a constructive one -- not an easy thing
to do when the believers in an open society are accustomed to subversive activity. Most of my
foundations did a good job, but unfortunately, they did not have much company. The open
societies of the West did not feel a strong urge to promote open societies in the former Soviet
empire. On the contrary, the prevailing view was that people ought to be left to look after their
own affairs. The end of the Cold War brought a response very different from that at the end of
the Second World War. The idea of a new Marshall Plan could not even be mooted. When I
proposed such an idea at a conference in Potsdam (in what was then still East Germany), in the
spring of 1989, I was literally laughed at.

The collapse of communism laid the groundwork for a universal open society, but the Western
democracies failed to rise to the occasion. The new regimes that are emerging in the former
Soviet Union and the former Yugoslavia bear little resemblance to open societies. The Western
alliance seems to have lost its sense of purpose, because it cannot define itself in terms of a
Communist menace. It has shown little inclination to come to the aid of those who have
defended the idea of an open society in Bosnia or anywhere else. As for the people living in
formerly Communist countries, they might have aspired to an open society when they suffered
from repression, but now that the Communist system has collapsed, they are preoccupied with
the problems of survival. After the failure of communism there came a general disillusionment
with universal concepts, and the open society is a universal concept.
These considerations have forced me to re-examine my belief in the open society. For five or six
years following the fall of the Berlin Wall, I devoted practically all of my energies to the
transformation of the formerly Communist world. More recently I have redirected my attention
to our own society. The network of foundations I created continues to do good work;
nevertheless, I felt an urgent need to reconsider the conceptual framework that had guided me in
establishing them. This reassessment has led me to the conclusion that the concept of the open
society has not lost its relevance. On the contrary, it may be even more useful in understanding
the present moment in history and in providing a practical guide to political action than it was at
the time Karl Popper wrote his book -- but it needs to be thoroughly rethought and reformulated.
If the open society is to serve as an ideal worth striving for, it can no longer be defined in terms
of the Communist menace. It must be given a more positive content.

THE NEW ENEMY

POPPER showed that fascism and communism had much in common, even though one
constituted the extreme right and the other the extreme left, because both relied on the power of
the state to repress the freedom of the individual. I want to extend his argument. I contend that an
open society may also be threatened from the opposite direction -- from excessive individualism.
Too much competition and too little cooperation can cause intolerable inequities and instability.

Insofar as there is a dominant belief in our society today, it is a belief in the magic of the
marketplace. The doctrine of laissez-faire capitalism holds that the common good is best served
by the uninhibited pursuit of self-interest. Unless it is tempered by the recognition of a common
interest that ought to take precedence over particular interests, our present system -- which,
however imperfect, qualifies as an open society -- is liable to break down.

I want to emphasize, however, that I am not putting laissez-faire capitalism in the same category
as Nazism or communism. Totalitarian ideologies deliberately seek to destroy the open society;
laissez-faire policies may endanger it, but only inadvertently. Friedrich Hayek, one of the
apostles of laissez-faire, was also a passionate proponent of the open society. Nevertheless,
because communism and even socialism have been thoroughly discredited, I consider the threat
from the laissez-faire side more potent today than the threat from totalitarian ideologies. We are
enjoying a truly global market economy in which goods, services, capital, and even people move
around quite freely, but we fail to recognize the need to sustain the values and institutions of an
open society.

The present situation is comparable to that at the turn of the past century. It was a golden age of
capitalism, characterized by the principle of laissez-faire; so is the present. The earlier period
was in some ways more stable. There was an imperial power, England, that was prepared to
dispatch gunboats to faraway places because as the main beneficiary of the system it had a vested
interest in maintaining that system. Today the United States does not want to be the policeman of
the world. The earlier period had the gold standard; today the main currencies float and crush
against each other like continental plates. Yet the free-market regime that prevailed a hundred
years ago was destroyed by the First World War. Totalitarian ideologies came to the fore, and by
the end of the Second World War there was practically no movement of capital between
countries. How much more likely the present regime is to break down unless we learn from
experience!

Although laissez-faire doctrines do not contradict the principles of the open society the way
Marxism-Leninism or Nazi ideas of racial purity did, all these doctrines have an important
feature in common: they all try to justify their claim to ultimate truth with an appeal to science.
In the case of totalitarian doctrines, that appeal could easily be dismissed. One of Popper's
accomplishments was to show that a theory like Marxism does not qualify as science. In the case
of laissez-faire the claim is more difficult to dispute, because it is based on economic theory, and
economics is the most reputable of the social sciences. One cannot simply equate market
economics with Marxist economics. Yet laissez-faire ideology, I contend, is just as much a
perversion of supposedly scientific verities as Marxism-Leninism is.

The main scientific underpinning of the laissez-faire ideology is the theory that free and
competitive markets bring supply and demand into equilibrium and thereby ensure the best
allocation of resources. This is widely accepted as an eternal verity, and in a sense it is one.
Economic theory is an axiomatic system: as long as the basic assumptions hold, the conclusions
follow. But when we examine the assumptions closely, we find that they do not apply to the real
world. As originally formulated, the theory of perfect competition -- of the natural equilibrium of
supply and demand -- assumed perfect knowledge, homogeneous and easily divisible products,
and a large enough number of market participants that no single participant could influence the
market price. The assumption of perfect knowledge proved unsustainable, so it was replaced by
an ingenious device. Supply and demand were taken as independently given. This condition was
presented as a methodological requirement rather than an assumption. It was argued that
economic theory studies the relationship between supply and demand; therefore it must take both
of them as given.

As I have shown elsewhere, the condition that supply and demand are independently given
cannot be reconciled with reality, at least as far as the financial markets are concerned -- and
financial markets play a crucial role in the allocation of resources. Buyers and sellers in financial
markets seek to discount a future that depends on their own decisions. The shape of the supply
and demand curves cannot be taken as given because both of them incorporate expectations
about events that are shaped by those expectations. There is a two-way feedback mechanism
between the market participants' thinking and the situation they think about -- "reflexivity." It
accounts for both the imperfect understanding of the participants (recognition of which is the
basis of the concept of the open society) and the indeterminacy of the process in which they
participate.

If the supply and demand curves are not independently given, how are market prices determined?
If we look at the behavior of financial markets, we find that instead of tending toward
equilibrium, prices continue to fluctuate relative to the expectations of buyers and sellers. There
are prolonged periods when prices are moving away from any theoretical equilibrium. Even if
they eventually show a tendency to return, the equilibrium is not the same as it would have been
without the intervening period. Yet the concept of equilibrium endures. It is easy to see why:
without it, economics could not say how prices are determined.
In the absence of equilibrium, the contention that free markets lead to the optimum allocation of
resources loses its justification. The supposedly scientific theory that has been used to validate it
turns out to be an axiomatic structure whose conclusions are contained in its assumptions and are
not necessarily supported by the empirical evidence. The resemblance to Marxism, which also
claimed scientific status for its tenets, is too close for comfort.

I do not mean to imply that economic theory has deliberately distorted reality for political
purposes. But in trying to imitate the accomplishments (and win for itself the prestige) of natural
science, economic theory attempted the impossible. The theories of social science relate to their
subject matter in a reflexive manner. That is to say, they can influence events in a way that the
theories of natural science cannot. Heisenberg's famous uncertainty principle implies that the act
of observation may interfere with the behavior of quantum particles; but it is the observation that
creates the effect, not the uncertainty principle itself. In the social sphere, theories have the
capacity to alter the subject matter to which they relate. Economic theory has deliberately
excluded reflexivity from consideration. In doing so, it has distorted its subject matter and laid
itself open to exploitation by laissez-faire ideology.

What allows economic theory to be converted into an ideology hostile to the open society is the
assumption of perfect knowledge -- at first openly stated and then disguised in the form of a
methodological device. There is a powerful case for the market mechanism, but it is not that
markets are perfect; it is that in a world dominated by imperfect understanding, markets provide
an efficient feedback mechanism for evaluating the results of one's decisions and correcting
mistakes.

Whatever its form, the assertion of perfect knowledge stands in contradiction to the concept of
the open society (which recognizes that our understanding of our situation is inherently
imperfect). Since this point is abstract, I need to describe specific ways in which laissez-faire
ideas can pose a threat to the open society. I shall focus on three issues: economic stability,
social justice, and international relations.

ECONOMIC STABILITY

ECONOMIC theory has managed to create an artificial world in which the participants'
preferences and the opportunities confronting participants are independent of each other, and
prices tend toward an equilibrium that brings the two forces into balance. But in financial
markets prices are not merely the passive reflection of independently given demand and supply;
they also play an active role in shaping those preferences and opportunities. This reflexive
interaction renders financial markets inherently unstable. Laissez-faire ideology denies the
instability and opposes any form of government intervention aimed at preserving stability.
History has shown that financial markets do break down, causing economic depression and
social unrest. The breakdowns have led to the evolution of central banking and other forms of
regulation. Laissez-faire ideologues like to argue that the breakdowns were caused by faulty
regulations, not by unstable markets. There is some validity in their argument, because if our
understanding is inherently imperfect, regulations are bound to be defective. But their argument
rings hollow, because it fails to explain why the regulations were imposed in the first place. It
sidesteps the issue by using a different argument, which goes like this: since regulations are
faulty, unregulated markets are perfect.

The argument rests on the assumption of perfect knowledge: if a solution is wrong, its opposite
must be right. In the absence of perfect knowledge, however, both free markets and regulations
are flawed. Stability can be preserved only if a deliberate effort is made to preserve it. Even then
breakdowns will occur, because public policy is often faulty. If they are severe enough,
breakdowns may give rise to totalitarian regimes.

Instability extends well beyond financial markets: it affects the values that guide people in their
actions. Economic theory takes values as given. At the time economic theory was born, in the
age of Adam Smith, David Ricardo, and Alfred Marshall, this was a reasonable assumption,
because people did, in fact, have firmly established values. Adam Smith himself combined a
moral philosophy with his economic theory. Beneath the individual preferences that found
expression in market behavior, people were guided by a set of moral principles that found
expression in behavior outside the scope of the market mechanism. Deeply rooted in tradition,
religion, and culture, these principles were not necessarily rational in the sense of representing
conscious choices among available alternatives. Indeed, they often could not hold their own
when alternatives became available. Market values served to undermine traditional values.

There has been an ongoing conflict between market values and other, more traditional value
systems, which has aroused strong passions and antagonisms. As the market mechanism has
extended its sway, the fiction that people act on the basis of a given set of nonmarket values has
become progressively more difficult to maintain. Advertising, marketing, even packaging, aim at
shaping people's preferences rather than, as laissez-faire theory holds, merely responding to
them. Unsure of what they stand for, people increasingly rely on money as the criterion of value.
What is more expensive is considered better. The value of a work of art can be judged by the
price it fetches. People deserve respect and admiration because they are rich. What used to be a
medium of exchange has usurped the place of fundamental values, reversing the relationship
postulated by economic theory. What used to be professions have turned into businesses. The
cult of success has replaced a belief in principles. Society has lost its anchor.

SOCIAL DARWINISM

BY taking the conditions of supply and demand as given and declaring government intervention
the ultimate evil, laissez-faire ideology has effectively banished income or wealth redistribution.
I can agree that all attempts at redistribution interfere with the efficiency of the market, but it
does not follow that no attempt should be made. The laissez-faire argument relies on the same
tacit appeal to perfection as does communism. It claims that if redistribution causes inefficiencies
and distortions, the problems can be solved by eliminating redistribution -- just as the
Communists claimed that the duplication involved in competition is wasteful, and therefore we
should have a centrally planned economy. But perfection is unattainable. Wealth does
accumulate in the hands of its owners, and if there is no mechanism for redistribution, the
inequities can become intolerable. "Money is like muck, not good except it be spread." Francis
Bacon was a profound economist.
The laissez-faire argument against income redistribution invokes the doctrine of the survival of
the fittest. The argument is undercut by the fact that wealth is passed on by inheritance, and the
second generation is rarely as fit as the first.

In any case, there is something wrong with making the survival of the fittest a guiding principle
of civilized society. This social Darwinism is based on an outmoded theory of evolution, just as
the equilibrium theory in economics is taking its cue from Newtonian physics. The principle that
guides the evolution of species is mutation, and mutation works in a much more sophisticated
way. Species and their environment are interactive, and one species serves as part of the
environment for the others. There is a feedback mechanism similar to reflexivity in history, with
the difference being that in history the mechanism is driven not by mutation but by
misconceptions. I mention this because social Darwinism is one of the misconceptions driving
human affairs today. The main point I want to make is that cooperation is as much a part of the
system as competition, and the slogan "survival of the fittest" distorts this fact.

INTERNATIONAL RELATIONS

LAISSEZ-FAIRE ideology shares some of the deficiencies of another spurious science,

geopolitics. States have no principles, only interests, geopoliticians argue, and those interests are
determined by geographic location and other fundamentals. This deterministic approach is rooted
in an outdated nineteenth-century view of scientific method, and it suffers from at least two
glaring defects that do not apply with the same force to the economic doctrines of laissez-faire.
One is that it treats the state as the indivisible unit of analysis, just as economics treats the
individual. There is something contradictory in banishing the state from the economy while at
the same time enshrining it as the ultimate source of authority in international relations. But let
that pass. There is a more pressing practical aspect of the problem. What happens when a state
disintegrates? Geopolitical realists find themselves totally unprepared. That is what happened
when the Soviet Union and Yugoslavia disintegrated. The other defect of geopolitics is that it
does not recognize a common interest beyond the national interest.

With the demise of communism, the present state of affairs, however imperfect, can be described
as a global open society. It is not threatened from the outside, from some totalitarian ideology
seeking world supremacy. The threat comes from the inside, from local tyrants seeking to
establish internal dominance through external conflicts. It may also come from democratic but
sovereign states pursuing their self-interest to the detriment of the common interest. The
international open society may be its own worst enemy.

The Cold War was an extremely stable arrangement. Two power blocs, representing opposing
concepts of social organization, were struggling for supremacy, but they had to respect each
other's vital interests, because each side was capable of destroying the other in an all-out war.
This put a firm limit on the extent of the conflict; all local conflicts were, in turn, contained by
the larger conflict. This extremely stable world order has come to an end as the result of the
internal disintegration of one superpower. No new world order has taken its place. We have
entered a period of disorder.
Laissez-faire ideology does not prepare us to cope with this challenge. It does not recognize the
need for a world order. An order is supposed to emerge from states' pursuit of their self-interest.
But, guided by the principle of the survival of the fittest, states are increasingly preoccupied with
their competitiveness and unwilling to make any sacrifices for the common good.

There is no need to make any dire predictions about the eventual breakdown of our global
trading system in order to show that a laissez-faire ideology is incompatible with the concept of
the open society. It is enough to consider the free world's failure to extend a helping hand after
the collapse of communism. The system of robber capitalism that has taken hold in Russia is so
iniquitous that people may well turn to a charismatic leader promising national revival at the cost
of civil liberties.

If there is any lesson to be learned, it is that the collapse of a repressive regime does not
automatically lead to the establishment of an open society. An open society is not merely the
absence of government intervention and oppression. It is a complicated, sophisticated structure,
and deliberate effort is required to bring it into existence. Since it is more sophisticated than the
system it replaces, a speedy transition requires outside assistance. But the combination of laissez-
faire ideas, social Darwinism, and geopolitical realism that prevailed in the United States and the
United Kingdom stood in the way of any hope for an open society in Russia. If the leaders of
these countries had had a different view of the world, they could have established firm
foundations for a global open society.

At the time of the Soviet collapse there was an opportunity to make the UN function as it was
originally designed to. Mikhail Gorbachev visited the United Nations in 1988 and outlined his
vision of the two superpowers cooperating to bring peace and security to the world. Since then
the opportunity has faded. The UN has been thoroughly discredited as a peacekeeping institution.
Bosnia is doing to the UN what Abyssinia did to the League of Nations in 1936.

Our global open society lacks the institutions and mechanisms necessary for its preservation, but
there is no political will to bring them into existence. I blame the prevailing attitude, which holds
that the unhampered pursuit of self-interest will bring about an eventual international
equilibrium. I believe this confidence is misplaced. I believe that the concept of the open society,
which needs institutions to protect it, may provide a better guide to action. As things stand, it
does not take very much imagination to realize that the global open society that prevails at
present is likely to prove a temporary phenomenon.

THE PROMISE OF FALLIBILITY

IT is easier to identify the enemies of the open society than to give the concept a positive
meaning. Yet without such a positive meaning the open society is bound to fall prey to its
enemies. There has to be a common interest to hold a community together, but the open society
is not a community in the traditional sense of the word. It is an abstract idea, a universal concept.
Admittedly, there is such a thing as a global community; there are common interests on a global
level, such as the preservation of the environment and the prevention of war. But these interests
are relatively weak in comparison with special interests. They do not have much of a
constituency in a world composed of sovereign states. Moreover, the open society as a universal
concept transcends all boundaries. Societies derive their cohesion from shared values. These
values are rooted in culture, religion, history, and tradition. When a society does not have
boundaries, where are the shared values to be found? I believe there is only one possible source:
the concept of the open society itself.

To fulfill this role, the concept of the open society needs to be redefined. Instead of there being a
dichotomy between open and closed, I see the open society as occupying a middle ground, where
the rights of the individual are safeguarded but where there are some shared values that hold
society together. This middle ground is threatened from all sides. At one extreme, communist
and nationalist doctrines would lead to state domination. At the other extreme, laissez-faire
capitalism would lead to great instability and eventual breakdown. There are other variants. Lee
Kuan Yew, of Singapore, proposes a so-called Asian model that combines a market economy
with a repressive state. In many parts of the world control of the state is so closely associated
with the creation of private wealth that one might speak of robber capitalism, or the "gangster
state," as a new threat to the open society.

I envisage the open society as a society open to improvement. We start with the recognition of
our own fallibility, which extends not only to our mental constructs but also to our institutions.
What is imperfect can be improved, by a process of trial and error. The open society not only
allows this process but actually encourages it, by insisting on freedom of expression and
protecting dissent. The open society offers a vista of limitless progress. In this respect it has an
affinity with the scientific method. But science has at its disposal objective criteria -- namely the
facts by which the process may be judged. Unfortunately, in human affairs the facts do not
provide reliable criteria of truth, yet we need some generally agreed-upon standards by which the
process of trial and error can be judged. All cultures and religions offer such standards; the open
society cannot do without them. The innovation in an open society is that whereas most cultures
and religions regard their own values as absolute, an open society, which is aware of many
cultures and religions, must regard its own shared values as a matter of debate and choice. To
make the debate possible, there must be general agreement on at least one point: that the open
society is a desirable form of social organization. People must be free to think and act, subject
only to limits imposed by the common interests. Where the limits are must also be determined by
trial and error.

The Declaration of Independence may be taken as a pretty good approximation of the principles
of an open society, but instead of claiming that those principles are self-evident, we ought to say
that they are consistent with our fallibility. Could the recognition of our imperfect understanding
serve to establish the open society as a desirable form of social organization? I believe it could,
although there are formidable difficulties in the way. We must promote a belief in our own
fallibility to the status that we normally confer on a belief in ultimate truth. But if ultimate truth
is not attainable, how can we accept our fallibility as ultimate truth?

This is an apparent paradox, but it can be resolved. The first proposition, that our understanding
is imperfect, is consistent with a second proposition: that we must accept the first proposition as
an article of faith. The need for articles of faith arises exactly because our understanding is
imperfect. If we enjoyed perfect knowledge, there would be no need for beliefs. But to accept
this line of reasoning requires a profound change in the role that we accord our beliefs.
Historically, beliefs have served to justify specific rules of conduct. Fallibility ought to foster a
different attitude. Beliefs ought to serve to shape our lives, not to make us abide by a given set of
rules. If we recognize that our beliefs are expressions of our choices, not of ultimate truth, we are
more likely to tolerate other beliefs and to revise our own in the light of our experiences. But that
is not how most people treat their beliefs. They tend to identify their beliefs with ultimate truth.
Indeed, that identification often serves to define their own identity. If their experience of living
in an open society obliges them to give up their claim to the ultimate truth, they feel a sense of
loss.

The idea that we somehow embody the ultimate truth is deeply ingrained in our thinking. We
may be endowed with critical faculties, but we are inseparably tied to ourselves. We may have
discovered truth and morality, but, above all, we must represent our interests and our selves.
Therefore, if there are such things as truth and justice -- and we have come to believe that there
are -- then we want to be in possession of them. We demand truth from religion and, recently,
from science. A belief in our fallibility is a poor substitute. It is a highly sophisticated concept,
much more difficult to work with than more primitive beliefs, such as my country (or my
company or my family), right or wrong.

If the idea of our fallibility is so hard to take, what makes it appealing? The most powerful
argument in its favor is to be found in the results it produces. Open societies tend to be more
prosperous, more innovative, more stimulating, than closed ones. But there is a danger in
proposing success as the sole basis for holding a belief, because if my theory of reflexivity is
valid, being successful is not identical with being right. In natural science, theories have to be
right (in the sense that the predictions and explanations they produce correspond to the facts) for
them to work (in the sense of producing useful predictions and explanations). But in the social
sphere what is effective is not necessarily identical with what is right, because of the reflexive
connection between thinking and reality. As I hinted earlier, the cult of success can become a
source of instability in an open society, because it can undermine our sense of right and wrong.
That is what is happening in our society today. Our sense of right and wrong is endangered by
our preoccupation with success, as measured by money. Anything goes, as long as you can get
away with it.

If success were the only criterion, the open society would lose out against totalitarian ideologies -
- as indeed it did on many occasions. It is much easier to argue for my own interest than to go
through the whole rigmarole of abstract reasoning from fallibility to the concept of the open
society.

The concept of the open society needs to be more firmly grounded. There has to be a
commitment to the open society because it is the right form of social organization. Such a
commitment is hard to come by.

I believe in the open society because it allows us to develop our potential better than a social
system that claims to be in possession of ultimate truth. Accepting the unattainable character of
truth offers a better prospect for freedom and prosperity than denying it. But I recognize a
problem here: I am sufficiently committed to the pursuit of truth to find the case for the open
society convincing, but I am not sure that other people will share my point of view. Given the
reflexive connection between thinking and reality, truth is not indispensable for success. It may
be possible to attain specific objectives by twisting or denying the truth, and people may be more
interested in attaining their specific objectives than in attaining the truth. Only at the highest
level of abstraction, when we consider the meaning of life, does truth take on paramount
importance. Even then, deception may be preferable to the truth, because life entails death and
death is difficult to accept. Indeed, one could argue that the open society is the best form of
social organization for making the most of life, whereas the closed society is the form best suited
to the acceptance of death. In the ultimate analysis a belief in the open society is a matter of
choice, not of logical necessity.

That is not all. Even if the concept of the open society were universally accepted, that would not
be sufficient to ensure that freedom and prosperity would prevail. The open society merely
provides a framework within which different views about social and political issues can be
reconciled; it does not offer a firm view on social goals. If it did, it would not be an open society.
This means that people must hold other beliefs in addition to their belief in the open society.
Only in a closed society does the concept of the open society provide a sufficient basis for
political action; in an open society it is not enough to be a democrat; one must be a liberal
democrat or a social democrat or a Christian democrat or some other kind of democrat. A shared
belief in the open society is a necessary but not a sufficient condition for freedom and prosperity
and all the good things that the open society is supposed to bring.

It can be seen that the concept of the open society is a seemingly inexhaustible source of
difficulties. That is to be expected. After all, the open society is based on the recognition of our
fallibility. Indeed, it stands to reason that our ideal of the open society is unattainable. To have a
blueprint for it would be self-contradictory. That does not mean that we should not strive toward
it. In science also, ultimate truth is unattainable. Yet look at the progress we have made in
pursuing it. Similarly, the open society can be approximated to a greater or lesser extent.

To derive a political and social agenda from a philosophical, epistemological argument seems
like a hopeless undertaking. Yet it can be done. There is historical precedent. The Enlightenment
was a celebration of the power of reason, and it provided the inspiration for the Declaration of
Independence and the Bill of Rights. The belief in reason was carried to excess in the French
Revolution, with unpleasant side effects; nevertheless, it was the beginning of modernity. We
have now had 200 years of experience with the Age of Reason, and as reasonable people we
ought to recognize that reason has its limitations. The time is ripe for developing a conceptual
framework based on our fallibility. Where reason has failed, fallibility may yet succeed.

Copyright © 1997 by The Atlantic Monthly Company. All rights reserved. The Atlantic
Monthly; February 1997; The Capitalist Threat; Volume 279, No. 2; pages 45-58.

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[civreports]
march?april 1999 ? vol 3. no. 2

George Soros: Open Society Crusader in Retreat?

By David Callahan

"Soros is the apotheosis of philanthropic imagination"

over the past decade, the billionaire financier George Soros has singlehandedly written a new
chapter in the history of philanthropy. Through a worldwide network of foundations, most based
in Eastern Europe and the former Soviet Union, Soros has conducted an enormous campaign to
strengthen civil society?or, what he calls, "open society." Along the way, Soros has become a
familiar figure on the international scene, more well-known than many presidents and prime
ministers. To date, his total giving has been over $1 billion, and Soros has promised to keep
spending until his fortune, estimated at $3 billion to $5 billion, is gone. While two other
philanthropists of the late twentieth century have given away more money than Soros?Walter
Annenberg and Paul Mellon?many observers of this world have called Soros the most important
philanthropist to come along since Andrew Carnegie. "Soros is the apotheosis of philanthropic
imagination," says Mark Dowie, who is writing a book on modern philanthropy. "He is doing
what Andrew Carnegie was doing when he was alive." Walter Nielsen, another longtime
foundation watcher, rates Soros as standing head and shoulders above most of his philanthropic
contemporaries. "His giving has a scope, a comprehensiveness, and a courage that is highly
unusual," Nielsen says. Soros's philanthropic career is intriguing for many reasons, most notable
of which is his international focus. Never before has a living philanthropist involved himself so
deeply in the shaping of foreign societies. The scope of Soros's giving is so great that, in much of
the former communist world, Soros is a larger donor than most Western nations. In a few
countries, Soros has given more in aid than the United States government. Soros's ventures
include investing upwards to $250 million to create the Central European University in Prague
and giving $100 million in aid to Russian scientists. Hundreds of millions of dollars more have
gone to fund such staples of civil society as independent media and strong judicial institutions.
With giving at this level, it is perhaps no great surprise that Soros has often been a controversial
figure in Eastern Europe and the former Soviet Union. Some national leaders have accused Soros
of meddling in their country's internal affairs. Elsewhere, Soros foundations have been caught up
in scandals regarding disappearing funds.

Lately, though, Soros's profile in the former communist world?as well as the controversy he
generates?seems to have diminished. In the last year or two, Soros has quietly slackened the pace
of his open society crusade. Last fall in Budapest, at the annual meeting of the Soros Foundations
Network, which includes more than 30 national foundations, Soros announced that he would
soon be reducing his commitments in Eastern Europe and the former Soviet Union. He predicted
that some of the foundations would close and others would remain open only if they could find
outside sources of funding.

There are several reasons for Soros's step back. First, it is no secret that Soros's Quantum Fund
has experienced major losses over the past year due to the instability of world financial markets.
To be sure, Soros still has a huge fortune to draw upon, but it's not growing as fast as it was
earlier in the decade, and Soros seems to be reconsidering the rate of giving he has sustained in
recent years, which has been around $350 million to $425 million a year.

But the bigger reason for Soros's reassessment of his philanthropy in the former communist
world may be his disappointment with what his efforts have yielded. As far back as 1995, Soros
was complaining that he was facing an uphill battle in promoting his open society ideal in
Eastern Europe. At the core of Soros's conception of an open society is the notion that no one has
a monopoly on the truth and that a truly free society requires that there always be vigorous public
debate. Today, however, a number of countries in the former communist world are characterized
by semi-authoritarian governments and strongly nationalist politics. Soros's disillusionment with
the region's political trajectory is thus unsurprising.

While it is too early to say how quickly or deeply Soros plans to cut his giving in the region,
indications of his retreat raise troubling questions: What will happen to the civil society building
efforts that Soros has been underwriting if he cuts off funding? Are there other philanthropists or
government donors that can be expected to fill Soros's shoes? And, more generally, what does
Soros' experience say about the longterm difficulties of building civil society in the former
communist world?

There is a certain irony about Soros's planned cutbacks to his foundations in the former
communist world. In many ways, Soros has only just recently put in place an adequate
infrastructure for effectively giving out money in the region. After nearly a decade of
development, Soros's network of national foundations now stands as the most impressive vehicle
for building civil society ever created in the nonprofit world.

But, unlike many other philanthropists, Soros has never seen his foundations as permanent
institutions and never committed himself to sustaining the Network indefinitely. When he first
started funding civil society work in Eastern Europe back in the 1980s, Soros always made it
clear that he saw foundations as a necessary evil and expressed his desire to not create
foundations that would live on in perpetuity like such philanthropic behemoths as Ford and
Rockefeller. As he commented in 1995: "I was very leery of foundations. I had some strong
prejudices against them. I still do." Even when Soros's giving in the former communist world
escalated dramatically in the early 1990s, he was still reluctant to put in place a major institution
to manage his civil society building efforts. The result was that disorder was the rule in Soros's
foundations. "The left hand didn't know what the right hand was doing," says one former Soros
employee. As of early 1994, there was still no budgetary process, no legal people, and no
personnel system to manage Soros's giving in the former communist world. A dedicated but
underpaid and overextended staff was being worked to the bone. Everyone complained that
nothing could get done without direct access to Soros, who was clearly juggling too much at
once. Soros himself came to feel that he had created a monster that he could barely control. He
didn't know exactly how much money he was spending abroad and couldn't keep track of all his
decisions. "I made all the decisions, and nobody knew what the decisions were," Soros said later.
"People turned up and claimed that I'd authorized this or that, and for all I knew, I did!"
Something had to change. What changed is that Soros abandoned his resistance to creating a real
organization and began to forge a more formal structure to manage his foundations in Eastern
Europe and the former Soviet Union. Making this transition proved bumpy. Soros's first major
move was to bring in Aryeh Neier, former president of Human Rights Watch, to lead the Open
Society Institute (OSI) in New York and manage the Soros Foundations Network. In early 1994,
Soros also hired an executive vice president for OSI, Lance Lindblom, who had previously run
the J. Roderick MacArthur Foundation. Neier is still at OSI, but Lindblom lasted barely more
than a year in that position and reportedly left in frustration about his inability to tame the chaos.
Still, things slowly did become more organized, and today the Soros Foundations Network is
now functioning more smoothly than ever. In 1997, the national foundations in the Network
spent $236 million in about two dozen program areas, most related to civil society building
challenges. Given all that Soros has invested in this sophisticated philanthropic empire, it is hard
to believe that he is now going to let it wither away?unless one knows how George Soros thinks.
Soros' giving was always predicated on the goal of spending down his fortune?a process that
Aryeh Neier says will be complete "within ten years." Few of the foundations within the
Network have any endowment money and the annual budgets for each are funded straight from
Soros's personal wealth. Closing down foundations in the Network is as easy as not writing a
check.

A financial investor by trade and temperament, George Soros has clearly not been satisfied with
the returns on all of the hundreds of millions of dollars in philanthropic giving to the former
communist world. Soros began his work in Eastern Europe well before the end of the Cold War;
and he stepped up that work as the Iron Curtain dissolved, pouring money into the former
communist world at a time when the situation in many countries was still extremely fluid and the
parameters of new societies were just being established. As a philanthropic speculator, he was
ahead of the curve during this period. By moving quickly to support democracy advocates in the
late 1980s and early 1990s, Soros played an important role in aiding the transition to a free-
market system. But once the initial phase of that transition was complete, Soros found it difficult
to continue having such a big impact. By the mid-1990s, he worried that the region was making
negative progress, even as his giving for civil society building increased. As he told one
interviewer in 1995, "on the whole the outcome has not corresponded to my expectations. The
pattern that is emerging is not a pattern of open societies. If anything, the trend is in the opposite
direction."

Soros's experience in Belarus has been among the more extreme examples of his problems in the
region. Established in 1991, the Belarusian Soros Foundation supported a variety of programs in
the areas of educational, social, and legal reform. Soros invested heavily in this national
foundation, and by the mid-1990s, his giving in Belarus was greater than that of most Western
governments. These efforts, however, yielded only limited gains in terms of creating strong civil
society institutions in Belarus. Politically, the country headed in an authoritarian direction, and as
it did, Soros's operations there came under attack. After a long campaign of harassment, the
Belarusian Soros Foundation was forced to close in September 1997 by the government of
President Alexander Lukashenko.

If Soros's civil society building efforts have been actively thwarted by negative political
developments in some countries, elsewhere he has simply become less influential because of
changing circumstances. In countries such as Hungary, Poland, and the Czech Republic?now far
more stable and prosperous than they were in the first half of the 1990s?Soros's money carries
less weight. "In some places his role is far less pivotal than it once was," says Stephen Heintz of
the Institute for East-West Studies, a U.S.-based institution deeply involved in civil society
building efforts in Eastern Europe.

To be sure, Soros remains a major presence in the region and is particularly focused on Russia.
In 1997, Soros announced plans to give between $300 million and $500 million to Russia over a
three-year period?plans that are now being carried out, although it's not clear how much money
has so far been spent. At the end of 1998, all of Soros's national foundations remained in
operation. Still, with these organizations now on notice that the flow of funds from Soros will not
last indefinitely, the old days of expanding operations are clearly over.

It is hard to say what the result will be of Soros's cutbacks in the former communist world. In
some of the poorest countries in the region, Soros's money remains critical to civil society
building efforts and a shutoff of these funds would be a severe blow. In other countries Soros
may have achieved as much with his giving as he can; and it makes sense to begin moving on.
One thing is certain: Soros's philanthropy of the past decade has been historically unprecedented,
and he is not easily replaced as a supporter of civil society in the former communist world. No
major foundation even comes close to providing the level of assistance to civil society building
efforts that Soros does. Moreover, there is little prospect that Western governments will increase
their foreign aid programs in the former communist world any time soon. Also, Soros's failure to
effect change in some of the countries where he committed large-scale resources may prove to be
a deterrent to other would-be donors.

Of course, the real lesson from Soros's experience may be that civil society building efforts in
countries with few strong civil society institutions requires a much larger and longer term
commitment of resources than that which the West made to the former communist world. Soros
never claimed to be able to do this job by himself, and he often criticized Western governments
for not duplicating his efforts on much a greater scale. Through his own heroic efforts, Soros
sought to shame the overly cautious policymakers of the United States and Western Europe. As
time passes and major transition problems persist in parts of Eastern Europe and in many of the
New Independent States, most notably Russia, Soros the philanthropist stands as an ever larger
figure of late 20th century history while the leaders of the West look ever more ineffectual.

David Callahan, author most recently of Unwinnable Wars: American Power and Ethnic Conflict
(Hill & Wang, 1998), is a fellow at the Century Fund in New York.
George Soros: The sound of one billionaire lashing
The currency speculator turned philanthropist took exception to the President's foreign policy
here yesterday.
By Miriam Hill
Inquirer Staff Writer

Some billionaires, like Warren Buffett, are known for their investment philosophy.
Some billionaires, like Bill Gates, are feared for their market dominance.

And some billionaires, like George Soros, can sound more like revolutionaries than pinstriped
denizens of Wall Street.

At the University of Pennsylvania yesterday to promote his new book, George Soros on
Globalization, Soros lashed out at the Bush administration's foreign policy.

The President has fallen into a trap set by terrorists who wanted this country to go to war and
sow the seeds for further acts of terrorism, he said.

"If we assess the foreign policy accomplishments of the Bush administration since Sept. 11, the
scorecard is quite dismal," Soros said. "There are some people in the Bush administration who
have the same mentality as Arafat or Sharon. I can name names, like Ashcroft, Cheney and
Rumsfeld, although that is considered impolite."

Soros, who amassed a fortune currently worth $6.9 billion by speculating in financial markets,
has since turned his sights to philanthropy. His Open Society Institute and network of
foundations around the world spend about $500 million yearly, much of it dedicated to
encouraging democracy and economic growth in developing countries.

Soros, 71, earned both admiration and scorn through his hedge fund, the Quantum Fund, which
earned 31 percent a year over its 32 years. He achieved the stunning gains mostly through
speculating in foreign currencies - a risky game that can wreak economic havoc. In 1992, he
earned $1 billion in a single day by betting - correctly - that the British pound would fall in
value.

His critics say he profited unfairly because his predictions that currencies were overvalued led
others to sell them, allowing him to reap big gains as well.

Remember the 1997 Asian economic crisis?

Some world leaders thought Soros' bets against the Thai baht caused it, though he does not agree.

So now he's taking on the Bush administration, no holds barred.

"Although the terrorist threat is real, and we must defend against it, we are going about it the
wrong way. What makes the situation so dangerous is that nobody dares to say so. The nation is
endangered, therefore it is unpatriotic to criticize our leader," Soros said. "That is not what has
made this country great. The strength of this country lies in the Declaration of Independence and
the Bill of Rights and the freedom of speech and thought."

Instead of acting like the world's greatest power, the United States is acting out of fear, he said.

"We are acting like a nation that is fighting for its survival and not like the leader of the global
capitalist system that has a responsibility for making the system work better," Soros said. "We
are still in pursuit of dominance instead of living up to the responsibilities that dominance
imposes. I believe that is how the terrorists wanted us to act. After all, their aim is to destroy the
system - killing innocent people is only the means."

He offered few specific solutions but argued for a change in philosophy. Creative approaches to
promoting democracy and economic growth - his foundation once bought hundreds of copiers to
help spread free speech in Hungary - are the answer, he said.

"How can we escape from the trap that the terrorists have set us," he asked. "Only by recognizing
that the war on terrorism cannot be won by waging war. We must, of course, protect our security;
but we must also correct the grievances on which terrorism feeds."

Soros withdrew from an active role at Quantum in 2000 after big losses on investments in
Nasdaq stocks and the Russian ruble.

Two students asked him about the contradiction in his life - a ruthless speculator who profited
with little concern for how unstable currencies affected people, but now wants to spend that
money doing good.

He said government policies, not his actions, hurt the economies involved.

"I was used as a scapegoat for the government's action."

He enjoyed the notoriety. He is better known in China, where they call him the Crocodile, than in
the United States.

"Watch out," he said as he left for a reception on campus. "The crocodile is coming."

Interview with George Soros

The Guardian (London)

June 15, 2002
By Charlotte Denny
George Soros wants to be the Bono of the financial world. The speculator whose assault on
sterling ejected Britain from the European exchange rate mechanism 10 years ago come
September has a mission - to use his estimated pounds 5bn fortune and his fame to help tackle
what he sees as the failures of globalisation. The idea that a man who made billions betting on
the financial markets sides with the anti-globalisation movement might strike some as ironic.
Soros is clearly genuinely appalled at the damage wrought on vulnerable economies by the vast
sums of money which flow across national borders every day. Leaning forward on the sofa in the
study of his South Kensington house, he warns that the global downturn has exposed the
weaknesses not just of corporate America but of how the International Monetary Fund and the
US treasury run the international economic system. "The US governs the international system to
protect its own economy. It is not in charge of protecting other economies," he says. "So when
America goes into recession, you have anti-recessionary policies. When other countries are in
recession, they don't have the ability to engage in anti-recessionary policies because they can't
have a permissive monetary policy, because money would flee." WASHINGTON CONSENSUS
In person, he has the air of a philosophy professor rather than a gimlet-eyed financier. In a soft
voice which bears the traces of his native Hungary, he argues that it is time to rewrite the so-
called Washington consensus - the cocktail of liberalisation, privatisation and fiscal rectitude
which the IMF has been preaching for 15 years. Developing countries no longer have the
freedom to run their own economies, he argues, even when they follow perfectly sound policies.
He cites Brazil, which although it has a floating currency and manageable public debt was
paying ten times over the odds to borrow from capital markets even before the Workers' Party
candidate, Luis Inacio "Lula" da Silva, gave traders the jitters. "The prospect of a leftwing
president has increased the nervousness of the market, depressed the bond market, raised the cost
of money and pushed down the exchange rate, which makes it very difficult for Brazil to grow,"
he says. Soros, who at one stage after the fall of the Berlin Wall was providing more assistance
to Russia than the US government, believes in practising what he preaches. His Open Society
Institute has been pivotal in helping eastern European countries develop democratic societies and
market economies. As Bono, the U2 singer and songwriter turned campaigner, has shown, fame
can be a powerful tool for influencing politicians. Soros has the advantage of an insider's
knowledge of the workings of global capitalism, so his criticism is particularly pointed. Last
year, the Soros foundation's network spent nearly half a billion dollars on projects in education,
public health and promoting democracy, making it one of the world's largest private donors. His
charitable work began nearly 25 years ago, when he began providing funds for black students to
attend Capetown university. Soros is still active in South Africa today, providing mortgage
guarantees for nearly 100,000 homeowners through an organisation called Nurture. His latest
cause, working with the Global Witness group, is the drive to force oil companies to disclose
how much they pay governments in the developing world for drilling rights. The tragedy of
Africa, he says, is that Sierra Leone, Angola and Congo, among the world's poorest countries,
have vast mineral and oil wealth. "It is really striking; you look at countries which are resource
rich and you would expect them to be more prosperous than countries which are resource poor.
But in actual fact it is often the other way. They tend to be more devastated by civil strife and
fighting over mineral resources," he says. Oil companies are not necessary directly responsible
for the corruption, he says, but the money they pay foreign governments is frequently
misappropriated. By declaring such payments, they would give voters in poor countries the
chance to hold their governments to account for the funds. Companies that fail to do so are
complicit in the disempowerment of these electorates, Soros argues. Regulation is the best way,
rather than expecting companies to act individually, he adds. "If individual companies did it, they
would suffer a competitive disadvantage against others that don't do it. The proof of the pudding
is in the eating. BP was ac tually willing to disclose in Angola and got threatened by the Angolan
government that they would be pushed out," he says. "That is why they need to have their arms
twisted for their own good." British oil companies have reacted reasonably favourably to the
calls for mandatory disclosure, but Soros has received a dusty response so far from the US oil
majors. "The prospect of legislation might be enough to get all the companies to comply
voluntarily, but I don't think, based on the responses that I got, that without the threat of
regulation we would get them on board." Soros credits the anti-globalisation movement for
having made companies more sensitive to their wider responsibilities. "I think (the protesters)
have made an important contribution by making people aware of the flaws of the system," he
says. "People on the street had an impact on public opinion and corporations which sell to the
public responded to that." By itself, the corporate social responsibility movement cannot cure the
ills of the international system, though. "In the same way that the defects in corporate accounting
came to the surface after the bust, the weaknesses of the international financial architecture are
also coming to the surface," he says. Because the IMF has abandoned billion dollar bailouts for
troubled economies, he thinks a repeat of the Asian crisis is unlikely. The fund's new "tough
love" policy - for which Argentina is the guinea pig - has other consequences. The bailouts were
a welfare system for Wall Street, with western taxpayers rescuing the banks from the
consequences of unwise lending to emerging economies. Now the IMF has drawn a line in the
sand, credit to poor countries is drying up. "It has created a new problem - the inadequacy of the
flow of capital from centre to the periphery," he says. WAR ON RECESSION The one economy
Soros is not losing any sleep about is the US. "I am much more positive about the underlying
economy than I am about the market, because we are waging war not only terrorism but also on
recession," he says. "Although we don't admit it, we are actually applying Keynesian remedies,
and I am a confirmed Keynesian. I have not yet seen an economy in recession when you are
gearing up for war." He worries that the world's largest economic power is not living up to its
responsibilities. "I would like the United States to live up to the responsibilities of its hegemonic
power because it is not going to give up its hegemonic power," he says. "The only thing that is
realistic is for the United States to become aware that it is in its enlightened self-interest to
ensure that the rest of the world benefits from their role." What would he like to be remembered
for - his career as a speculator or his philanthropy? "I prefer to be a legend in my own lifetime
rather than afterwards. I think that is an idle kind of idea that you can live on after your death,
you have only one life," he says.

George Soros

He went from apple harvester to capitalist kingpin to progressive savior. The countercultural
investor has more money than you've ever heard of, and he just loves to give it away.

By Alan Deutschman
----------

March 27, 2001 | Last year, when the great investor George Soros retired, at 70, from his career
of speculating with billions of other people's dollars, it was as if a legendary athlete -- his fingers
covered with championship rings -- had grudgingly given up after a couple of humiliating losing
seasons. Soros' lifetime record was astonishing: If you had invested $1,000 in his Quantum Fund
when he started out in 1969, he would have turned your paltry grand into $4 million by the new
millennium -- a cumulative 32 percent annual return, the financial equivalent of a major-league
slugger batting .400 not just for a single season but for three decades.

Like John D. Rockefeller in a previous generation, Soros found making his billions to be very
stressful, and he took much more pleasure in giving them away. Even though he has already
given $2.8 billion to his foundation, Soros is still worth around $5 billion. He has promised to
give away the rest of his wealth before he turns 80, meaning that his legacy as a philanthropist
and reformer could be even greater than it already is.

Soros achieved his lasting fame early on: Back in 1981 he was hailed as "the world's greatest
money manager" by the bible of the trade, Institutional Investor, which wrote: "As Borg is to
tennis, Jack Nicholas is to golf and Fred Astaire is to tap dancing, so is George Soros to money
management."

Only one other individual -- the famed Warren Buffett -- rivaled Soros as an investing wizard for
the long stretch from the '60s through the '90s. Buffett's approach was dreadfully prosaic -- he
lived in Omaha, Neb., of all places, bought stocks in a few supersolid companies (among them
Coca-Cola, Disney, ABC and the Washington Post) and held onto them forever. Soros, in
contrast, was the epitome of guts and glory. He was a short-term speculator who made
terrifyingly huge bets on the directions of financial markets.

No wager was bigger than the time in September 1992 when he risked $10 billion -- billion with
a B -- that the British pound would fall. His instinct was right: That night, while Soros slept in
his apartment on New York's Fifth Avenue, he made $1 billion from the trade. Ultimately his
profit reached almost $2 billion -- and earned him international notoriety.

From that point on, Soros had guru status among traders, who believed that he could move
markets single-handedly. Presidents and prime ministers constantly feared that Soros would bet
against their currencies, and the sheeplike denizens of Wall Street and London's City would
follow him, resulting in sharp devaluations and economic crises. Malaysia's chief of state
demonized him for allegedly ruining that country's economy during the Asian financial panic.
Soros gained a reputation as one of the few names -- along with Buffett and Alan Greenspan --
that had oracular status in the global economy.

And then it all went to hell. Soros lost $2 billion in Russia's default in 1998. The following year
he made a big bet that Internet stocks would fall. The basic idea was right, but he was about a
year too early, and he quickly lost $700 million. Then he rushed to buy up a bunch of tech
stocks, which sank. His embarrassing losses mounted to almost $3 billion when the NASDAQ
ultimately did crash in the spring of 2000. That's when Soros announced that he was
withdrawing from an active role at Quantum, which he would transform from a high-risk
speculative fund into a conservative institution -- a move like Babe Ruth pledging that he would
only try to hit singles from now on.
Soros wasn't the only legend who suffered an embarrassing fall. Another famous speculator,
Julian Robertson -- who managed money for New York glitterati such as writer Tom Wolfe --
lost billions and had to close down his Tiger Fund last year. Even Buffett had a bad slump. For
the small-time day trader at home, moaning as he watched CNBC and logged on to E-Trade and
figured that he had just blown the kids' college tuition fund, it was oddly comforting. It was like
watching Tiger Woods triple-bogey every hole on the back nine. If even he could be such a
duffer, then you had an excuse.

But even as Soros retired from Wall Street, his influence in the world had never been greater. For
two decades his true passions had been philanthropy and political influence, not investing, and
by 2001 he had put a stunning $2.8 billion into his foundation, which promotes liberal
democracy throughout the globe. Since 1980, when he began giving financial support to
dissidents and human-rights movements such as Poland's Solidarity, no private citizen has done
more to promote reform in Eastern Europe and the former Soviet Union. Newsweek called him
"a one-man Marshall Plan."

In the '90s Soros expanded his efforts to Africa, Latin America and even the United States,
where the paragon of capitalism became a cult hero to the bohemian counterculture for his
outspoken criticism of the drug war and his financial largess for groups advocating drug
legalization and medical marijuana ballot initiatives. Although the $30 million he has given
toward changing drug policy is a mere crumb of his overall philanthropy, it has helped to remake
his image in this country from capitalist kingpin to progressive savior. While Buffett is famous
for sipping Cherry Coke, Soros -- who doesn't smoke tobacco, let alone pot -- is most celebrated
for fostering cannabis clubs. - - - - - - - - - - - - - - - - -

Soros was born in Budapest in 1930 as Dzjcgdzhe Shorash and grew up in a family of haute
bourgeoisie Hungarian Jews. His father, Tivadar, was an attorney who worked very little,
preferring the pursuits of a bon vivant. He owned real estate and published an Esperanto journal.
Tivadar's life of comfort and leisure, made possible in part by a good marriage, came after a
perilous youth. He was a lieutenant in World War I when he was taken as prisoner of war on the
Russian front and exiled to Siberia. He escaped and lived as a fugitive through the tumult of the
Russian Revolution.

Those survival skills were crucial to the family when the fascists invaded in World War II.
Tivadar bribed government officials for false identity papers so his son could pretend to be the
godson of a gentile bureaucrat. For a period, the family hid from the Nazis in nearly a dozen
different attics and concealed stone cellars.

After the war the teenage Soros moved to England (he was inspired by BBC broadcasts) and
scrounged odd jobs. As a waiter at Quaglino's, a posh restaurant in London, he wasn't too
ashamed to scavenge the leftover profiteroles. In 1948, at age 18, he supported himself by
harvesting apples and painting houses before enrolling at the London School of Economics.
Soros was strongly influenced by one of his professors there, Karl Popper, author of "The Open
Society and Its Enemies." At a time when leftist intellectuals still had faith in the Marxist
religion, Popper argued that Communism was as condemnable as fascism, since both were
repressive and intolerant. Popper's ideas resonated with the young Soros, who had lived under
the Nazi and Soviet occupations and had seen both regimes firsthand. Decades later, Popper's
conception of the "open society" would be the basis for Soros' philanthropic efforts -- he would
even borrow the term for the title of one of his own books.

Soros aspired to be an intellectual luminary like Popper, but his grades weren't top-notch and he
had to struggle for his subsistence. During one break from school he did a stint as a night-shift
railway porter. In 1952, after receiving his degree, he worked as a handbag salesman before
finally getting in the door at a London investment bank. Four years later he moved to New York
with only $5,000.

Soros began to establish himself as a junior trader on Wall Street, but his real ambition remained
to become an intellectual in the grand European tradition. Through the early '60s he tried to
rewrite his philosophy dissertation so he could publish it as a book, but his efforts frustrated him.

"There came a day when I was rereading what I had written the day before, and I couldn't make
sense of it," he later reminisced in his 1995 book, "Soros on Soros." "That was when I decided to
get back into business ... I thought that I had some major new philosophical ideas, which I
wanted to express. I now realize that I was mainly regurgitating Karl Popper's ideas."

While Soros was what he liked to call a "failed philosopher," he excelled as a money manager. In
1969 he went out on his own and established a private investment partnership, or "hedge fund,"
that would evolve into what is now the Quantum Fund. His success was quick and conspicuous:
Throughout the awful bear markets of the 1970s, when most investors lost money, Soros' fund
was profitable every year, and sometimes he even scored double-digit returns. Quantum had only
one losing year in its first two decades -- ironically, it was 1981, when Institutional Investor
jinxed Soros by putting him on its cover as "the world's greatest money manager."

But Soros' biggest embarrassment came in October 1987: For a Fortune cover story titled "Are
Stocks Too High?" Soros predicted that the U.S. market wouldn't fall. Only days later Wall
Street suffered the crash of '87. Soros took a $300 million hit, making him one of the biggest
losers in the debacle. But even with that big blow, Quantum was actually up 14 percent for the
calendar year -- a year when Soros' personal compensation of $75 million made him the second-
highest-paid man on Wall Street. He could pull triumph out of disaster.

Soros settled into his reign as the King of the Street. In 1992, the year that he made his gutsy $10
billion bet on the British pound, Soros' compensation was $650 million. It was the most lucrative
year for any individual in Wall Street's recent history. (Even Michael Milken reported an annual
income of only $550 million at his peak.) In 1993, Soros topped the rest of his peers by making
$1.1 billion, which was more than the annual profit of the McDonald's Corp. Financial World
calculated that Soros' pay was greater than the gross national product of 42 nations. In retrospect,
a billion bucks a year seems relatively modest compared with the Internet fortunes of the late
'90s, but back then it was real money.

Soros' success sprang partly from his extraordinary energy and relentless drive. He often tested
the stamina of his butler and cook by sleeping for only two hours a night before returning to
work. But Wall Street is full of supercharged workaholics, which begs the question: What was
Soros' secret? His basic theory of investing was that financial markets are chaotic. The prices of
stocks, bonds and currencies depend on the human beings who buy and sell them, and those
traders often act out of highly emotional reactions rather than coolly logical calculations.

Soros didn't accept the prevailing theory among economics professors, who held that markets are
rational, that prices reflect every nuance of hard data and relevant information. He believed that
investors influenced one another and moved in herds. Soros' trick was to try to understand that
herd instinct. Most of the time he went along with the mob, but his real killings came from
sensing when the trend would turn and getting out in front of the pack.

And how could he tell the timing of the crucial turning points? Like other investors, Soros had
colleagues gather information and perform analyses. But he also had an extraordinary gut. He
said that he would have an instinctive physical reaction about when to buy or sell. Normally his
composure was cool and emotionless, but when he suffered from a bad backache, he took it as an
ominous warning about problems in the market. "I used the onset of acute pain as a signal that
there was something wrong in my portfolio," he once explained. "I rely a great deal on animal
instincts."

The Soros Foundations' push for liberalization in Eastern Europe began with a focus on his
native Hungary in the early '80s as a showcase. One of his first coups was surprisingly simple:
His foundation discovered that photocopiers were rare in the country, so it gave 400 machines to
libraries and universities as a way of fostering free expression and dissemination of ideas.

Although he started pouring cash into Eastern Europe in the '80s, it was Soros' media stardom as
an investor that really gave him an unprecedented visibility. "Until 1992, I had difficulty getting
an Op-Ed piece on Eastern Europe published in the Wall Street Journal or the New York Times,"
he said. From that point forward, Soros' cash and clout enabled him to hobnob with chiefs of
state as if he were one of them. In 1993, after dining with the heads of Moldova and Bulgaria in
the same day, he told journalist Michael Lewis: "You see, I have one president for breakfast and
another for dinner."

Soros' greatest influence, however, came not from his shuttle diplomacy but, rather, from his
donations to dissidents and grass-roots political movements, such as the Otpor student group and
other organizations that agitated for the overthrow of Yugoslav tyrant Slobodan Milosevic. Soros
shrewdly gave money and equipment to scores of tiny independent TV stations, which used the
newer generations of scaled-down apparatus to elude the control of repressive regimes as they
broadcast uncensored news. Evelyn Messinger, who worked as director of electronic media for
Soros' foundation, recalls flying to Belgrade with a TV transmitter in her baggage to deliver to an
operator.
Starting in the mid-'90s, Soros pushed his reform efforts into the United States, most
conspicuously with his criticisms of the nation's war on drugs. He argues that the emphasis
should be on treating addicts, not on criminalizing them. Soros supports the Lindesmith Center, a
leading advocate of drug legalization. The center is run by Ethan Nadelmann, a rabbi's son and
former Princeton professor, who is one of the most outspoken and charismatic crusaders in the
cause. Soros has also funded needle exchange and methadone treatment programs and supported
medical marijuana ballot initiatives in seven states, including California and Arizona. Joseph
Califano Jr., director of Columbia University's National Center on Addiction and Substance
Abuse, calls Soros "the Daddy Warbucks of drug legalization."

"I'll tell you what I'd do if it were up to me," Soros says in "Soros on Soros." "I would establish a
strictly controlled distribution network through which I would make most drugs, excluding the
most dangerous ones like crack, legally available. Initially I would keep the prices low enough to
destroy the drug trade. Once that objective was attained I would keep raising the prices, very
much like the excise duty on cigarettes, but I would make an exception for registered addicts in
order to discourage crime. I would use a portion of the income for prevention and treatment. And
I would foster social opprobrium of drug use."

That kind of approach is still a long shot in today's political climate. But when it's voiced by
someone with the Establishment credentials of George Soros -- and billions to spend -- it's an
idea that can no longer be dismissed by the pooh-bahs of the political world.

Interview with George Soros by Mark Schapiro Tuesday, September 5, 2000.

Interview with George Soros, Chairman, Soros Fund Management by Mark Schapiro Tuesday,
September 5, 2000.

George Soros, Chairman, Soros Fund Management

Historic figures tend to wait into their waning years before reflecting on their own thinking about
the system that brought them to prominence; few attempt to do so in real time, when their
comments might actually make a difference. In the arena of finance, George Soros has come to
command attention not only due to his considerable philanthropic works, but also due to the fact
that at the height of his powers, he continues to issue a critique of the capitalist system that has
made him a billionaire. The more than ten billion dollars in assets controlled by Soros' Quantum
Fund and Soros Fund Management qualify him as being one of the 'sovereign' financial powers
whose interests transcend national borders, and can influence the evolution of political and social
systems through investment priorities.

Over the past ten years, Soros has channeled more than two billion dollars into creating a
network of non-governmental organizations and activist groups in more than 30 countries. His
contributions in Russia, the other countries of the former Soviet Union and Eastern Europe were
responsible for creating, almost overnight, a civil society; recently, his philanthropic activities
have expanded into southern Africa, Haiti, Guatemala and the United States. But it is has been
his critiques of capitalism that have sparked the attention of the broader financial community: A
book he authored two years ago, The Crisis of Global Capitalism: Open Society Endangered,
predicted, on the heels of the Asian financial crisis, the imminent "disintegration of the global
capitalist system." This year, Soros is critiquing his own critique in a new book, Open Society:
From Global Capitalism to Global Democracy, in which he admits to underestimating the self-
correcting mechanisms of U.S. financial institutions, and the force of the high-technology
industry. In this book, he also offers an elaborated vision of the need for a strong civil society
sector as critical to a strong democracy, and as a hedge against violent conflict. In the past, Soros
has responded to criticisms of the disruptive impact of his own currency speculations on national
economies by distinguishing between "making the rules" and "playing by the rules." His
comments at the State of the World Forum this week were focused on changing the rules by
reforming an international financial system that, he claims, has created gross inequities, and
continue to help fuel deep social divisions that can lead to violent conflict. On Wednesday, he
proposed the establishment of a global body which, with enforcement power rivaling that of the
World Trade Organization, could enforce global environmental standards. "We must," he said,
"mobilize civil society in favor of international law and international institutions."

At the Forum, he met for the first time former Soviet President Mikhail Gorbachev, co-convener
of the Forum, with whom he discussed participating in a new Council for Responsible
Globalization to represent citizens' interests on the global stage. In an interview on Thursday
with Mark Schapiro and Gabrielle Kelly, a documentary filmmaker, Soros called for greater
public participation in the international financial institutions that over the past week have been
the leading target of criticisms at the U.N. Millennium Summit, at a day of protests sponsored by
a coalition of progressive groups and at the State of the World Forum.

Soros has a broad face, with eyes deep in their sockets, conveying a mix of wry bemusement and
intensity. He still speaks with a thick Hungarian accent. He spoke to us on the fourth day of the
State of the World Forum.

Mark Schapiro: This week at the Forum you and numerous others have spoken repeatedly on the
theme of the inequities created by globalization, and the potential public backlash to come if they
are not addressed—as we've already seen in Seattle, and expect to be seeing later this month
during the IMF/World Bank meetings in Prague. How do you respond to the accumulating
criticisms of globalization in its current shape? Your comments this week have focused on the
inadequacy of international institutions to respond to those criticisms. What do you mean?

George Soros: What I mean is that there is a disparity between the economic arrangements and
the political arrangements, because what we really have now are global markets, particularly
global financial markets, and they dominate the economic life of each country….These
arrangements have been brought about by market fundamentalists, mainly the Reagan and
Thatcher administrations, that really allowed global markets to develop. I think there's a lot of
merit in an international economy and global markets, but they're not sufficient because markets
don't look after social needs. Markets are designed to allow individuals to look after their private
needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of
that, but they're not designed to take care of social needs.
Whereas we do not have political arrangements to match the markets, globalization has reduced
the capacity of the state to take care of social needs. [Nations] haven't lost their sovereignty; they
are in charge of, you know, affecting real life and death, within their country, within their
borders. But their ability to control capital is diminished because that capital can simply go away
and go to the environment where it is least harassed, so you can't impose taxation, you can't
impose regulations. That's a great limitation on the powers of the state. So, the social needs need
to be met now by international institutions and that is where, I believe, we don't have the
appropriate international institutions.

Mark Schapiro: What do you have in mind?

George Soros: This is where the problem is, because the United Nations was meant to be an
international institution, to preserve peace and the very noble goals stated in the Preamble of the
[U.N.] Charter. But the Charter was drafted in terms of nation-states and, therefore, they are
subordinated to the interests of each state. Each state is guided by its interests, not by some
nebulous concept of common interest. And not many states are even democratic. So, you have a
problem with the concept between international institutions and sovereignty.

To my mind, there is a solution which has to do with democracy, because democratic

governments are subject to the will of the people. So, if the people will it, you can actually create
international institutions through the democratic states. For that reason, I advocate an alliance of
democratic states, with a dual purpose. One, to promote what I call open society. I talk about an
alliance of open societies which would first foster the development of open societies within
individual countries, because there's a lot that needs to be done in that effort. And secondly, to
establish basic international law and international institutions that you need for a global, open
society. So that's my sort of broad concept. Now, I have not worked out the details, because I
don't think it's for me to work out the details. It's for them to work out the details.

Mark Schapiro: You know well how capital moves, I'm sure you know a great deal about that.
Much of the talk here has been about the distorting influences of international capital on
developing countries. How do you begin to channel those funds in a more sustainable, less
destructive direction?

George Soros: [Existing] international financial institutions were designed at a time when there
was [little] movement of capital. The International Monetary Fund was set up in 1945, I think,
with Bretton Woods, when you couldn't really transfer money from one country to another. The
IMF was designed to provide short-term financing to countries in trade deficits, and the World
Bank was designed to provide longer-term loans for development, which was appropriate to that
time. Now, the IMF has to become more of a lender of last resort, on an international scale, but
that's sort of a very tricky problem. Instead of increasing the Fund's capacities, the IMF is being
cut down and constrained, very much based on this market fundamentalist position that we
should leave it to the markets. That, I think, is very dangerous, because markets are, in fact,
unstable and they do need guidance from something like a central bank. So, I would like to see
the IMF develop into a direction of an international central bank, but very few people share that
view today.
Mark Schapiro: You've written some very acute observations about capitalism; now you're
reassessing some of your previous assessments. What you seem to be speaking about is the
directing of public monies, through the World Bank and IMF. What about private funds, which
of course are the bulk of investments we're talking about?

George Soros: The job of the IMF would be to regulate the capital flows, the capital market, and
be a lender of last resort in case of a crisis. You would also need adequate regulation of the
banking systems in the various countries that would probably fall outside the capacity of the
IMF; it would be more appropriate to the Bank of International Settlements of Oslo, to set
standards and so on. So, that's for regulating the market. Now, I think that the World Bank has to
be developed as an institution that would make public monies available for creating a more level
playing field—because you have some income maldistribution within individual countries—and
that's very much part of a democracy, creating equal opportunities, ensuring people that they can
have access, for instance, to education. Now, internationally, that is, at the moment, not
available. So, I would like to see the World Bank develop in that direction, as a creator of a more
even playing field.

Mark Schapiro: Who would be the political power that would authorize the World Bank to take
that role?

George Soros: It has to be the shareholders and I don't think you can get away from that.
Actually, these institutions work better than the United Nations, because the shareholders
actually control the institutions. [Voting in the World Bank is weighted according to each
country's financial contribution.] So, inevitably, this would mean domination by the rich
countries and I don't think it's appropriate to change that, provided the monies are used for
creating that more level playing field. And provided the institution is more insulated from the
specific interests of particular shareholders, because the way the World Bank has worked out,
you have certain countries that have a stake in a [particular] project and they push it, and it's
done more for the benefit of the donor than the benefit of the recipient. Most international aid is
more to benefit the donor than the recipient. So you have to insulate the World Bank from that
interest much more than it has been. But I would not put it under the control of the developing
countries, because there is a donor relationship and the donor should be in charge of the funds
that she is donating. I'm in favor of, let's say, greater foreign aid, if you like, provided it is
directed to benefit the recipient and not the benefit of the donor.

Mark Schapiro: You mentioned the other day the unholy alliance between government and
business, and how that contributes to corruption and human rights violations in different nations
around the world. Zimbabwe, Peru, Malaysia and Burma were among the countries you
identified as examples illustrating the intertwining of corrupt economic and political interests.
How would such a body address that kind of abusive situation?

George Soros: I have not defined how this would work, because it's something that has to evolve.
First of all, you have one alliance of democratic states, and that's NATO, but that's a military
alliance. Now, I think, we need a military alliance, but by the time it comes to military action, it's
too late. So, to prevent clashes from emerging, from developing countries, you need to engage in
prevention, and prevention means constructive engagement. Either way, I am actually engaged in
crisis prevention, having the network of foundations trying to build open societies, in the way of
preventing factions from developing. By building open societies you reduce the chances of
needing military intervention. So, I'm not opposed to NATO, but I am arguing for a constructive
alliance that actually engages in creating this more level playing field. For instance, providing
universal education in each country. Women's empowerment is the way to bring populations
under control.

[These efforts are often] much more inefficient than when people work for profit, and yet, I
think, you can make it more efficient if you give more scope for an entrepreneurial approach. On
that, I have actually changed my view. I used to be opposed to the idea of social
entrepreneurship. I said, you know, let business be business, and philanthropy be philanthropy.
Keep the two separate, don't mix it up, and this is what I did, and I did that rather successfully,
but I now recognize that actually you do need to mix it up and I think there is room for social
entrepreneurship [establishing business principles to the organization of NGOs]. It's more
difficult, you know, to bring about positive change than it is to make money. It's much easier to
make money, because it's a much easier way to measure success—the bottom line.

When it comes to social consequences, they've got all different people acting in different ways,
very difficult to even have a proper criterion of success. So, it's a difficult task. Why not use an
entrepreneurial, rather than a bureaucratic, approach. As long as people genuinely care for the
people they're trying to help, they can actually do a lot of good.

Gabrielle Kelly: I'd just like to ask you a personal question, if it's all right. How does your
experience as a businessman, at using the tools of the financial system, inform your philanthropic
work—which often supports groups and movements that criticize the very financial system in
which you've so succeeded? What has that experience meant to you?

George Soros: Well, you know, I was a human being before I became a businessman. In my
capacity as a human being, I actually argue that [businessmen need] to separate their business
interests from their interest as citizens. So, I argue that it's appropriate for people to pursue their
profit motive in business. If you want to change that, you're going against human nature. But
when it comes to setting the rules or creating the institutions, then you should have the general
interest at heart, even if it conflicts with your personal interest. Now that may be a little too much
to ask, but when your vital interests are involved, you should be allowed to plead the Fifth
Amendment. But if you do express an opinion, I think you should be concerned with the
common good, [in] that [way] you can act as a citizen. So, if you vote, you vote your best
judgment of the common interest rather than, let's say, pay off your representative to make him
represent your interests. Then I think you'll have a better-functioning democracy and then the
political process will work better. But, coming back to the specific, you know, these things
interested me before I became a businessman and I kind of neglected them during twenty,
twenty-five years, while I was engaged in making money, because running a hedge fund takes,
you know, a hundred percent of your attention on Saturday morning, and so I didn't get involved
in these issues very much. It's only when I was rather successful at it and I've made enough
money for my personal needs and to look after my family that we established this interest and, by
now, it is more important to me than my business. Although I want to make sure that my
business runs properly, but I'm not myself [as] engaged in it.

Gabrielle Kelly: You spoke yesterday here at the Forum about the Internet, which you expect
will be playing a more significant role in your philanthropy. Why?

George Soros: Well, you know, I'm in a very peculiar position, because I don't use the Internet,
now. I don't want to access to information, I want to restrict people reaching me, because there's
too much. I need to protect myself. I'm like a tribal chieftain, you know, that recognizes the
benefits of lightening, but doesn't actually learn how to light. He describes the theory of how to
do the lightening. But I did spearhead the introduction of the Internet in countries like Russia, the
former Soviet Union, because it is a very open system of communication. I think it has great
potential for self-organization and self-organization is very much at the heart of an open society.
The Internet is sort of a medium of open society. However, it can also be a medium of control
and so we have to be careful it doesn't destroy you. The same thing happens with the Internet
and, you know, in China they are trying to control it and it could actually be an extremely
intrusive control, because as you know, anything that moves through the Internet can be traced.
Before the Internet, you had to take a walk in the garden if you didn't want to be overheard by
the spies. Now, it's going to be much harder if you use the Internet. The Internet rules beyond
any regulation. I think you will have to be very, very careful to have the regulations that will
protect freedom.

Transcript: Interview with George Soros By John Authers

Transcript: Interview with George Soros

By John Authers
Published: March 20 2002 11:27 | Last Updated: March 20 2002 11:33

George Soros, the fund manager and philanthropist, was interviewed in Monterrey where he is
participating in the International Conference on Financing for Development.

Though he expresses some provocative views on recent crises in Argentina and Zimbabwe, the
interview focuses on a proposal he first announced last year to improve aid to developing
countries by persuading the US Congress to approve Special Drawing Rights from the IMF,
which have been waiting for approval since 1997.

Under Mr Soros's plan, the SDRs, which function much like a credit line from the IMF, would be
made available to countries which showed a solid record of good governance to finance
infrastructure projects. The following is an edited transcript of the interview.
What is your opinion of President Bush's announcement last week that he would increase the US
aid budget as part of the 'Millennium Challenge'? Is it just a fig leaf, or is it a step in the right
direction?

It's helpful, but it's also a fig leaf. It's both. He could not come to Monterrey with nothing. And
therefore they came up with this proposal, which actually could be a good beginning. However,
it's been crafted so that it costs nothing in the next year. It only starts in fiscal 2004. It's been
dressed up in a deceptive way.

Why do you think the president chose to make the announcement when he did?

It's the Monterrey momentum. I will be very frank. I put forward or pushed my SDR proposal in
the hopes that it might get caught up in the summitry. But it didn't quite fit the anti-multilateral
sentiment in the US administration. So instead of that they came up with this new compact. I'm
perfectly happy to see that move forward, provided it moves with international co-operation and
provided it gets started. If it's successful it could be scaled up. I would like to take a positive
view of it.

[Treasury Secretary] Paul O'Neill described your proposal on Special Drawing Rights as too
complicated. Do you agree?

I think there's some justice in what he said. I accept that. It's one of the weaknesses of the
proposal that it's too complicated - it's not easy to explain. It could be a very good scheme, but
very often good schemes just don't take off. I accept his criticism - but I think the merits
overcome it.

So what exactly are the merits of the SDRs proposal?

One of the difficulties will be to get the Europeans to accelerate. They are only offering
something by 2006. The SDR proposal would require agreement among all the donors to donate.
It would impose a certain equitable burden sharing, which is very difficult to achieve on a
voluntary basis. It would also be more effective in ensuring that the programs which are
supported are well constructed. It would be a superior way of giving aid.

In the larger picture, there's a lot of merit in the SDRs as a monetary instrument. It provides an
addition to the monetary reserves of less well developed countries which they need. The more
developed countries donate it. So by combining donations with the allocations you kill two birds
with one stone.

We are now facing a possibility of global deflation and we don't have any monitoring
instruments to tackle it. The issue of SDRs, particularly if it's donated, could be a valuable
instrument for stimulating the global economy. It would be worth having as an instrument
because we don't have an instrument for deflation and our monetary authorities are still fighting
inflation and imposing rather strong pressure on emerging market economies to have budget
discipline.
If you have a global SDR allocation as a stimulus mechanism, you could still maintain the
budget discipline. We could certainly use it right now and I think it's something that we may
need exactly because globalisation is setting up deflationary pressures. On this issue there is no
consensus at all - this is my particular judgment.

A recent opinion piece in the FT said that the Argentine crisis would not have happened if you
had stayed in active fund management, because you would have attacked the currency and the
country would have been forced to abandon its currency board much earlier. Do you agree?

It's very flattering but actually not valid because the entire market saw the eventual collapse
coming, and the cost of shorting it was too high. It was not possible to build up a significant
position. So the markets were pretty confident in discounting the eventual default.

So how could the Argentine crisis have been avoided?

It would have required [former Argentine finance minister] Cavallo to recognise that the
situation was untenable and to organise an efficient of orderly devaluation and reorganisation.
They would have had the support of the IMF for it. But he was not willing to do it.

How can sovereign defaults be handled better in future? Should there be an international system
for bankruptcies?

The proposal of a bankruptcy procedure is a necessary step forward. But it will have a sort of
unintended negative consequence in making sovereign debt less secure, because there's no
collateral on sovereign debt, except the pain that's inflicted. I think that we are now confronting
the next international financial crisis, and that will be the inadequate capital for emerging market
economies. It's not a sudden crash like 1997, but a more long drawn-out agony.

Do you agree with the suggestion made by [Harvard economist] Jeffrey Sachs at this conference
that there is a widening gap between a few emerging markets which have already developed a
sophisticated financial infrastructure and the poorest nations? The best-developed nations are
still receiving good flows of capital while the poorest are getting less than ever.

There's an increasing differentiation, I accept that. It's clearly visible. But even the best are
suffering when Brazil, which has done all the right things, has to pay 600 basis points over Libor.
It's untenable. And what's worse is that the ability of governments to engage in social policy is
severely circumscribed - if it were to increase its government spending, its credit rating would
penalise it. The market discipline is a very severe discipline over countries that have become
indebted.

You have been very critical of Zimbabwean president Robert Mugabe at this conference. How
important are democracy and good governance in deciding whether to allocate resources?

It's tremendously important. What Mugabe has done in Zimbabwe has done more damage than
years of overseas development aid could repair. Sanctions are of limited value. And that's why I
think it's so important to have positive reinforcement for the countries that have democratic
governments and sound economic policies, to counteract and to shore up the difference between
these countries and countries like Zimbabwe. External pressure is very often counter-productive.

The idea of positive reinforcement for democracies with good governance is also part of
President Bush's plan. Do you agree with him on this?

Yes, that's what both have in common - on that point we are on the same wavelength. And I also
think that there's a new paradigm which recognises that instead of conditionality you need
selectivity. Both recognise that.

The only difference between my perspective and the US government perspective is that you need
international co-operation to make this approach effective. If you have a large number of
different donors each pursuing its own agenda, then the recipient government is in the driver's
seat. I've seen it in countries like Bosnia, where billions were spent. All the donors had to go
through the same gatekeepers. If you had a united front on political requirements, then of course
it would be much more effective. The SDR framework would provide for this in a more explicit
manner.

The SDR proposal has been on the table waiting for Congress to approve it since 1997. Do you
think there is any chance that the political calculation will change so that the SDRs can be
approved? Will that require active support from the administration?

I think there's been a shift in public opinion which had been caught into a very negative approach
to foreign aid, since September 11. The administration could capitalise on this if it wanted to. I
think they could get the SDR proposal through Congress if they proposed it. It would be much
more difficult if they opposed it, because few Republicans would want to go against the
administration. But I think the support in public opinion is much stronger, which is probably one
of the reasons why Bush has actually come up with a proposal, to appease domestic public
opinion.

It's not by accident that the Bush administration went out of its way to have Bono [lead singer of
the rock group U2] at the announcement, because he represents a constituency that needs to be
catered to.

You win if you prevent a catastrophe

an interview with George Soros

by Ervin Hladnik-Milharãiã

I first heard about George Soros in the beginning of the eighties

in Budapest. People were talking about an American millionaire of
Hungarian origin who invested money into the free university and
supported marginal cultural projects. In connection with George
Soros they further mentioned Henry Bergson and Karl Popper, and
the concept of civil rights in open society which should become
the foundation for the development of democracy in Eastern
Europe. All of it sounded somewhat eccentric and not very
realistic.

Years later I was sitting with Fran Nazi in his office at the
outskirts of Tirana, where young Albanians were framing the
concept and preparing other documentation needed for the
launching of radio stations. They introduced themselves as "Soros
people" and talked about open society which in Tirana sounded a
bit more realistic than in Budapest. Nazi was the executive
director of the Albanian Open Society foundation and he was not
eccentric at all. He was an Albanian from Brooklyn who returned
to Tirana to help develop democracy in the country which was in
the midst of a terrible turmoil. He was successful. His conflict
with Salih Berisha led to his expulsion from the country.

Today in every capital in Eastern Europe one comes across the

name Soros. During the past twenty years he built the network
that spans the territory from Ljubljana to Kyrgyzstan. His
foundations finance newspapers, radio stations, English language
programs, initiatives for reforms of local governments, and a
host of other initiatives that seem to be infinite. They can be
found in South Africa and the United States. The report for 1998
states that in that year alone he spent 574 million dollars of
his fortune to finance the operation of his network.

Many American financiers leave behind them artistic, scientific

or educational foundations, because in addition to their own
interests this practice is stimulated by American tax
legislation. Yet Soros network is outstanding, because it has
made him a noteworthy political factor in South-Eastern Europe.
One of the documents formulated by his foundation was the basis
for the Stability Pact which stirred up both much hope and
reluctance. Soros is one of the most enthusiastic advocates of
the Stability Pact and he continually supplies ideas for the
resolution of the crisis that followed the disintegration of
Yugoslavia.

In his interview for Delo, given before his visit to foundations

in Slovenia, Croatia and Hungary, he explains why he devotes so
much funds and time to the Balkans and its difficulties.
Undoubtedly it would be no less interesting to hear him talk
about his financial activities, but he does not answer such
questions.
EHM: You travel to Slovenia just after two interesting changes
occurred in its neighboring countries. After a decade of
political darkness Croatia finally has a respectful democratic
government, while Austria, which was put forward as a model of
liberal democracy, ended up with the government with extreme
right-wing politicians. Being an expert on Central European
politics, were you surprised at such an outcome?

GS: Austria did not surprise me because the coalition there has
been growing weaker and weaker. However, I do not know Haider. I
never talked to him, so I have only second-hand information. I do
agree that the presence of such a politician in the Austrian
government arouses serious concerns. But I also think that he
cannot be simply driven away by our not agreeing to his presence
in the government. His climb reflects the weakness of democratic
forces in Austria. In addition, the reaction of the EU equally
seems to be above all the expression of weakness and fear that
the phenomenon could spread. Chirac is afraid of the rise of
extreme right-wing parties in France, which is the reason why he
supports the boycott with so much fervor. Germany, due to the
scandals related to CDU, is afraid that its own extreme
right-wing parties could become a political power of consequence.
I think that the reaction in Europe was in the first place a sign
of the weakness of democracy.

EHM: And what reaction would be appropriate?

GS: An expression of concern is entirely justifiable, while the

direct boycott could have an opposite effect. Such moves make
Haider even more attractive for nationalist sentiment in Austria.
People wonder what right do European countries have to dictate to
Austria the composition of its coalition. Rather than resorting
to a direct attack it would be better to employ an indirect
approach to ensure the strengthening of the democratic
alternative in Europe. From my standpoint, what is needed is to
see that the Stability Pact succeeds. That would be an investment
into democracy.

EHM: But at the same time Croatia has strenghtened its democracy.

GS: Yes. That is exctly what I am saying. It is a very important

test. The new government should be helped to achieve better
results than Tu_man's government did. To do away with corruption,
to create prosperity and bring about political reforms. The
development of democracy in the countries like Croatia takes away
legitimacy from the projects like Haider's.
EHM: Why were the United States so reserved in both cases?

GS: I am myself very cautious too when criticizing Austria.

American reservations seem justified to me. To condemn Haider
because of his past is dangerous. He must be judged by his
actions. The strong reaction of the Europeans originates in
internal weaknesses. That is not healthy. A healthy reaction
would be an accelerated investment into open societies. Let
Haider sink under his own weight. The Austrians could be warned
that their government is not attractive, and left to take care of
it themselves. Let them vote differently as Croatians did.

EHM: Don't you think that these two events affect the planned
changes in the region?

GS: On the contrary. The changes in Croatia will have massive

impact on Bosnia and Yugoslavia. There will be local elections in
Yugoslavia. People in Yugoslavia can ask themselves why the
changes cannot be effected in their own country as they have been
in Croatia. The authorities can fabricate election results to a
certain extent, but only to a certain extent. The changes in
Croatia represent a much more significant positive move for the
development of events in the Balkans than do the changes in
Austria represent a negative one. The outcome in the Balkans, on
the other hand, is not critical only for the region but for
Europe as a whole. This is the project through which the EU could
justify its existence and prove that it could act constructively,
that it has ideas and knows how to implement them. The European
Union is a process of integration, of the formation of open
society and economic prosperity through the common market.
Yugoslavia went through the process of disintegration. The legal
system disintegrated, ethnic conflicts led to the collapse of
institutions and economic sunset. The West reacted defensively
attempting to maintain status quo and stop the disintegration. It
was not successful. Europe could now offer the concept of
integration and reverse the course of history. The Balkans must
become a part of Europe. That is the answer. That would lend a
new meaning to Europe and have significant effects on the
development of the whole world.

EHM: Of the whole world? Isn't it somewhat exaggerated?

GS: We live in the era of global economy, but we do not have

global society. The political structures across the world do not
keep in step with modern economic developments. I think that it
is necessary to establish global open society. As an idea this
may seem utopian. But if we proceed bit by bit and bring about
realistic changes in the Balkans based on the principles of open
society, we will make the important first step. We could show
that it is in the interests of existing open societies that the
whole world should become the world of open societies.
Democracies should work on a gradual development of open
societies in all parts of the world where it is in their
interests. The Balkans is the first trial. If we succeed there,
the idea of open society will become less utopian. If we fail,
there is no point in talking about global open society. If we
cannot resolve the situation in the region so close to Europe,
then there is no point in further considerations. The Stability
Pact is a good starting point.

EHM: Who do you have in mind when you say "we"? Which subject
could take on the management of the project? The United Nations
is an awkward organization enmeshed in a network of national
politics. NATO is a military organization with the one-way
political agenda. Europe is a concept still in development.

GS: We need an alliance of democratic states. The alliance of

open societies which should promote open societies relying on
constructive and not military means. We need a political
counterbalance to NATO. That is to say, a political alliance
which will insist on free compliance with the principles of open
society instead of imposing sanctions against those who violate
rules. Sanctions do not work. Economic sanctions are
non-productive and they help consolidate corrupted regimes. The
smugglers who breach sanctions are the allies of these regimes
and they create the symbiosis of the criminals and officials.
Sanctions create franchise for the regimes which should be
punished, so they remain in power thanks to the breach of
sanctions. Military sanctions are equally destructive and on
their own do not lead to positive changes. Bombing is not a cure
for social diseases. Something constructive should be done. But
the possibilities for constructive intervention are very limited.
There is no money needed for it, there is no an adequate
organization. There has been no progress made so far. After the
military intervention in Kosovo we were very slow to establish
the rule of law and the ethnic cleansing continued in the
opposite direction. People in Kosovo continue to live in fear of
men carrying guns . That is not the best formula for building
democracy. The police action in Kosovo has failed. The answer is
the Stability Pact, which is a fine idea, yet it has not come
very far for the time being.
EHM: What stage of implementation has it achieved in fact?

GS: There will be a meeting towards the end of March at which we

will talk about finances. This meeting will show whether this
project is serious or not. Quite a lot of serious financial
substance must be invested into the Pact or it will remain an
empty shell. I myself work on ensuring the success of this
meeting, but I cannot assure it though.

EHM: The Pact has been on the agenda for quite some time now.
What is the problem?

There are two problems. The first is money. The second is

organization. They are related. We do not talk about vast sums of
money. We will need a lot of money for infrastructure, yet this
funds could be obtained later through loans and investments. We
do not need more than one billion dollars of direct financial
investments.

EHM: Who will manage this fund?

GS: We talk about a project that is similar to Marshal's plan.

Marshal's plan was an American enterprise and it was managed by
America. The plan for stability should be an European enterprise.
But the European Union is not in top form. There are too many
cooks. Look at Kosovo. There is KFOR which is a military
formation more or less composed of NATO members. Then there are
civilian structures. UNMIK are United Nations. And there are four
pillars. The European Union, OSCE, UNCHR, and a fourth one which
has now slipped my mind. There are too many authorities and they
continually find excuses for their failures by laying the
responsibility at other's doors. When different authorities come
into conflict, they establish another authority to coordinate
them. That does not work. The Stability Pact gave to the
resolution of the conflicts a clear form and organizational
structure. But it has many enemies because it was shaped by
foreign ministers, so financial ministers are now very
unforthcoming when it comes to allocating financial means. I hope
that there will be formed the common fund which will coordinate
the donations. The EU itself has no money, it can obtain it from
donors only. And donors will then want to have supervision over
the spending of the funds. These two problems must be resolved.
Money and organization.

EHM: Your description depicts the standard procedure of all

foreign political projects of the EU. Mutual jealousy always
leads to a standstill.

GS: They must transcend it. They must form an action group,
determine who is responsible for its work and give authorizations
to him. The most evident candidate is Chris Patten. Other
commissioners should remain under his leadership. Which is
difficult because all commissions are equal and everybody has to
give agreement for each decision. They should find a mechanism
which would enable them to accomplish their task.

EHM: We have seen this many times before. The situation is

resolved in this way or another only when the United States steps
in.

GS: This time the United States is less important because the
protective umbrella must be provided by Europe. The region has to
be integrated into Europe, not America. America could set an
example and offer, say, trade concessions, but the bulk of work
must be done by Europe. The project must be led by Europe. The
idea implies the reducing of the significance of the state
borders and the creation of better cooperation in the region
which should gradually grow closer to Europe. This is the
European business. The United States could support the project,
but they cannot lead it.

EHM: You are one of the more successful American financiers and
you make the impression that you are a satisfied man. You devoted
a lot of time, energy and money to the activities in the
countries which seemed to belong to the empire of Dracula. Why?

GS: The idea of open society is a universal one and it is not

tied to one or two countries. I would like to bring the world
closer to global open society. This is an abstract concept which
I would like to transform into more concrete form. I began in the
eighties when the situation in Eastern Europe was very clear. On
the one hand, you had closed societies which enforced upon their
people their own special version of the truth. On the other side
were open societies where nobody had monopoly over society, which
means freedom. The difference was very clear. Open society was
much desired, because closed society was very oppressive. The
idea of open society was the idea of freedom. Things are
different today. The Soviet system collapsed, we have global
economy but no global society. On what basis could society be
organized? In my opinion the basis should be the recognition that
nobody is in possession of the ultimate truth. At the same time
everybody should recognize that we are all part of common society
in which we are concerned about the conduct and interests of
others because they affects us. I try to serve common interests.

EHM: Which of the local organizations that you finance yielded

most results?

GS: Different organizations in different times. The Albanian

foundation was unbelievably successful. In Albania the foundation
of open society has been perceived as an institution which
largely contributed to Albanian democracy. The Sarajevo
foundation was very important during the siege of Sarajevo,
because it helped preserve life within the city. Slovenian
foundation is not so significant for the state, because Slovenia
does not need this foundation as much as other countries do. Yet
the foundation in Slovenia is very good because it shows concern
for its neighbors. Today Slovenia is in a very good position to
help, say, Montenegro in their reforms. The foundation organizes
workshops in which Slovenian experts for education share their
experience with experts from Montenegro who need such exchange.
On the other hand, I had to shake up the Ukrainian foundation
because it came under a too strong influence of its environment.
The Ukraine is a very corrupted environment and I had to purge
the foundation thoroughly. The Ukrainian foundation was not a
success.

EHM: What has been built with your investments into tens of
programs from Slovenia to Kyrgyzstan?

GS: The network of open society foundations in which individual

units function as prototypes of open society. They are
self-organized and have substantial autonomy in bringing
decisions. They accept responsibility for their actions. They
serve the idea of open society by functioning as open societies.
The network is well positioned so that it can contribute to the
success of the Stability Pact. It cannot accomplish the task on
its own, because western democracies must show willingness to
join in and help. Another thing needed is the capacity to absorb
help, and that is where the foundations could offer their expert
knowledge.

EHM: And that should be carried out by the United Nations of the
western world mentioned before?

GS: That should be an association of democratic states. The

objective is to promote open society all around the world and to
create global open society. There are two objectives in fact. The
first is the internal development of individual countries, the
second is the international development of the rules and
standards of conduct, and institutions to support those rules.

EHM: Yet there are so many international organizations, agencies,

non-governmental organizations, private forums, which rush to
every crisis spot so that it has become difficult to count all of
them. Each follows its own course and they often make an
impression that they do not know exactly what course that is.
Doesn't this point to the failure of traditional organized
structures rather than anything else?

GS: That is a kind of pluralism. Different organizations with

different forms of support operate independently. The idea that
there should be some supreme authority which caters for all needs
is a relict of the communist era. We are simply a network. And
there are many networks. Some achieve better results in certain
areas, others do in other areas. The idea of open society is
based on self-organization and not on any pre-meditated plan.

EHM: Yet the networks have become so widespread that they have
turned into an important employer.

GS: It is clear that sooner or later this may turn into a

business. The organizations must obtain money from donors.
Therefore they must be visible when mediating aid. They cannot
just send money directly to those who need it even though it
would be perhaps the most effective way of giving help.
Personally I am not especially keen on participating in purely
humanitarian operations. As a rule, once there is a need for the
humanitarian action, it is already too late. I find it much more
sensible to organize political structures which could prevent
humanitarian catastrophes. Much less money is needed to build
democracy and dynamic market economy than to amend catastrophes.
One can prevent the victories of politicians who exploit ethnic
conflicts and lead nations into the wars which finally create
need for humanitarian aid. If we have to come and make the
cleaning after the conflict, it means that the idea about open
society has been defeated. You can talk about victory when such
action is not needed because you have prevented the catastrophe.
One of the lessons learned from the disintegration of Yugoslavia
is that the prevention never begins too early. The opposition to
Miloseviç should have been put up as soon as he took away
autonomy from Kosovo and Vojvodina. At that time Milo”eviç had
not any significant power in his hands and had he met with the
opposition then, he would have never become the big authority. It
is not possible to guess just like that which event could lead to
a catastrophe. Therefore, you need general principles. These
could be solely the principles of open society, democracy, human
rights and so on. It is necessary to react each time they are
violated and to perceive immediately every critical violation.

EHM: Who could oppose the elimination of the autonomy in Kosovo

and Vojvodina save for the constructive elements within the
federation of that time?

GS: Europe. An external diplomatic pressure on the former

government could have been very effective. As the time passed it
became much more difficult. Of course we will never manage to
turn this world into the garden of paradise. Catastrophes will
always happen.

EHM: Russia has just finished off the war in Chechnya which
fulfills all of these criteria. Why nobody reacted?

GS: We could not do anything for Chechnya. It was too late. Had
we tried to assist in building open society in Russia, something
could have been done perhaps. Perhaps in that case we would not
even hear about Chechnya. Why there is war in Chechnya? Because
thanks to the disintegration of political environment Russian
politicians have used Chechnya as a vehicle for securing Putin's
popularity. If we had tried to create a different environment,
Putin would have not risen to power through war. Do not forget
that between ninety four and ninety six the Russian public
opinion resisted the military action in Chechnya and thus stopped
it. The situation in Russia has worsened since then. We cannot do
anything about Chechnya because there is so much resentment
against the West that it would be counter-productive and would
only reinforce nationalistic sentiment. But in the Balkans we can
do something. The ball is in our court. We have made the military
intervention, so now we have to justify it and bring a visible
progress to the region. That calls for a constructive action.
That is the Stability Pact. That is why it is so important.

Soros Interviewed by Diane Rehm

In an interview that aired on September 12, 2002, Diane Rehm, the host of National Public
Radio's "The Diane Rehm Show," and OSI Founder and Chairman George Soros discussed a
wide range of issues including globalization and the possibility of a U.S.-led invasion of Iraq.
Below are edited excerpts from the interview:

G.S. = George Soros

D.R. = Diane Rehm

D.R.:
President Bush has told the United Nations they cannot stand by while Iraqi President Saddam
Hussein defies it by developing weapons of mass destruction and barring weapons inspectors.
Financier and philanthropist George Soros believes the best defense against terrorism is
international cooperation. He joins me from New York to discuss his vision of a global, open
society and America's role in a post 9/11 World.

President Bush has just laid out his case against Saddam Hussein to the United Nations. Do you
believe military action is called for now?

G.S.:
Yes, I fully support what President Bush said and I also fully support what Secretary General
[Kofi Annan] said. I'm hopeful that the United Nations will pass a resolution demanding
unconditional inspections, also that Iraq agree to that. Then l think that we really have won a
victory for the United Nations.

D.R.:
If, in fact, the United Nations does not go along with that idea of demanding, again, inspections,
complete and fully open, can you see any circumstances under which a unilateral preemptive
strike by the United States would be justified?

G.S.:
A case could be made [for a preemptive strike], but President Bush has definitely not made the
case for one at the present time. And Kofi Annan made it clear that it is only in self-defense that
the United Nations allows a country to engage in war.

D.R.:
In your book On Globalization you say, "I advocated military intervention in Bosnia and Kosovo
and I am glad at the extent of American military superiority. All our efforts at crisis prevention
may come to naught, and as a fall back position, we had better be prepared to win military
confrontations, if and when crises occur".

G.S.:
That is actually my stand, and I think that military action is necessary as a last resort, but it
should be the last resort. Now President Bush has announced a doctrine of preventive action; I'm
all for preventive action, but that preventive action should be a constructive action. It should
provide incentives and reinforcements to countries that are moving in the right direction, moving
out of poverty, establishing democratic regimes. We are failing in delivering on that need. And
there's no example better than Afghanistan. We won the war. We were greeted as liberators. And
we have already, I think, largely lost the peace because we have failed to introduce international
peacekeeping forces and in delivering assistance in the provinces. We only have international
forces in Kabul. And we have regimes that only control Kabul. And that, I think, is our failure. I
would blame Defense Secretary Rumsfeld in particular for resisting the need for international
peacekeepers.
D.R.:
Now the other thing that President Bush said in his speech to the United Nations, and I think I'm
giving you a fairly accurate quote here, is, "My nation will work with the Security Council to
meet the Iraqi challenge. The purposes of the United States will not be thwarted, they will be met
or there will be action." Now how do you interpret that, Mr. Soros?

G.S.:
Well, if this very firm tone succeeds in getting the United Nations to take the right actions, then I
think it has brought results. If it is actually converted into unified action, I seriously have to
question the legitimacy of the United States going alone without the authority of the United
Nations.

D.R.:
What do you think that the result of going it alone might in fact do?

G.S.:
Well, I think that, first of all, it really undermines the international laws we currently have. I
think that there is really an ideology here in certain segments of the Bush administration that
really has no respect for international law. But to speak to Iraq, I think doing it alone would be
very, very dangerous because Saddam is likely to retaliate by attacking Israel, and Israel would
then likely retaliate. And that would then create a war between the Arabs and the rest of the
world or the Arabs and the United States. And there would be the danger of the Arab street
siding with Saddam. And that could have repercussions in countries like Egypt and Jordan and so
on.

D.R.:
And perhaps, even India or Pakistan?

G.S.:
Pakistan is a problem anyhow, but [Pakistani President Pervez] Musharraf knows that danger and
he has warned the United States, and so has practically everybody in the world.

D.R.:
Mr. Soros, come back to that point, if you would, of international law and the Bush
administration, which has said it believes it has the right to proceed with a preemptive strike
should the United States deem that to be necessary.

G.S.:
This is the really dangerous lie because we have people in the administration today who believe
that international relations are basically the relations of power, not of law. So you have rule of
law inside the United States, democratic country that it is, but there is no international rule of law
in the world. That is, international relations are governed by power, mainly military power. Now
we are in fact by far the most powerful nation on earth, not just militarily but also economically
and financially. Now therefore we have the right to decide how the world should be ruled. What
is the world order that we want? That is the right that we do not have. This belief that "might is
right" is tremendously dangerous, particularly if it is held by the most powerful nation on earth.

D.R.:
Now I want to take you back in history to the Cuban missile crisis and to the fact that indeed
missiles were seen from the air on Cuban territory and President John F. Kennedy issued an
ultimatum. The ultimatum was responded to, but if that kind of weaponry were indeed to be
shown to exist on Saddam's territory, and yet we still did not have the agreement of nations
around the world, would you then, if the proof was there, be amenable to a preemptive strike on
the part of the United States?

G.S.:
I would be very reluctant. I would need more evidence that Saddam is about to use that weapon,
because I think that you could probably get evidence that Israel is in possession of nuclear
weapons or that maybe other countries are in possession. Pakistan possesses nuclear weapons,
and there is a very strong Islamic extremist movement there. So I think just the sheer possession
of nuclear weapons would not be sufficient cause for intervention. But I think it would be
sufficient cause for the United Nations to intervene and to authorize the United States to act, and
if the United Nations isn't capable of that, then there is a breakdown of international law and
order and then maybe the United States would have to act alone, or then build a coalition of the
willing to act. So I think that there should be other countries. I think Britain would certainly join,
and hopefully Europe would. So that it might be possible to create a coalition of the willing for
intervention, which would have sufficient legitimacy, given the dire circumstances to be
justified.

D.R.:
Considering past performance, do you believe that the United Nations is capable of putting
together such a force as to create a momentum that ultimately forces Saddam to back down?

G.S.:
The United Nations doesn't have to put together the forces. All it needs to do is to authorize the
United States and other countries that are willing to intervene to do so. That is the most powerful
way to do it. And I'm confident that a resolution will be passed. Maybe China will abstain, but
there will be no veto. So I'm actually quite hopeful that maybe there will be a peaceful
resolution, that Iraq might actually agree to the inspection, and if not, that the intervention would
be under UN auspices. But my concern is, as I stated, there are elements in the U.S. government
that not only don't want international law to prevail, but go out of their way to destroy whatever
we have.

D.R.:
Mr. Soros, one of the comments that you make in your book is that the United States is the major
obstacle of international cooperation today and that it is resolutely opposed to any international
arrangement that would infringe on its sovereignty. After September 1lth, the Bush
administration is still not willing to compromise sovereignty in waging war on terrorists. Would
you explain?
G.S.:
Take the treaty establishing the international criminal court. Not only did we not subscribe to it,
but we have gone out of our way to try to destroy it by sabotaging it, by asking countries to sign
bilateral agreements that might break that treaty. Now there is plenty of protection for American
citizens acting on behalf of the U.S. government, such as soldiers or officials, under article 98 of
that treaty. But we are asking for every citizen to be exempted from it. So, we are making
unreasonable demands with the express purpose of breaking that law.

We are very much in favor of international trade, but we have imposed steel tariffs that will be
ruled to be illegal under the World Trade Organization, and I think that we know that will be the
case. There is a convention on torture, which the United State has subscribed to, and there is now
a protocol for enforcing it, but we refuse to accept that protocolÉand I could go on.

D.R.:
So, from your perspective, while the United States is calling for international support and
international cooperation, the United States itself, remains in your view, a major obstacle.

G.S.:
That's right. Now that we are the most powerful nation, we call the tune in the world and there
can be no development of international law or international organizations without American
cooperation. There is a lot to be done because we now have global markets and there are needs
for improved international law and regulations, and we are not willing to come through with this.
Now we have a situation where there are international markets, but we have a political regime
that is based on the sovereignty of the states. It is very difficult to intervene in the internal affairs
of other nations. It is very difficult to bring about regime changes in, let's say, Iraq, however
really desirable that would be. What we can do, which does not violate sovereignty, is to offer
inducements, reinforcements, and incentives for countries that are moving in the right direction.
We have a very uneven global system. And we need to extend a helping hand to the less
developed countries and countries that have less strong democratic institutions.

D.R.:
Has September 11th has actually changed your vision of a global open society, and has it
affected where you'll direct your efforts and your money?

G.S.:
Well, the only thing to the extent that I see is a more aggressive, negative attitude on the part of
the United States towards international cooperation. And I believe that the future of a global
open society is going to be decided in the United States. So I, as a philanthropist, have
concentrated my efforts on the countries that are emerging from communism, from a closed
society, and tried to help them make the transition to an open society. I think that the future of
open society is now decided in the United States and so I am refocusing my attention to the
United States.

D.R.:
Has the downturn in the stock market, Mr. Soros, affected your spending on trying to solve some
of the world's problems?
G.S.:
Actually, I am downsizing my spending; I've been spending $500 million a year and I really have
passed my moneymaking phase. So, I'm not making money any more and therefore I can't quite
spend as much as I have in the past.

D.R.:
Do you still intend to spend down your entire fortune and close down your Open Society
Network by 2010?

G.S.:
No, there is a modification there, because there is a network that needs to, or is justified, to be
maintained past 2010, but it won't have the resources that it currently has. It will be more of a
network of people standing for a certain set of ideas, rather than a network of foundations,
spending $500 million a year. Because the money will not be there.

D.R.:
The Los Angeles Times recently asked, in a review of your book On Globalization, whether it
matters if an institution fostering democracy is the creation and extension of one very rich person
who need not stand for office, take into account the wishes of an electorate, or consult with
anyone or anything except his bankers. How do you respond to that?

G.S.:
I think that is a phony accusation, actually. Because in a democracy everybody has a voice, and
not just a voice, but he can function within the laws to advance his ideas. Most people are
motivated by self-interest. I happen to be in a position where having satisfied my personal needs,
I am more concerned with the well being of society and I devote my resources to it and I don't
see anything wrong with that.

D.R.:
The book we're talking about is called On Globalization. Our guest this morning is George
Soros. Let's go to the phones for your questions and comments for philanthropist George Soros.

We have an e-mail from Karen, who asks who are those in the administration who don't believe
or want to support international law. Can you be more specific?

G.S.:
Yes, I would select Donald Rumsfeld, who really did not want to have international
peacekeeping in Afghanistan and we are now paying the price for it. I would select [Attorney
General John] Ashcroft, who, when we introduced the Patriot Act, said that those who are
opposed to the law as laid down are aiding and abetting the terrorists. That pushes the wrong
buttons with me, you know, because I grew up in Hungary and I experienced Nazis and I
experienced Communism. And that is the kind of extremist talk that is not what America stands
for. We are a democracy and I hope people will actually express their disapproval at that kind of
approach. And then I could go down further. There's an Undersecretary of State, Bolton, who is
the mastermind behind trying to sabotage the international criminal court. And there are other
people. I think Vice President Cheney is very much the head of this group of people, and
[Secretary of State Colin] Powell is on the other side representing a more reasonable law abiding
policy.

D.R.:
Caller in Rockford, Illinois. Good morning, Drew.

CALLER:
Mr. Soros, I would just like to compliment you. I spent time in East Central Europe over about
the last 12 years and have witnessed some of, well, many of the programs your foundation
initiated during that time. Having said that, I'm curious if you think that some of the efforts to
promote social change in that region could be applied to either here, domestically, in the United
States, or abroad in the effort to influence the rest of the world as to what America is about.

G.S.:
Well I think the problems are different there and that was a period of transition from a
totalitarian closed society to an open society. We are an open society and of course every society
has some deficiencies and so we need to address those, but we do have strong democratic
institutions even though, let's say, Ashcroft's attitude does remind me of the Nazis and the
Communists. He cannot implement his ideas to the extent that they could be implemented in a
totalitarian regime, so our democratic institutions are very strong. I think that we have an
educated and freedom-loving population and we need to express our views and defend our
democratic principals. Because the terrorist attack has awakened great fear, we all reacted in our
stomach, in our gut; we mustn't let that grow to overwhelm our thinking and our actions.

D.R.:
Mr. Soros, those are pretty strong words you used about the attorney general. Have you said
those words to him directly?

G.S.:
Not to the attorney general himself, but I did confront Rumsfeld and Afghanistan at a public
meeting. I actually sponsored an advertisement in the newspapers quoting Ashcroft's statements
about aiding terrorists by opposing the Patriot Act.

Sunday, 30 June, 2002, 14:23 GMT 15:23 UK

Interview with George Soros, financier

George Soros, financier

BBC BREAKFAST WITH FROST INTERVIEW: GEORGE SOROS FINANCIER JUNE

30TH, 2002
Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: Well it's been a turbulent week for Stock Exchanges around the world. On
Wednesday we learned about the fraudulent accounting of the US phone telecom company
Worldcom. And on Friday another American multinational Xeros faced new questions about the
accuracy of its accounts. That all follows on of course from Enron. Can we rely on company
figures and how will these cases affect investment? I'm joined in the studio by the financier, the
legendary financier turned philanthropist George Soros, George good morning.

GEORGE SOROS: Good morning.

DAVID FROST: We've got all these headlines today on Worldcom here, the financial section of
the Sunday Express says Worldcom disaster now ten times worse and all of that, what are the
lessons, what the conclusions you draw from this horrendous set of headlines this week?

GEORGE SOROS: Well this is, in one way, a normal fall-out of the, of the preceding boom but
in another way the fact that it is so widespread, that there are so many irregularities that come to,
to the fore raises a more far-reaching issues about the values that guide us, not just in business
but also in politics and generally. Because there is a culture in the United States that success
matters and that's the only principle that you really have to rely on. So anything goes and if
you're successful and particularly financially successful you have admiration, respect and so on.
So there is the lack of, what I would call moral principles now which I is I think very
widespread, you see it in politics as well, it's the, a matter of you know, politician is supposed to
win elections, it doesn't matter what he says, what he does as long as he gets elected. And this is
a very unsound basis for a society so I think we ought to really look back a little bit and, and
reflect a little bit more profoundly than we have done so far.

DAVID FROST: Well in fact those questions are asked about politicians and so on, but
particularly in this case of the, in the financial world or in the business world what could be
done?

GEORGE SOROS: Well obviously there has to be the changes in the way figures are presented.
America has a rules-based system of accounting and it isn't enough to have rules because rules
can lead to rules avoidance and in fact the rule avoidance business, the industry is a very large
industry pursued by the most respectable people in finance. So rules alone are not enough, you
need principles and this is where actually there is a difference between the accounting approach
in, in Europe and in the, in the United States. Because in Europe you have actually principles-
based approach and in America you have a rules-based approach.

DAVID FROST: I see, so, so would you say we, you wouldn't expect a similar scandal here?

GEORGE SOROS: Well it could occur, there are always excesses, I mean you had a few but you
wouldn't have this sort of systemic problem and interestingly I think the most important step to
bring it to the, to the fore, to correct this has already occurred because the SEC, the Securities
and Exchange Commission sent out a directive to the directors of all the reporting companies
saying that they are personally responsible for giving a fair and appropriate representation of the
financial affairs of the companies irrespective of the rules. In other words, even if they, they
meet all the accounting rules they misrepresent the overall condition of the company they are
personally responsible and that's why all these things are now coming, coming out, because the
directors are taking a closer look.
DAVID FROST: Well that's a very important point, that one, about accountability. Tell me in the
overall view of the financial world at the moment, did I read you right that you said somewhere
that you thought that in the foreseeable future the dollar could lose as much as a third of its
value?

GEORGE SOROS: Yes I did say that and because you see markets generally, financial markets
generally but particularly currencies don't move towards an equilibrium, they go to one excess or
the other and they tend to move in sort of large waves, cycles which tend to last for two or three
years and you never know when the trend has changed and you can only say in retrospect. But
there are signs now that, that the trend has changed, that people in the world have lost confidence
in the management in the United States, in other words this is now a kind of Bush bear market
that is developing.

DAVID FROST: Well it's fascinating to go over this with you and I think that key point about
personal accountability making chief executives look more closely at the figures is a vital one,
thank you very much for being with us.

GEORGE SOROS: My pleasure.

DAVID FROST: George Soros there.

END

The George Soros Independent News Site is the premier location for news about
George Soros. We welcome feedback and insight from all sources.

The New York Times

Sunday, December 6, 1998

"GEORGE SOROS HAS SEEN THE ENEMY. IT LOOKS LIKE HIM."

By Timothy O'Brien

NEW YORK -- What would Freud have made of the way George Soros, the world's most
famous hedge fund manager, describes the tension brought on by having made a fortune as a
speculator and then having reinvented himself as a globe-trotting philanthropist?

"Sometimes I felt like a gigantic digestive tract, taking in money at one end and pushing it out at
the other," Soros writes earthily in the preface to his new book, "The Crisis of Global
Capitalism" (Public Affairs, $26). "But in fact a considerable amount of thought connected the
two ends."
And what to make of a man who has raked in billions of dollars through lightning strikes in free-
wheeling currency markets, but now advises the world on how to clean up the messes he thinks
such strikes create?

While Soros has been playing the multiple roles of trader, philosopher and philanthropist for
many years, the friction has come into sharpest relief in recent months, as he has boldly
prescribed cures for a variety of the world's economic ills.

It has been most conspicuous in Russia, where Soros, with more than $1 billion at stake in the
country, actively lobbied Russian and American officials to accept his advice on the best way to
resolve the summer's financial crisis.

Soros' book includes a day-by-day account of his high-level phone contacts and memo-writing in
the weeks before and after the August devaluation of Russia's currency, the ruble.

"There's a potential conflict -- I've always taken great care not to exploit it," said Soros, 68,
gently tapping his eyeglasses against a conference table in his mid-Manhattan office. "And I
think that people, both in Russia and Washington, knew that, and that's why they took the calls,
because I think I have established a certain record in that regard."

Still, many observers wonder about Soros' straddling of so many fences inthe worlds of finance,
economics and politics.

"I think there's a built-in conflict between making money in public markets and improving the
world," said James Grant, editor of a newsletter, Grant's Interest Rate Observer, and the author of
several studies of financial markets. "Soros is out there telling you what he's done, what he's
going to do and how he'll save the world. I think there's a conflict because those goals seem at
cross-purposes."

"It raises questions about inside information when you're able to talk to central bankers and
policy makers at the same time that you're involved in financial markets," Grant said.

For his part, Soros, dapper and attentive, defended his probity in a wide-ranging interview last
week, saying he has always strived to keep separate his roles as a hard-nosed trader placing
global bets and a financial guru able to rub elbows with the highest of the high and mighty.

Though he had run-ins with American regulators in the 1970s and 80s, he has never been
accused of insider trading or similar financial wrongdoing.

"We have to distinguish between playing by the rules and making the rules," Soros said. "Playing
by the rules, one does the best one can, irrespective of the social consequences. Whereas in
making the rules, people ought to be concerned with the social consequences and not with their
personal interests -- in other words, not to bend the rules to their benefit or their advantage. This
is a principle which I have certainly observed."
Yet Soros, who is believed to be worth about $5 billion, is uniquely positioned to help determine
how the rules are made in some parts of the world, and he built his fortune in currency markets
where the rules were never entirely clear.

As the Russian crisis mounted in August, for example, Soros worked his Rolodex, summoning
influential Russian politicians and United States Treasury Department officials to the telephone.
He pushed for a big international bailout and a devaluation of the ruble to bolster Russia's
troubled economy.

At the same time, Soros had $1 billion invested in a Russian telecommunications concern --
through a partnership with one of Russia's powerful "oligarchs" -- as well as investments in
Russian stocks, bonds and the ruble.

Soros was also the overseer of a philanthropic foundation in Moscow that generously financed a
range of causes, including education, the arts, sciences and media, through about $61 million in
annual grants.

If Soros ruled the world, he said, he would establish an international regulatory agency to rein in
speculative excesses and provide financing during economic crises.

"To put it bluntly, the choice confronting us is whether we will regulate global financial markets
internationally, or leave it to each individual state to protect its own interests," he wrote in his
book. "The latter course will surely lead to the break down of the gigantic circulatory system
which goes under the name of global capitalism."

That prescription reflects the fact that Soros has long harbored a certain disdain for the
profession that made him rich. Indeed, his record is such that he -- along with Warren E. Buffett,
the Omaha financier, and perhaps Peter Lynch, the Fidelity fund guru -- is among the few
investors whose names are widely recognized by the public.

A Hungarian-born Jew, Soros was 14 when the Nazis invaded his homeland. He avoided the fate
of many Jews by posing as the godson of a Hungarian official overseeing the confiscation of
Jewish properties. He moved to London after the war and eventually graduated from the London
School of Economics.

There he came under the influence of the philosopher Karl Popper, whose "open societies" credo
Soros re-fashioned as his own. Popper opposed totalitarian states; Soros believes that
participatory democracy and regulated market economies are the vehicles for insuring individual
freedom.

His academic training led to the fascination with abstract thinking that pervades much of his
writing. "But if you get too abstract, you have nothing to grapple with and abstraction empties
your thinking of content," he acknowledged last week.

Soros, at first hard up for cash and then stymied by limited opportunities in London, moved to
New York in the late 1950s and became a trader. He soon carved out a niche exploiting
differences between the London and New York markets, a gulch he mined through the 60s
before venturing into the new world of hedge funds.

Hedge funds -- largely unregulated investment pools open only to wealthy investors and big
institutions -- aim to provide consistently outsized returns on stocks, bonds, currencies or other
securities while limiting losses from market downturns.

Soros, an aggressive, gutsy speculator, ran one of the earliest and most successful of these -- the
Quantum Fund -- for two decades beginning in1969.

Basing Quantum in the loosely regulated confines of the Caribbean island of Curacao, Soros
often racked up returns in excess of 30 percent a year and twice posted annual returns of more
than 100 percent, according to the fund's most recent quarterly report.

He was one of the first investors to hunt down opportunities around the world, eventually
spawning a legion of imitators and fellow enthusiasts. "George opened all of our thinking to
macroeconomic theory, and he made globalists of us all by making us understand the importance
ofgeopolitical events on the U.S. economy," said Byron Wien, chief domestic investment
strategist at Morgan Stanley Dean Witter, who has known Soros for about 30 years.

Soros gave up day-to-day management of Quantum in 1989, but he is still consulted on major
trades and is one of three supervisors of Soros Fund Management, the New York firm that
oversees Quantum and his other funds.

Since the late 1980s he has also been a ubiquitous philanthropist, donating money to causes
around the globe to realize his vision of an open society. Last year, his foundations gave away
$428 million, with Russia the single largest recipient and political reform in Eastern Europe one
of his chief causes.

Along the way, Soros has become an incisive critic of the predations of unfettered capitalism, a
theme that has taken on even greater resonance in the wake of the financial calamities in Asia
and Eastern Europe over the last 18 months.

"Markets basically are amoral, whereas society does need some kind of morality -- a distinction
between right and wrong," Soros observed. "And by allowing market values to become all-
important, we actually narrow the space for moral judgment and undermine public morality. This
has actually happened, and globalization has increased this aberration, because it has actually
reduced the power of individual states to determine their destiny."

Of course, no one in the markets proves the point better than Soros himself. It was in 1992 that
he became a household name, when Quantum and related funds, largely using piles of borrowed
money, made more than $1 billion in a few weeks by betting against the British pound.

Britain's central bank wasted its reserves in an unsuccessful effort to defend the currency's value.
The episode derailed Britain's membership in a European initiative seeking to rationalize
exchange rates -- and it earned Soros this sobriquet: "the man who broke the Bank of England."
Soros has also described some forms of financial derivatives -- highly volatile and complex
investing products -- as the economic equivalent of crack cocaine. Yet he has used derivatives in
his own speculating, explaining that his funds favor only the simplest varieties.

Such inconsistencies give pause to those who might otherwise share his views. "It's an amusing
spectacle to see a guy like him who's made a fortune speculating now going around denouncing
newcomers to the field," said Doug Henwood, author of "Wall Street" (Verso, $25), an
examination of financial markets. "It's like he suddenly found religion late in life and now wants
to be Hegel in a hedge fund."

Closet Hegel or not, Soros is still very much a market maven, intimately involved in his hedge
funds' overall activities. That has created some notable flare-ups in the last year, as politicians
and financiers alike grappled with understanding the causes of the recent wave of global
economic turmoil.

Repeatedly, the finger has been pointed at speculators. Developing nations that had welcomed
the capital of foreign investors when it flowed into their economies decried "hot money" as it
whipped out.

Speculators like Soros were blamed for destabilizing one nation after another that lacked the
financial resources to defend their currencies when signs of economic weakness drew traders'
attacks.

In early 1997, Soros' funds were shorting Thailand's currency, the baht, and Malaysia's currency,
the ringgit -- that is, betting that the value of both currencies would drop. In July, Thailand
dropped its defenses, devaluing the baht. That set off the wave of devaluations in Malaysia and
elsewhere that marked the beginning of the current global economic turmoil.

Soros said that by the time of the devaluations, his funds had become active buyers of the
currencies, believing that they had already hit bottom. But that did not shield him from withering
accusations, mainly from Prime Minister Mahathir Mohamad of Malaysia.

"The Jews robbed the Palestinians of everything, but in Malaysia they could not do so, hence
they do this -- depress the ringgit," Mahathir said in blaming Soros and other currency traders for
Malaysia's economic woes.

In a speech in Washington on Thursday, Soros criticized Mahathir and his policies. "He needs to
be removed from power," Soros said.

SOROS' manifold roles on the world stage became most apparent in August, during the Russian
economic meltdown, when he leaped into the fray.

Though he had a longstanding interest in Russia -- inspired by his father's time there as a
prisoner of war, followed by a brief residency, during and after World War I -- Soros said he had
steered clear of investing there in the years immediately after the fall of communism. Rather, he
sank money into the country through philanthropy.

"I abstained from investing in Russia," Soros wrote in his new book, "partly to avoid any
conflict-of-interest problems but mainly because I did not like what I saw."

But as early as 1994, he had been in and out of Russia as an investor. And in 1997, he plunged
headlong into Russian markets when they were among the frothiest on the planet.

Soros explains now that his concerns about the country were allayed by his confidence in the
young reformers surrounding President Boris N. Yeltsin.

But his largest single holding in Russia -- a $1 billion stake in Svyazinvest, a

telecommunications concern -- put him into partnership with Vladimir Potanin, the young
chairman of one of Russia's biggest banks. Potanin is a member of a powerful and politically
influential clique of Russian businessmen known as the "oligarchs."

These men deftly exploited lucrative opportunities that came with privatization in Russia and
used dubious tactics to snare control of huge industrial concerns. "I bought it on the thesis that
robber capitalism was ready to turn into legitimate capitalism," Soros said of his holding in
Svyazinvest.

But the transition proved bumpy. In March, Soros lent the Russian government several hundred
million dollars to help it meet overdue pension payments. By the summer, as a corrupt and debt-
ridden economy was tumbling toward insolvency, Soros was Russia's biggest individual investor.

Besides his investment with Potanin -- which he now describes as the worst of his career -- he
also held Russian stocks, bonds and rubles.

All of this hardly made Soros a disinterested observer when he sprang into action in mid-August
to try to stem the crisis.

According to the account in his book, Soros contacted both Robert E. Rubin, the American
Treasury secretary, and David A. Lipton, an under secretary who has since left the Treasury
Department. He also telephoned two influential former members of Yeltsin's administration,
Yegor T. Gaidar and Anatoly B. Chubais, to lobby them on how to prevent an economic
collapse.

On Aug. 13, a Thursday, Soros published a letter in The Financial Times saying that the
meltdown in the Russian financial markets had "reached the terminal phase."

He called for immediate action, including a devaluation and the institution of a currency board --
a system fixing a nation's currency to the value of its richest trading partner. Such a plan would
have taken away Russian central bankers' discretion over monetary policy.
The letter helped prompt a panic in Russian markets -- and invited a fresh bout of suspicion
about Soros' motives. Later in the day, he issued a statement saying that he was not shorting the
ruble, adding that his own portfolio "would be hurt by any devaluation." In his book, he added
that he did not trade any Russian securities during the crisis.

By the weekend, Russia appeared headed for a default on its foreign and domestic debt. In a
private meeting in Russia's White House on Sunday, Aug. 16, business leaders -- including
Potanin -- persuaded members of the Yeltsin administration to add a moratorium on debt
repayment to a deep devaluation of the ruble that was to be announced the next day.

That announcement caused international investors to flee Russia, touching off a global financial
panic and setting in motion the events that would lead, a month later, to the near-collapse and
government-orchestrated bailout of another big hedge fund, Long-Term Capital Management.

Soros says self-interest played no part in his financial diplomacy during the meltdown.

"In Russia, of course, I had been very involved and became more involved at the time of the
crisis," he said last week. "But the advice that I gave, which I think would have avoided the
breakdown, was not designed to benefit me personally."

Indeed, at the end of August, Soros' funds announced a $2 billion loss in Russia. But it is hard to
imagine that the country's economic stabilization -- the goal of his activism -- could have failed
to bolster Svyazinvest.

Ever philosophical, Soros acknowledges that his foray into Russia was problematic. "I have no
regrets with regard to my attempts to help Russia move toward an open society: They did not
succeed, but at least I tried," he wrote in his book. "I have grave regrets as an investor. It goes to
show how difficult it is to reconcile the two roles."

But a former American official who has crossed paths with Soros said the speculator's many
roles made it hard to weigh his advice. "The fact that one part of him is motivated by the
philanthropy and another part by the investments makes it very difficult to deal with him," said
the former official, who insisted on anonymity. "Sometimes the philanthropy dominates his
motives. Sometimes investing does. But there's that duality, and you never know."

Copyright 1998 The New York Times Company

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The World According to George Soros

<http://www.tikkun.org/magazine/index.cfm/action/tikkun/issue/tik0103/article/010353.html>
--------------------------------------------------------------------------------

David C. Korten

Open Society: Reforming Global Capitalism. George Soros. Public Affairs, 2000.

No man can serve two masters:

for either he will hate the one, and love the other;
or else he will hold to the one, and despise the other.
Ye cannot serve God and mammon.
—Matthew 6:24
George Soros, high stakes financial speculator, international philanthropist, and a man of grand
contradictions tells us in his final paragraph of Open Society: Reforming Global Capitalism that
writing it clarified his thinking on his plan for the world and led him to a clear sense of mission
for his foundation network. He closes with an ominous sentence.

I shall not spell it [the mission for his foundation network] out here because it would interfere
with my flexibility in carrying it out—there is a parallel here with the problem of making public
pronouncements when I was actively engaged in making money—but I can state it in general
terms: to foster the civil society component of the Open Society Alliance.
This is pure Soros: Soros writing a book about Soros and his secret plan to create a global open
society. It befits the outsized ego of the man who in an interview for a 1995 New Yorker profile
reflected on the parallels between himself and the God of the Old Testament and observed that as
a child he thought of himself as superhuman.

Open Society, a revised edition of his earlier The Crisis of Global Capitalism: Open Society
Endangered, is its own contradiction. After presenting a devastating critique of capitalism sure to
beguile progressives and infuriate market fundamentalists, it concludes that global capitalism is
the best of all possible worlds and sets forth a program of "reforms" that on close reading are
little more than a call to give yet more money and power to the stewards of global capitalism—
the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World
Bank.

There are three reasons to read Open Society. The first is for the penetrating Soros critique of
capitalism. The second is for insights into the limited worldview of those who live in the world
of high finance. The third is to understand why we must be skeptical of the public pretensions of
persons of means who profess to serve two masters.

The Critique
Although the insights of the Soros critique of global capitalism are scarcely new, they are rarely
articulated with such candor and accuracy by those who have so mastered its ways for personal
gain. The following is a sampling of Soros' insights.
1. Unregulated financial markets are inherently unstable. Soros observes that, contrary to
conventional economic theory, financial markets are not driven toward a relatively stable and
rational price by the objective value assessment of such things as the soundness of a company's
management, products, or record of profitability. Rather they are constantly driven away from
equilibrium by the momentum of self-fulfilling expectations—a rising stock price attracts buyers
who further raise the price—to the point of collapse. The recent massive inflation and subsequent
collapse in the price of the shares of unprofitable dot-com companies illustrates Soros' point.

Bank lending also contributes to the instability, because the price of real and financial assets is
set in part by their collateral value. The higher their market price rises the larger the loans banks
are willing to make to their buyers to bid up prices. When the bubble bursts, the value of the
assets plummets below the amount of the money borrowed against them. This forces banks to
call their loans and cut back on the lending, which depresses asset prices and dries up the money
supply. The economy then tanks—until credit worthiness is restored and a new boom phase
begins

2. Financial markets render irrelevant the morality of their participants. According to Soros there
is no meaningful place for individual moral behavior in the context of financial markets, because
such behavior has no consequence other than to reduce the financial return to the ethical actor.

When I bought shares in Lockheed and Northrop after the managements were indicted for
bribery, I helped sustain the price of their stocks. When I sold sterling short in 1992, the Bank of
England was on the other side of my transactions, and I was in effect taking money out of the
pockets of British taxpayers. But if I had tried to take social consequences into account, it would
have thrown off my risk-reward calculation, and my profits would have been reduced.
Soros argues that if he had not bought Lockheed and Northrop, then somebody else would have,
and Britain would have devalued sterling no matter what he did. "Bringing my social conscience
into the decision-making process would make no difference in the real world; but it may
adversely affect my own results." One can challenge the Soros claim that such behavior is
amoral rather than immoral, but his basic argument is accurate. His understanding that it is futile
to look to individual morality as the solution to the excesses of financial markets is all too
accurate.

3. Corporate employees are duty-bound to serve only corporate financial interests. Soros writes:

Publicly owned companies are single-purpose organizations—their purpose is to make money.

The tougher the competition, the less they can afford to deviate. Those in charge may be well-
intentioned and upright citizens, but their room for maneuver is strictly circumscribed by the
position they occupy. They are duty-bound to uphold the interests of the company. If they think
that cigarettes are unhealthy or that fostering civil war to obtain mining concessions is
unconscionable, they ought to quit their jobs. Their place will be taken by people who are willing
to carry on.
Though not specifically mentioned by Soros, this is why corporations are properly excluded from
the political processes by which societies define their goals and the rules of the marketplace.
They are incapable of distinguishing between private corporate interests and broader public
interests.

4. The fact that a strategy or policy produces economic returns in the short-term does not mean
the long-term results will be beneficial. The focus of financial markets is on short-term
individual gain to the exclusion of both social and longer-term consequences. The fact that
particular policies and strategies are effective in producing short-term financial returns does not
mean they are more generally beneficial or desirable. Soros offers the example that running up a
budget or trade deficit "feels good while it lasts, but there can be hell to pay later."

5. The relationship between the center and the periphery of the capitalist system is profoundly
unequal. The powerful countries at the center of the capitalist system are both wealthier and
more stable than countries at the periphery because control of the financial system and ownership
of productive assets allows them to shape economic and political affairs to their benefit. "Foreign
ownership of capital deprives peripheral countries of autonomy and often hinders the
development of democratic institutions. The international flow of capital is subject to
catastrophic interruptions." In times of uncertainty financial capital tends to return to its country
of origin, thus depriving countries at the periphery of the financial liquidity necessary to the
function of monetized economies. "The center's most important feature is that it controls its own
economic policies and holds in its hands the economic destinies of periphery countries."

6. In the capitalist system financial values tend to displace social values in sectors where this is
destructive of important public interests. Soros writes:

Monetary values have usurped the role of intrinsic values, and markets have come to dominate
spheres of existence where they do not properly belong. Law and medicine, politics, education,
science, the arts, even personal relations—achievements or qualities that ought to be valued for
their own sake are converted into monetary terms; they are judged by the money they fetch rather
than their intrinsic value." Because financial "capital is free to go where most rewarded, …
countries vie to attract and retain capital, and if they are to succeed they must give precedence to
the requirements of international capital over other social objectives.
The Limitations
The Soros critique would seem to establish an iron-clad case for the conclusion—widely shared
among the civil-society groups protesting the forces of corporate globalization—that each nation
must maintain its essential economic sovereignty by regulating the flow of goods and money
across its borders and that market forces must be subordinated to the democratically determined
rules of a strong public sector. Soros' world view and personal interests are, however, much too
aligned with the status quo to accept the logical outcome of his own argument.

My critique of the global capitalist system falls under two main headings. One concerns the
defects of the market mechanism, primarily the instabilities built into international financial
markets. The other concerns the deficiencies of the nonmarket sector, primarily the failure of
politics at the national and international levels. The deficiencies of the nonmarket sector far
outweigh the defects of the market mechanism.
In his focus on financial markets, Soros scarcely mentions the real economy of goods and
services, people and nature. Nor does he make more than passing reference to human rights,
democracy, equity, and the environment—all of which are obvious victims of the corporate
global economy. As to poverty and economic justice, Soros tells us, "I am altogether leery of so-
called social and economic freedoms and the corresponding human rights: freedom from hunger
or the rights to a square meal" because rights must be enforced by the state and this "would give
the state too big a role in the economy."

In a rare mention of the poor, Soros suggests their needs are best left to the charity of the rich:
"We must recognize that under global capitalism individual states have limited capacity to look
after the welfare of their citizens, yet it behooves the rich to come to the aid of the poor." His
only mention of the possibility of a less extreme form of capitalism that might value a more
equitable distribution of income and ownership is to categorically reject it. "Social justice
emphatically does not mean equality, because that would take us right back to communism. I
prefer the Rawlsian concept of social justice, which holds that an increase in total wealth must
also bring some benefit to the most disadvantaged. What 'some' means has to be defined by each
society for itself, and the definition is liable to vary over time."

Soros has no great quarrel with democracy in moderation, but warns us to beware of the unruly
masses. He fears, for example, that if the General Assembly of the United Nations were turned
into an effective legislative body, "we might just have an overdose of democracy, with every
NGO breaking down the doors with legislative proposals. International civil society is capable of
great achievements such as the ban on land mines, but with the help of the Internet it could
become too much of a good thing. We have all seen what happened at the WTO meeting in
Seattle." The self-appointed, self-righteous billionaire with a secret plan for the world goes on to
tell us that he is "rather leery of self-appointed, self-righteous NGOs."

The limits of the Soros worldview were especially evident in his April 13, 1994 testimony before
the Banking Committee of the U.S. House of Representatives. He explained to committee
members that when a speculator bets that a price will rise and it falls instead, he is forced to
protect himself by selling—which accelerates the price drop and increases market volatility. "No
great harm is done," he told the Committee, "except perhaps higher volatility," unless everyone
rushes to sell at the same time and a discontinuity is created, meaning that a speculator who has
to sell can find no buyers and consequently may suffer "catastrophic losses." When Soros says,
"No great harm is done," he means there is no threat to the integrity of the system and the losses
of the speculators who created the crisis fall within acceptable limits. The millions of people
whose lives and livelihoods are disrupted by the machinations of the global financial casino in
which they have no say simply aren't on his screen.

Soros takes no note of the fact that from an elite perspective, the genius of finance capitalism is
its ability to manage the money system in a way that maintains a sharp distinction between those
who live by their labor and those who live by money—keeping money scarce for the former
while allowing the latter to create it in abundance through the interaction of debt pyramids and
financial bubbles. The result is an inexorable transfer of control over the real wealth of society
from the many whose labor produces the goods and services by which we all live to the financial
elites who make only money. Enough money trickles down to the working classes in times of
economic boom to create the illusion that new wealth is being enjoyed by all. Behind the
illusion, however, there is a darker reality of growing inequality and the depletion of real wealth.
Either Soros has not seen through to the reality behind the illusion or he chooses to ignore it.

The Contradictions
Soros professes his allegiance to two masters: maximizing private profit in his market dealings
and the public good in his philanthropy. Indeed, he asserts as a guiding principle that, "People
should separate their role as market participant from their role as political participant. As market
participants, people ought to pursue their individual self-interests; as participants in the political
process, they ought to be guided by the public interest." It's a tidy bifurcation, but begs the
question of whether it is possible for either individuals or society to sustain such a division
between private greed and public citizenship.

Consider what it means in the specific case of George Soros, who at one and the same time is
investing hundreds of millions of dollars for his private profit in the countries of Eastern Europe
and spending still more hundreds of millions through his foundations in those same countries to
shape their economic and political policies in the public interest. One marvels at the discipline
that would be required to compartmentalize these interests in one's daily dealings. When Soros
meets with political leaders, including heads of state, how are they to know whether they are
dealing with the private Soros or the public Soros? Can even Soros be clear which he is
representing in any given encounter? When Soros The Beneficent finds himself pitted against
Soros The Greedy, whose side is Soros the Arbiter most likely to favor?

The Soros reform agenda reveals the deep conflicts. Most of Chapter 10, "A New Global
Financial Architecture," is devoted to spelling out the myriad reasons why governments of
countries at the periphery of the global economy best serve their citizens by regulating financial
markets, foreign investors, and economic borders. Yet Soros concludes that "the instability of the
international financial system has no architectural solution at present; it is more a challenge for
day-to-day management" and declares capital controls, the obvious step to curtail instability, to
be "beggar-thy-neighbor policies that could disrupt the global capitalist system."

Soros the Benevolent has confronted Soros the Greedy and Soros the Greedy wins hands down.
Soros the Arbiter proceeds to settle for a no-reform strengthen-the-status-quo "solution" that
calls for the three stewards of global capitalism—the IMF, the World Bank, and the WTO—to
keep markets open to foreign predators, keep the periphery in debt (but not too much debt), and
step in when the system falters with generous bail-outs for those who made bad bets.

The Soros treatment of democracy is similarly conflicted. He properly acknowledges that "Open
society cannot be designed from first principles: It must be created by the people who live in it."
Yet his proposal for creating open society centers on a proposed alliance of the world's most
powerful states acting under the tutelage of the United States to impose on other states an
unspecified set of open society principles. This sounds distressingly similar to the undemocratic,
top-down process by which an alliance of the United States, the European Union, Canada, and
Japan under the leadership of the United States acts through the IMF, World Bank, and WTO to
dictate the principles of open markets to the rest of the world. In the end, the main difference
between the "open society" of George Soros and the "open markets" of the market
fundamentalists who Soros criticizes is that the former includes just enough space for self-
criticism and error correction to prevent the self-destruction of capitalism's powerful mechanisms
of wealth extraction and concentration.

Quoting the famous dictum of Cardinal Richelieu that "states have no principles, only interests,"
Soros concludes that his plan for open society can succeed only with the strong support of civil
society. "If citizens have principles, they can impose them on their governments. That is why I
advocate an alliance of democratic states: It would have the active engagement of civil society to
ensure that governments remain true to the principles of that alliance." The Soros plan thus calls
for civil society to impose the principles of open society on powerful states that will in turn
impose them on weaker states.

It is here that Soros reveals the most fundamental contradiction of his plan—and the reason civil-
society groups must be wary when the beguiling billionaire comes calling with checkbook in
hand. "As the recent demonstrations in Seattle and Washington have shown, civil society can be
mobilized in opposition to international institutions; a way must be found to mobilize it in their
favor.… While civil society is an important part of open society, the common good cannot be left
solely in their care. We need public institutions to protect the public interests. The WTO is such
an institution; it would be a pity to destroy it."

The thrust of the secret plan for civil society Soros intends to implement through his network of
foundations is thus revealed: to mobilize civil society in support of the institutions that to date it
has valiantly opposed (even in the face of massive police violence and brutality) as elitist,
undemocratic, and a threat to the health of people, community, and planet. Putting it bluntly,
Soros plans to buy civil society. The chutzpah of this undertaking is exceeded only by its grand
contradiction. Soros needs civil society because it is motivated by principle, not money. To buy
civil society, Soros would first have to destroy the dedication to principle that makes it an
essential element of his plan.

In his conclusion Soros tells us, "I have learned a lot from other people's criticism, and I can
continue to do so after the book is published." I thus commend to him the biblical instruction that
"No man [nor woman] can serve two masters." At any given point in our lifetime we each make
our choice as to whether we will devote our life to the practice of public citizenship or the pursuit
of private greed. George Soros now faces such a choice. If he proceeds with his plan to use his
money and influence to realign civil society behind the institutions of greed and his personal
financial interests he has made one choice. He could yet, however, make a choice for citizenship
by heeding his own critique—which is consistent with that of civil society—and mobilize his
foundations in support of civil society's self-defined mission to align the institutions and values
of the economy with the interests of life.

--------------------------------------------------------------------------------
David C. Korten is the author of The Post-Corporate World: Life After Capitalism and When
Corporations Rule the World. He is board chair of the Positive Futures Network, publishers of
YES! A Journal of Positive Futures, and president of the People-Centered Development Forum.
TESTIMONY OF GEORGE SOROS

TO THE U.S. HOUSE OF REPRESENTATIVES

Committee on Banking and Financial Services

September 15, 1998

This hearing is very timely because the global capitalist system which has been responsible for
the remarkable prosperity of this country in the last decade is coming apart at the seams. The
current decline in the US stock market is only a symptom, and a belated symptom at that, of the
more profound problems that are afflicting the world economy. Some Asian stock markets have
suffered worse declines than the Wall Street crash of 1929 and in addition their currencies have
also fallen to a fraction of what their value was when they were tied to the US dollar. The
financial collapse in Asia was followed by an economic collapse. In Indonesia, for instance, most
of the gains in living standards that accumulated during 30 years of Suharto’s regime have
disappeared. Modern buildings, factories and infrastructure remain, but so does a population that
has been uprooted from its rural origins. The Japanese banking system is in deep trouble. The
world’s second largest economy just reported an annualized 3.3 % decline in economic activity
for the second quarter. Currently Russia has undergone a total financial meltdown. It is a scary
spectacle and it will have incalculable human and political consequences. The contagion has now
also spread to Latin America.

It would be regrettable if we remained complacent just because most of the trouble is occurring
eyond our borders. We are all part of the global capitalist system which is characterized not only
by free trade but more specifically by the free movement of capital. The system is very favorable
to financial capital which is free to pick and choose where to go and it has led to the rapid growth
of global financial markets. It can be envisaged as a gigantic circulatory system, sucking up
capital into the financial markets and institutions at the center and then pumping it out to the
periphery either directly in the form of credits and portfolio investments, or indirectly through
multinational corporations.

Until the Thai crisis in July 1997 the center was both sucking in and pumping out money
vigorously, financial markets were growing in size and importance and countries at the periphery
could obtain an ample supply of capital from the center by opening up their capital markets.
There was a global boom in which the emerging markets fared especially well. At one point in
1994 more than half the total inflow into US mutual funds went into emerging market funds.

The Asian crisis reversed the direction of the flow. Capital started fleeing the periphery. At first,
the reversal benefitted the financial markets at the center. The U.S. economy was just on the
verge of overheating and the Federal Reserve was contemplating raising the discount rate. The
Asian crisis rendered such a move inadvisable and the stock market took heart. The economy
enjoyed the best of all possible worlds with cheap imports keeping domestic inflationary
pressures in check and the stock market made new highs. The buoyancy at the center raised
hopes that the periphery may also recover and between February and April of this year most
Asian markets recovered roughly half their previous losses measured in local currencies. That
was a classic bear market rally.

There comes a point when distress at the periphery cannot be good for the center. I believe that
we have reached that point with the meltdown in Russia. I am not making any predictions about
the stock market, but I am ready to assert that we have reached that point. I have three main
reasons for saying so.

One is that the Russian meltdown has revealed certain flaws in the international banking system
which had been previously disregarded. In addition to their exposure on their own balance
sheets, banks engage in swaps, forward transactions and derivative trades among each other and
with their clients. These transactions do not show up in the balance sheets of the banks. They are
constantly marked to market, that is to say, they are constantly revalued and any difference
between cost and market made up by cash transfers. This is supposed to eliminate the risk of any
default. Swap, forward and derivative markets are very large and the margins razor thin; that is to
say, the value of the underlying amounts is a manifold multiple of the capital employed in the
business. The transactions form a daisy chain with many intermediaries and each intermediary
has an obligation to his counterparties without knowing who else is involved. The exposure to
individual counterparties is limited by setting credit lines.

This sophisticated system received a bad jolt when the Russian banking system collapsed.
Russian banks defaulted on their obligations, but the Western banks remained on the hook to
their own clients. No way was found to offset the obligations of one bank against those of
another. Many hedge funds and other speculative accounts sustained large enough losses that
they had to be liquidated. Normal spreads were disrupted and professionals who arbitrage
between various derivatives, i.e.: trade one derivative against another, also sustained large losses.
A similar situation arose shortly thereafter when Malaysia deliberately shut down its financial
markets to foreigners but the Singapore Monetary Authority in cooperation with other central
banks took prompt action. Outstanding contracts were netted out and the losses were shared. A
potential systemic failure was avoided.

These events led most market participants to reduce their exposure all round. Banks are
frantically trying to limit their exposure, deleverage, and reduce risk. Bank stocks have
plummeted. A global credit crunch is in the making. It is already restricting the flow of funds to
the periphery, but it has also begun to affect the availability of credit in the domestic economy.
The junk bond market, for instance has already shut down.

This brings me to my second point. The pain at the periphery has become so intense that
individual countries have begun to opt out of the global capitalist system, or simply fall by the
wayside. First Indonesia, then Russia have suffered a pretty complete breakdown but what has
happened in Malaysia and to a lesser extent in Hong Kong is in some ways even more ominous.
The collapse in Indonesia and Russia was unintended, but Malaysia opted out deliberately. It
managed to inflict considerable damage on foreign investors and speculators and it managed to
obtain some temporary relief, if not for the economy, then at least for the rulers of the country.
The relief comes from being able to lower interest rates and to pump up the stock market by
isolating the country from the outside world and squeezing short sellers. The relief is bound to be
temporary because the borders are porous and money will leave the country illegally; the effect
on the economy will be disastrous but the local capitalists who are associated with the regime
will be able to salvage their businesses unless the regime itself is toppled. The measures taken by
Malaysia will hurt the other countries which are trying to keep their financial markets open
because it will encourage the flight of capital. In this respect Malaysia has embarked on a
beggar-thy-neighbor policy. If this makes Malaysia look good in comparison with its neighbors,
the policy may easily find imitators, making it harder for others to keep their markets open.

The third major factor working for the disintegration of the global capitalist system is the evident
inability of the international monetary authorities to hold it together. IMF programs do not seem
to be working; in addition, the IMF has run out of money. The response of the G7 governments
to the Russian crisis was woefully inadequate, and the loss of control was quite scary. Financial
markets are rather peculiar in this respect: they resent any kind of government interference but
they hold a belief deep down that if conditions get really rough the authorities will step in. This
belief has now been shaken.

These three factors are working together to reinforce the reverse flow of capital from the
periphery to the center. The initial shock caused by the meltdown in Russia is liable to wear off,
but the strain on the periphery is liable to continue. The flight of capital has now spread to Brazil
and if Brazil goes, Argentina will be endangered. There is general panic in Latin America.
Forecasts for global economic growth are being steadily scaled down and I expect they will end
up in negative territory. If and when the decline spreads to our economy, we may become much
less willing to accept the imports which are necessary to feed the reverse flow of capital and the
breakdown in the global financial system may be accompanied by a breakdown in international
free trade.

This course of events can be prevented only by the intervention of the international financial
authorities. The prospects are dim, because the G7 governments have just failed to intervene in
Russia, but the consequences of that failure may serve as a wake-up call. There is an urgent need
to rethink and reform the global capitalist system. As the Russian example has shown, the
problems will become progressively more intractable the longer they are allowed to fester.

The rethinking must start with the recognition that financial markets are inherently unstable. The
global capitalist system is based on the belief that financial markets, left to their own devices,
tend towards equilibrium. They are supposed to move like a pendulum: they may be dislocated
by external forces, so-called exogenous shocks, but they will seek to return to the equilibrium
position. This belief is false. Financial markets are given to excesses and if a boom/bust
sequence progresses beyond a certain point it will never revert to where it came from. Instead of
acting like a pendulum financial markets have recently acted more like a wrecking ball, knocking
over one economy after another.

There is much talk about imposing market discipline but, imposing market discipline means
imposing instability, and how much instability can society take? Market discipline needs to be
supplemented by another discipline: maintaining stability in financial markets ought to be the
objective of public policy. This is the general principle that I should like to propose.
Despite the prevailing belief in free markets this principle has already been accepted and
implemented on a national scale. We have the Federal Reserve and other financial authorities
whose mandate is to prevent a breakdown in our domestic financial markets and if necessary act
as lenders of last resort. I am confident that they are capable of carrying out their mandate. But
we are sadly lacking in the appropriate financial authorities in the international arena. We have
the Bretton Woods institutions, -- the IMF and the World Bank -- which have tried valiantly to
adapt themselves to rapidly changing circumstances. Admittedly the IMF programs have not
been successful in the current global financial crisis; its mission and its methods of operation
need to be reconsidered. I believe additional institutions may be necessary. At the beginning of
this year I proposed establishing an International Credit Insurance Corporation, but at that time it
was not yet clear that the reverse flow of capital would become such a serious problem and my
proposal fell flat. I believe its time has now come. We shall have to establish some kind of
international supervision over the national supervisory authorities. We shall also have to
reconsider the workings of the international banking system and the functioning of the swap and
derivative markets.

These issues are beyond the competence of Congress. There is, however, one issue which is very
much within its purvue. That is the request to authorize an increase in the capital of the IMF. I
am aware that Congress was greatly influenced by the testimony given by George Schultz
opposing such an increase. I hope my remarks will serve to contradict that testimony.

George Schultz argued that it is better if markets are allowed to look after themselves than if they
are looked after by regulators. There is an element of truth in his argument: regulators do make
mistakes. The IMF approach clearly did not work, otherwise we would not find ourselves in the
current situation. But that does not mean that financial markets can look after themselves.
Everybody looking out for his or her self-interest does not lead to equilibrium but to what Alan
Greenspan called irrational exuberance and afterwards panic.

George Schultz inveighed against the moral hazard of bailing out irresponsible investors and
speculators. Here he has a valid point. Bailouts did encourage irresponsible behavior not so much
by speculators -- because we know that we have to take our lumps when markets decline -- but
by banks and other lenders who could count on the IMF coming in when a country got into
difficulties. The IMF imposed tough conditions on the country concerned but it did not impose
any penalties on the lenders. This asymmetry in the treatment of lenders and borrowers is a
major source of instability in the global capitalist system and it needs to be corrected. It has to be
a focal point in the soul searching that the IMF must undergo, but I am glad to say that the IMF
is learning fast. In its $2.2 billion program in Ukraine, it is imposing a new condition: 80% of
Ukraine’s treasury bills have to be "voluntarily" rescheduled into longer-term, lower yielding
instruments before the program can go forward. This is a long way from the Mexican bailout of
1995 where the holders of Mexican treasury bills came out whole.

The moral hazard now operates in the opposite direction; in not enabling the IMF to do its work
when it is most needed. Congress bears an awesome responsibility for keeping the IMF alive. I
am convinced that the attitude of the Congress was already an important element in the failure to
deal with Russia. As you probably know I have foundations in many of the formerly communist
countries. Some of these countries are badly hit by the fallout from the Russian collapse.
Countries like Moldova and Romania have no one else to turn to but the IMF. The IMF is
perfectly capable of assisting them. It would be tragic if it ran out of resources.

Replenishing the capital of the IMF will not be sufficient to resolve the global financial crisis. A
way has to be found to provide liquidity not only at the center but also at the periphery. I believe
there is an urgent need for the creation of Special Drawing Rights which can be used to
guarantee the rollover of the already existing debt of countries which receive the IMF’s seal of
approval. If there is no reward for good behavior, meltdowns and defections will multiply. But
such radical ideas cannot even be considered until Congress changes its attitude towards
international institutions and the IMF in particular.

So far our stock market has escaped relatively unscathed and our economy has actually
benefitted from the global crisis but make no mistake: unless Congress is willing to support the
IMF, the disintegration of the global capitalist system will hurt our financial markets and our
economy as well because we are at the center of that system.

George Soros
NS Profile
NEIL CLARK / New Statesman 2jun03
[Review of this article below]

The billionaire trader has become eastern Europe's uncrowned king and the prophet of ''the open
society''. But open to what? George Soros profiled by Neil Clark

George Soros is angry. In common with 90 per cent of the world's population, the Man Who
Broke the Bank of England has had enough of President Bush and his foreign policy. In a recent
article in the Financial Times, Soros condemned the Bush administration's policies on Iraq as
"fundamentally wrong"—based as they were on a "false ideology that US might gave it the right
to impose its will on the world".

Wow! Has one of the world's richest men—the archetypal amoral capitalist who made billions
out of the Far Eastern currency crash of 1997 and who last year was fined $2m for insider trading
by a court in France—seen the light in his old age? (He is 72.) Should we pop the champagne
corks and toast his conversion?

Not before asking what really motivates him. Soros likes to portray himself as an outsider, an
independent-minded Hungarian emigre and philosopher-pundit who stands detached from the US
military-industrial complex. But take a look at the board members of the NGOs he organises and
finances. At Human Rights Watch, for example, there is Morton Abramowitz, US assistant
secretary of state for intelligence and research from 1985-89, and now a fellow at the
interventionist Council on Foreign Relations; ex-ambassador Warren Zimmerman (whose spell
in Yugoslavia coincided with the break-up of that country); and Paul Goble, director of
communications at the CIA-created Radio Free Europe/Radio Liberty (which Soros also funds).
Soros's International Crisis Group boasts such "independent" luminaries as the former national
security advisers Zbigniew Brzezinski and Richard Allen, as well as General Wesley Clark, once
Nato supreme allied commander for Europe. The group's vice-chairman is the former
congressman Stephen Solarz, once described as "the Israel lobby's chief legislative tactician on
Capitol Hill" and a signatory, along with the likes of Richard Perle and Paul Wolfowitz, to a
notorious letter to President Clinton in 1998 calling for a "comprehensive political and military
strategy for bringing down Saddam and his regime".

Take a look also at Soros's business partners. At the Carlyle Group, where he has invested more
than $100m, they include the former secretary of state James Baker and the erstwhile defence
secretary Frank Carlucci, George Bush Sr and, until recently, the estranged relatives of Osama
Bin Laden. Carlyle, one of the world's largest private equity funds, makes most of its money
from its work as a defence contractor.

Soros may not, as some have suggested, be a fully paid-up CIA agent. But that his companies
and NGOs are closely wrapped up in US expansionism cannot seriously be doubted.

So why is he so upset with Bush? The answer is simple. Soros is angry not with Bush's aims—of
extending Pax Americana and making the world safe for global capitalists like himself—but with
the crass and blundering way Bush is going about it. By making US ambitions so clear, the Bush
gang has committed the cardinal sin of giving the game away. For years, Soros and his NGOs
have gone about their work extending the boundaries of the "free world" so skilfully that hardly
anyone noticed. Now a Texan redneck and a gang of overzealous neo-cons have blown it.

As a cultivated and educated man (a degree in philosophy from the London School of
Economics, honorary degrees from the Universities of Oxford, Yale, Bologna and Budapest),
Soros knows too well that empires perish when they overstep the mark and provoke the
formation of counter-alliances. He understands that the Clintonian approach of multilateralism—
whereby the US cajoles or bribes but never does anything so crude as to threaten—is the only
one that will allow the empire to endure. Bush's policies have led to a divided Europe, Nato in
disarray, the genesis of a new Franco-German-Russian alliance and the first meaningful steps
towards Arab unity since Nasser.

Soros knows a better way—armed with a few billion dollars, a handful of NGOs and a nod and a
wink from the US State Department, it is perfectly possible to topple foreign governments that
are bad for business, seize a country's assets, and even to get thanked for your benevolence
afterwards. Soros has done it.

The conventional view, shared by many on the left, is that socialism collapsed in eastern Europe
because of its systemic weaknesses and the political elite's failure to build popular support. That
may be partly true, but Soros's role was crucial. From 1979, he distributed $3m a year to
dissidents including Poland's Solidarity movement, Charter 77 in Czechoslovakia and Andrei
Sakharov in the Soviet Union. In 1984, he founded his first Open Society Institute in Hungary
and pumped millions of dollars into opposition movements and independent media. Ostensibly
aimed at building up a "civil society", these initiatives were designed to weaken the existing
political structures and pave the way for eastern Europe's eventual colonisation by global capital.
Soros now claims, with characteristic immodesty, that he was responsible for the
"Americanisation" of eastern Europe.
The Yugoslavs remained stubbornly resistant and repeatedly returned Slobodan Milosevic's
unreformed Socialist Party to government. Soros was equal to the challenge. From 1991, his
Open Society Institute channelled more than $100m to the coffers of the anti-Milosevic
opposition, funding political parties, publishing houses and "independent" media such as Radio
B92, the plucky little student radio station of western mythology which was in reality bankrolled
by one of the world's richest men on behalf of the world's most powerful nation. With Slobo
finally toppled in 2000 in a coup d'etat financed, planned and executed in Washington, all that
was left was to cart the ex- Yugoslav leader to the Hague tribunal, co-financed by Soros along
with those other custodians of human rights Time Warner Corporation and Disney. He faced
charges of crimes against humanity, war crimes and genocide, based in the main on the largely
anecdotal evidence of (you've guessed it) Human Rights Watch.

Soros stresses his belief in the "open society" propounded by the philosopher Karl Popper, who
taught him at the LSE in the early 1950s. Soros's definition of an "open society"—"an imperfect
society that holds itself open to improvement"—sounds reasonable enough; few lovers of
genuine liberty would take issue with its central tenet that "the open society is a more
sophisticated form of social organisation than a totalitarian one". But Soros's "open societies"
don't tend to be all that open in practice.

Since the fall of Milosevic, Serbia, under the auspices of Soros-backed "reformers", has become
less, not more, free. The recently lifted state of emergency saw more than 4,000 people arrested,
many of them without charge, political parties threatened with bans, and critical newspapers
closed down. It was condemned by the UN Commission on Human Rights and the British
Helsinki Group. But there was not a murmur from the Open Society Institute or from Soros
himself. In fairness, Soros has been far more critical of his former protégé Leonid Kuchma,
president of the Ukraine, a country described by the former intelligence officer Mykola
Melnychenko as "one big protection racket", and now possibly the most repressive police state in
Europe.

But generally the sad conclusion is that for all his liberal quoting of Popper, Soros deems a
society "open" not if it respects human rights and basic freedoms, but if it is "open" for him and
his associates to make money. And, indeed, Soros has made money in every country he has
helped to prise "open". In Kosovo, for example, he has invested $50m in an attempt to gain
control of the Trepca mine complex, where there are vast reserves of gold, silver, lead and other
minerals estimated to be worth in the region of $5bn. He thus copied a pattern he has deployed to
great effect over the whole of eastern Europe: of advocating "shock therapy" and "economic
reform", then swooping in with his associates to buy valuable state assets at knock-down prices.

More than a decade after the fall of the Berlin Wall, Soros is the uncrowned king of eastern
Europe. His Central European University, with campuses in Budapest, Warsaw and Prague and
exchange programmes in the US, unashamedly propagates the ethos of neoliberal capitalism and
clones the next pro-American generation of political leaders in the region. With his financial
stranglehold over political parties, business, educational institutions and the arts, criticism of
Soros in mainstream eastern European media is hard to find. Hagiography is not. The Budapest
Sun reported in February how he had been made an honorary citizen of Budapest by the mayor,
Gabor Demszky. "Few people have done to Budapest what George Soros has," gushed Demszky,
saying that the billionaire had contributed to "structural and mental changes in the capital city
and Hungary itself". The mayor failed to add that Soros is also a benefactor of Demszky's own
party, the Free Democrats, which, governing with "reform" communists, has pursued the classic
Soros agenda of privatisation and economic liberalisation—leading to a widening gap between
rich and poor.

The Soros strategy for extending Pax Americana differs from the Bush model, particularly in its
subtlety. But it is just as ambitious and just as deadly. Left- liberals, admiring his support for
some of their favourite issues such as gay rights and the legalisation of soft drugs, let him off
lightly.

Asked about the havoc his currency speculation caused to Far Eastern economies in the crash of
1997, Soros replied: "As a market participant, I don't need to be concerned with the
consequences of my actions." Strange words from a man who likes to be regarded as the saviour
of civil society and who rails in print against "market fundamentalism".

source: http://www.mail-archive.com/marxism@lists.panix.com/msg45266.html 3jun03

--------------------------------------------------------------------------------

George Soros: “The billionaire trader has become eastern Europe’s uncrowned king and the
prophet of “the open society”. But open to what? by Neil Clark, New Statesman, June 2, 2003
A review by Karen Talbot
Centre for Research on Globalisation 4jul03
George Soros, is known as a Hungarian émigré philanthropist, a proponent of human rights and
the “open society,” and, just incidentally, a financier—one of the richest men in the world. Soros
recently criticized George W. Bush saying in an article in the Financial Times of London that his
administration’s Iraq policies were “fundamentally wrong” and that they are premised on the
“false ideology that U.S. might gave it the right to impose its will on the world.” Many of us in
the peace movement would say: “he got that right!” We might be inclined to praise him and to
believe that this confirms that he really is a “do-gooder”—an image, by the way, that he carefully
cultivates, especially through various NGOs. In fact numerous non-profit organizations have
received funds from his foundation because they have bought into that perception.

But let’s take a closer look to see what is motivating Soros. Neil Clark, writing in an incisive
article the New Statesman (June 2, 2003), points out that Soros “made billions out of the Eastern
currency crash of 1997,” and that he was fined last year “for insider trading by a court in
France.” In fact currency speculation is his modus operandi and if this contradicts his
pronouncements against “market fundamentalism” and in favor of “civil society, ” well, so be it.
In fact, Clark reported that when queried about the turmoil his speculation caused to Far Eastern
economies in 1997, Soros replied: “As a market participant, I don’t need to be concerned with
the consequences of my actions.”
But all of this is just the tip of the iceberg. What of the NGOs Soros established and finances?
Who are the other leaders of these groups? Clark informs us that at Human Rights Watch, for
example, there is Morton Abramowitz, U.S. assistant secretary of state for intelligence and
research from 1985-1989` and now a fellow at the Council on Foreign Relations; Warren
Zimmerman former ambassador “whose spell in Yugoslavia coincided with the break up of that
country”; and Paul Goble, director of communications “at the CIA-created Radio Free
Europe/Radio Liberty (which Soros also funds).”

According to Clark, Soros’ International Crisis Group “boasts such ‘independent’ luminaries as
the former national security advisers Zbigniew Brzezinki and Richard Allen, as well as General
Wesley Clark, once NATO supreme allied commander for Europe. The group’s vice-chairman is
the former congressman Stephen Solarz, once described as ‘the Israel lobby’s chief legislative
tactician on Capitol Hill’ and a signatory, along with the likes of Richard Perle and Paul
Wolfowitz, to a notorious letter to President Clinton in 1998 calling for a ‘comprehensive
political and military strategy for brining down Saddam and his regime’.”

So much for Soros’ opposition to Bush’s Iraq policies.

There’s more! Who are Soros’s business partners at the Carlyle Group---one of the world’s
largest private equity funds, which makes most of this profit from defense contracts? They
include the former secretary of state James Baker and Frank Carlucci, former defense secretary,
George Bush, Sr, and “until recently, the estranged relatives of Osama Bin Laden.” Soros has
invested more than $100 million in Carlyle, Clark tells us.

He also points out that “Soros may not, as sometimes suggested, be a fully paid-up CIA agent.
But that his corporations and NGOS are closely wrapped up in U.S. expansionism cannot
seriously be doubted.”

This brings us back to the question; “why has Soros lambasted Bush?” The answer lies in
understanding that, more than ever, within the Wall Street power elite there may be differences
in tactics but seldom are there significant differences in the end goal---opening the way for the
maximization of corporate profits everywhere around the world. Today, there is basically a
oneness of purpose in promoting U.S. imperial dominance, and in the process, attempting to
solve a deepening global economic crisis by controlling diminishing petroleum and energy
resources.

How does this play out where Soros is concerned? As Clark points out, “Soros is angry not at
Bush’s aims---of expanding Pax Americana and making the world safe for global capitalists like
himself—but with the crass and blundering way Bush is going about it. By making U.S.
ambitions so clear, the Bush gang has committed the cardinal sin of giving the game away. For
years, Soros and his NGOs have gone about their work extending the boundaries of the ‘free
world’ so skillfully that hardly anyone noticed. Now a Texan redneck and a gang of overzealous
neo-cons have blown it”

Soros’ way is to use a few billion dollars, some NGOs and a “nod and wink from the U.S. State
department” to bring down foreign governments that are “bad for business” to seize a nation’s
assets, and even get thanked for your ‘benevolence,’” according to Clark. This method has
worked for Soros and his cohorts.

Take the collapse of the Soviet Union, for example. Clark points out that “Soros’ role was
crucial: “From 1979, he distributed $3 million a year to dissidents including Poland’s solidarity
movement, Charter 77 in Czechoslovakia and Andrei Sakharov in the Soviet Union. In 1984, he
founded his first Open Society Institute in Hungary and pumped millions of dollars into
opposition movements and independent media. Ostensibly aimed at building up a ‘civil society”,
these initiatives were designed to weaken the existing political structures and pave the way for
eastern Europe’s eventual exploitation by global capital. Soros now claims with characteristic
immodesty, that he was responsible for the “Americanization” of eastern Europe.”

More recently, there is the case of Yugoslavia. As Clark puts it:

“TheYugoslavs remained stubbornly resistant and repeatedly returned Slobodan Milosevic’s

reformed Socialist Party to government. Soros was equal to the challenge. From 1991, his Open
Society Institute channeled more than $100 million to the coffers of the anti-Milosevic
opposition, funding political parties, publishing houses and “independent” media such as Radio
B92, the plucky little student radio station of western mythology, which was in reality bankrolled
b one of the world’s richest men on behalf of the world’s most powerful nation. With Slobo
finally toppled in 2000 in a coup d’etat financed, planned and executed in Washington all that
was left was to cart the ex Yugoslav leader to the Hague tribunal, co-financed by Soros along
with other custodians of human rights, Time Warner Corporation and Disney. He faced charges
of crimes against humanity, war crimes and genocide, based in the main on the largely anecdotal
evidence of (you guessed it) Human Rights Watch.”

Clark points out that “since the fall of Milosevic, Serbia, under the auspices of Soros- backed
“reformers”, has become less, not more, free. The recently lifted state of emergency saw more
than 4,000 people arrested, many of them without charge, political parties threatened with bans,
and critical newspapers closed down” This has been so blatant that it was condemned by the UN
Commission on Human Rights and the British Helsinki Group

“Soros has made money in every country he has helped to prise ‘open’. In Kosovo, for example,
he has invested $50 million in an attempt to gain control of the Trepca mine complex, where
there are vast reserves of gold, silver, lead and other minerals estimated to be worth in the region
of $5 billion. He thus copied a pattern he has deployed to great effect over the whole of eastern
Europe of advocating ‘shocking therapy’ and ‘economic reform’, then swooping in with his
associate to buy valuable state assets at knock-down prices,” according to Clark.*

In Hungary, Soros is the benefactor of the Free Democrats party “which has pursued the classic
Soros agenda of privatization and economic liberalization---leading to a widening gap between
rich and poor,” says Clark.

“The Soros strategy for extending Pax Americana differs from the Bush model, particularly in its
subtlety. But it is just as ambitious and just as deadly,” Clark concludes.
Of course, in the case of Yugoslavia, ultimately the Soros approach was not enough so the
overwhelming might of the U.S. military was brought into play.*

For background information on the former Yugoslavia, see “The Real Reasons for the War in
Yugoslavia: Backing up Globalization with Military Might,” by Karen Talbot,
http://icpj.org/military_build.html

source: http://www.globalresearch.ca/articles/TAL307A.html 3jul03

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George Soros' international school of youth corruption

(The slightly enlarged version of speech delivered by Marek Glogoczowski

during the EU(RO)-skeptic Youth Camp held at Ljublana, Slovenia, Sept.
26-27, 2001.)

George Soros is a businessman-philanthropist, whose activities are known to

professionals worldwide. In USA he operates the Institute of Open Society,
in countries belonging to the former Soviet Block he operates a number of
similar foundations, which in case of Poland holds the "royal" name of
Bathory Foundation. These "philanthropist" institutions have - or had - a
substantial influence on composition of consecutive post-communist
governments in Eastern Europe, especially governments of big countries - in
Poland, with George Soros Fund are linked three first "independent" Prime
Ministers (Mazowiecki, Bielecki, Suchocka); in Russia to Soros' "boys"
belong such ardent reformers as PM Gajdar, Kirylenko and Niemcov. In his
book "Underwriting Democracy" of 1993, George Soros claims to be - together
with his associate, professor Jeffrey Sachs - a true Funding Father (or
rather a Godfather) of all these "Protocols of Zion" styled reforms, which
we had to suffer in Eastern Europe.

Today, with Soros Fund is linked in Poland the most influential journal
"Gazeta Wyborcza" - which journal already in 1989 paved the way for the
"Solidarity" electoral victory over PZPR, the declining at that time Polish
Communist Party. In Slovakia with Soros' Invisible Empire is linked the TV
station "Markiza", which helped to remove, during 1998 elections, the
supposedly undemocratic Meciar's government. Inside Serbia the Soros Fund
operated in Kosovo, until 1999 NATO bombings, a Civil Center in Pristina,
which fought for the national independence of the local Albanian majority,
and in Belgrade it still operates the famous "Radio B-92", which played a
substantial role in anti-Milosevic's student riots in 1996/7. (And than, in
October 2000, it helped the "civilized" - i.e. bulldozer and Parliament
fire assisted - destruction of the last socialist regime in Europe.) At
present many of Soros Fund linked intellectuals are in key positions of
institutions controlling economies and cultures of former East Block
countries, and in Budapest this Foundation operates a whole International
University of Central Europe. George Soros plays also an important role in
USA foreign politics, already in 1980 he organized, together with his close
associates, Secretaries of State Zbig Brzezinsky and Mad Albraight, a
National Endowment for Democracy (NED) fund, which is a kind of joint
venture of CIA and private business, greed oriented, activities.

The best summary of George Soros humanitarian activities in South-East

Europe gave Gilles d'Aymery in an article "Mapping the Human Rights Crowd
in the Balkans" published on July 23, 2001 in the Jugoinfo vitrine:
"Behind the veil of legitimacy and humanitarian concerns can be found the
same powerful people and organizations such as the Open Society Institute
of the billionaire and - as always characterized - philanthropist, George
Soros, the Ford Foundation, the United States Institute of Peace, the
National Endowment for Democracy and many more, financing and using a maze
of well known NGO's such as Human Rights Watch, Amnesty International, the
International Crisis Group, etc., as well as more obscure entities ... But,
among all of them, shining as the Southern star, is George Soros who, like
an immense Jules Verne octopus, extends his tentacles all over Eastern
Europe, South-Eastern Europe, the Caucasus as well as the republics of the
former Soviet Union. With the help of these various groups (it is possible)
not only to shape but to create the news, the agenda and public opinion to
further aims which are, in short, the control of the world, its natural
resources and the furtherance of the uniform ideal of a perfect world
polity made in America."

Despite such richness of this philanthropist activities, the general public

hardly knows his name. During our meeting at Ljublana, young, 20 - 25 years
old, EU sceptics from several countries virtually ignored the name of
Soros, my equal age, 59 years old Swiss German friend from Zurich wrote me
that in his well informed country perhaps 2 percent of people knows about
this billionaire. And in Poland surely no more than 10 percent of adult
population knows who was the true author of widely despised "Balcerowicz's
reforms". Despite this "educated" public ignorance, Soros' "missionary"
role is perceptible at the planetary scale: according to Schiller's
Institute data, the "man of Soros" in the European Commission is professor
Romano Prodi, in Malaysia our philanthropist is officially searched for
enormous financial frauds, and in Italy he is officially considered persona
non grata for similar reasons. We can take for granted that these last
facts are only summits of a whole "iceberg" of fraudulent affairs in which
our billionaire-philanthropist-politician is - or was - engaged in.

The mystery of his success in world-wide speculation George Soros

explained in a surprisingly honest statement, during an interview he gave
to the Swiss weekly "L"hebdo" of May 1993. He said "I SPECULATE ON
DISCREPANCY BETWEEN THE REALITY AND THE PUBLIC IMAGE OF THIS
REALITY, UNTIL A CORRECTIONAL MECHANISM OCCURS, WHICH APPROACHES
THESE TWO." It is evident that a skillful speculator is not used to wait passively until such
discrepancy occurs. To the contrary, with his "creativity of an investor"
he purposefully enlarges the gap between the "real reality" and its public
image. (To put this statement into a plain language, a good speculator,
knowing principles of the stock exchange, is feeding the public with the
fake information - or, in more polite words, with DISINFORMATION - in order
to gather personal profits.)

The "liberal" idea of a purposeful construction of a fake image of the

world - in order to get the political power - is also expressed in Soros'
book "Underwriting democracy" (in French version "Sauver la démocratie a
l'Est") published in 1993. He writes there for example: "In a normal state
of affairs it is necessary that a movement (a political one, but also
commercial, scientific and religious ones - M.G.) is pushed sufficiently
far, before forces occur, which are able to correct the deformation (of
image of reality) which was at its base." Putting this statement once again
into a plain language, it means that the more aggressively a person - or a
group, a coterie or a Mafia - is able to lie-up the image of reality, the
longer this group is expected to remain in power. (The same maintained
Goebbels 70 years ago: the bigger the lie is, the better it holds.)

George Soros even explains in detail how the elaborated by him, program of
"Americanization" of Eastern Europe works. He informs in "Underwriting
Democracy" that behind his philanthropic idea of creation of Open Society
Foundations was "the creation of an international web (...) at the heart of
which will be the computerized base of (personal) data, which enable the
Western Multinational Societies to find candidates, which they are
searching for". In short, all these Soros-Fundation educated (and kept in
computer memories) young men and women are prepared to fulfill functions of
so-called "influence agents", which behave in a way similar to that of
Japanese geishas. These Young Urban Professionals, thanks to their fluent
knowledge of languages, and having multiple, delicate social contacts with
bureaucracy in target countries, facilitate the implementation in their
homelands not only of Western Multinationals, but also of Western
sub-cultures and Western habits of consumption of appropriate, personality
enriching, commercial goods.

For the first time I heard that Soros Fundation corrupts young people, from
the mouth of Piotr Ikonowicz, who is a leader of the Polish Socialist
Party, roughly twenty years younger than me. How does this corruption is
organized in detail? In general it takes the form of an ordinary training
very similar to the one practiced while teaching young dogs to bark at a
"stranger". In case of 'education' of "Soros youth" (SorosJugend) the
"food" necessary for such simple training consists of all these computers,
lavish scholarships, luxury cars and invitations for dinners and seminars
in four stars hotels. In general this was/is sufficient to bribe not only
the young but also adult "intellectuals" in a target country. An example of
this gave few years ago the former finance minister of Poland, Grzegorz
Kolodko, in a Warsaw satirical "Nie" weekly. He reported there the story
how a "well known investor" (his name he dared not to disclose) was able to
buy, only at the cost of few dozens of millions of dollars spent for
Warsaw's "elite", the Polish Bank Handlowy having the value of 1,5 billion
of dollars.

The specific task of all these Bathory Foundation trained 'watchdogs' of

Open Society consist of "barking" (in tune with Their Master's Voice),
against all individuals which may endanger the Private Property of
'feeding' them Lord. Observing the behavior of journalists linked with this
'watchdog' formation, one finds easily that all their vigor and sense of
humor is exploited for the task of continuous, monotonous defamation of
national leaders, which have an authentic, popular support. (This was the
case, for example, of Soros/NED sponsored Students in Market Theology
"Otpor" movement in Serbia; the similar baiting of Lukashenko we witness
today in Belorussia.)

Once competent people are removed from key posts of a target country, its
pillage, by the gang of "Global Investors", can proceed at full speed,
thanks to utter cretins (like President Walesa or PM Buzek in Poland), or
opportunists (like Djindzic in Serbia), which get installed at commands of
the state. It is evident that in order to obtain the public (i.e. media)
consent for such 'reforms', all more observant and honest people have to
disappear from the public life. Usually it is sufficient to associate them
with despised (by "Soros' Family", of course) "communists, fascists,
reactionaries and populists", but in particular cases it becomes necessary
to kidnap them to the Hague's ICTY. (Or simply, to murder them by the
"invisible death squads" - inside Serbia, after Milosevic was ousted from
power, about 20 personalities were liquidated in this "open society" way.)
The best, and at the same the shortest description of the general direction
of all "reforms", we have in Eastern Europe, was given to me, in May 1999,
by an old professor of Slavic literature, Vladimir Bozkov from Skopie,
Macedonia.

At that time he witnessed at Skopie nearly every day how B-52

bombers fly towards his former homeland. Impressed by this techno-spectacle
he told me, during our meeting at Moscow, "Oni chotiat' ubit' vsiech umnych
ljudi": (THEY WANT TO KILL ALL THINKING PEOPLE). I think that this is the
essential goal, which our beloved "Global Investors" are aiming at.
The very ethics of "misinformation as a tool of survival and conquest"
belongs to the "aristocratic" pattern of behavior, which spontaneously
developed among Stock Exchange players. It is already in 1813 brothers
Johannes and Nathan Rotschild, by a skillful, gossiped at London's & Paris'
Stock Exchanges, lie about the outcome of the Waterloo battle, were able to
earn in one "scoop" 40 million francs, making out of their family the
richest Banking Group in Europe. (By the way, according to Schiller's
Institute, George Soros is associated with this famous Rotschild Banking
Group.)

Here I come to the point, which I want to stress in the conclusion. Already
in the Antiquity the Greek philosopher Socrates argued that (in
contradiction with the Biblical (mis)information about the 'original sin')
people are not evil by their nature, but they are becoming evildoers out of
their ignorance. The Global Stock Exchange is by its very nature the place
where the MISINFORMATION (or the production of ignorances) has become the
principal source of personal enrichment of 'Investors'. By an imitation of
Stock Exchange 'Super Stars' like George Soros, every day more and more
numerous 'young wolves of interest' are polluting the Planet with lies
supposed to bring them their selfish, pecuniary happiness. It is precisely
from Stock Exchanges radiates in all directions the Lie - and thus
automatically also the Evil and Ugliness - which has become the ever more
visible symbol of Our Civilization. (By the way, these B-52 bombers, which
2,5 years ago impressed so much professor Bozkov from Skopie, I can see at
present over Tatra Mountains, during their return to Germany from
antiterrorist missions in Afghanistan.)

Stock Exchanges and bourgeois Banks were permitted to operate only in 16

century Europe by our religious reformers, dreaming about 'New Jerusalem'.
We can trace thus the origin of these modern 'Temples of Lie', back to the
Old Jerusalem's Temple of Merchants two thousand years ago. At that time
Jewish dissidents considered their Temple of Hypocrites as "brigands'
cavern". Considering this last expression as an 'approaching the reality'
description, we can take for sure that nothing will turn for a better in
our Brave (observe the military stout of Americans!) World until we kick
Global Investors out of our homelands.
MG, November 2001

Transparent corruption
George Soros

All over the world, countries that should be rich remain poor. Though blessed with valuable
minerals such as oil, diamonds and gold, the ordinary people of Angola, Nigeria, Kazakhstan and
elsewhere are mired in poverty while corrupt officials prosper. Money that could be used to
reduce poverty and jump-start economic growth is stolen instead.

Oil and mining companies play an important role in many developing countries. Often they are
the main source of budget revenues and foreign currency earnings. In Angola, for example, oil
accounts for an estimated 90 per cent of the $3bn-$5bn (э2bn-э3.4bn) state budget. At least $1bn
of this revenue goes missing every year.

There is a close connection between the exploitation of natural resources and the prevalence of
corrupt and oppressive regimes. A secure revenue stream allows such regimes to maintain
power, and controlling vast flows of money gives dictators a powerful incentive to cling to
power. Without the need for broader public support, these regimes can oppress their citizens and
ignore basic needs such as healthcare and education.

The problem is particularly acute in Africa, where the natural resource sector accounts for about
three-quarters of the continent's trade. Angola, Sierra Leone, Chad, Congo-Brazzaville, the
Democratic Republic of the Congo, Equatorial Guinea, Gabon, Nigeria and Sudan are all
countries where natural resources provide a big portion of state revenues, and corruption is
rampant. Many have been devastated by civil wars motivated by the control of natural resources.
As a general rule, people in resource-rich and resource-poor African countries are equally poor
but the resource-rich countries have worse governments and greater civil strife.

Central Asia faces similar prospects. In the coming years, countries such as Kazakhstan,
Uzbekistan and Azerbaijan can expect greatly increased revenues from the sale and transport of
oil and gas. Will these funds foster development or repression?

Multinational corporations involved in extraction industries argue that the misappropriation of

state revenues is beyond their control. Nevertheless, they cannot escape responsibility for what
happens in the countries in which they operate.

Unsurprisingly, activists have often singled out oil and mining companies for blame. In recent
years, lobby and pressure groups have launched campaigns against Royal Dutch/Shell in Nigeria,
Unocal and TotalFinaElf in Burma, ExxonMobil in Aceh, British Petroleum and Occidental
Petroleum in Colombia, ChevronTexaco in Angola, Talisman in Sudan, Freeport MacMoRan in
Papua, Indonesia, and ExxonMobil and partners in Equatorial Guinea.

But this does not have to be the case. It is in the enlightened self-interest of these companies to
ensure that their payments are not misappropriated. In association with a broad consortium of
human rights, environmental, development, and anti-corruption groups, I am endorsing a
proposal that would require oil and natural resource companies to make public how much they
pay to national governments.

The proposal, known as "Publish What You Pay", would be a useful step in forcing corrupt
governments to open up to scrutiny from their own people. The idea is to require natural resource
companies to make public disclosure of taxes, fees, royalties and other payments to governments
as a condition of being listed on leading stock exchanges. I am not talking about releasing
commercially confidential data, but simply the basic figures that companies are already required
to disclose in many developed countries.

I recognise that oil and mining companies do not control how their payments are spent, or
misspent. But if they are to be good corporate citizens in this age of globalisation, they do have a
responsibility to disclose these payments so the people of the countries concerned can hold their
governments to account.

No individual company wants to start disclosing data before its competitors do. That is why
voluntary disclosure will not work. But all companies would benefit from a level playing field if
disclosure were required. They would not be violating the terms of their agreements if the
requirement to "publish what they pay" were imposed on them.

What we are proposing is only a first step. Africa is high on the agenda of this month's Group of
Eight summit. The New Partnership for African Development, Nepad, an African initiative that
will be discussed at the summit, emphasises the need to eliminate corruption. Our proposal fits
right into this agenda.

If revenues generated by the extraction industry were channelled to promote development,

poverty could be dramatically reduced. Coupled with the Millennium Challenge Account
recently announced by the US and other improvements in international assistance, they could go
a long way towards making the United Nation's widely supported millennium goals a reality.

“Financial Times”; June 13, 2002

George Soros Financed Peru Riots

In July 2000
By Richard Deegan
http://educate-yourself.org/rfp/reportsperusorosfinancedriots7may01.shtml
May 7, 2001

A stunning admission was finally forced from the empire of the New World Order’s George
Soros that, indeed, he had contributed millions of dollars to the political campaigns of Alejandro
Toledo Manrique in Peru, included $1,000,000 specifically for Toledo’s “March from the Four
Winds” that resulted in six dead and multi-million dollar damage to government and private
buildings and property (the specifics of these riots were the subject of a previous Report).

Smoking Fax Obtained from Toledo Camp Defector

The admission came in the form of a fax from international currency speculator Soros’ Open
Society Institute in New York, issued by Director Michael Vachon. The fax was intended to
serve as a clarification after Toledo (who had previously denied receiving money from foreign
interests) acknowledged receiving a million dollars from Soros specifically for the July 26-27-28
2000 series of demonstrations and attacks in the heart of Lima.

Toledo’s acknowledgement resulted from writer Alvaro Vargas Llosa’s defection “for moral and
ethical reasons” from the Toledo camp in view of what he termed “conduct that left grave
doubts about Toledo’s moral capability to govern.” While Toledo has long been known as
indecisive and inconsistent as well as a pathological liar on the level of his former ally,
exPresident Clinton, new evidence of his machiavellian venality has recently rocked the
Peruvian political scene. The latest disclosures have shocked many of his staunchest supporters.
Cocaine & Orgies
Neither revelations of his cocaine orgies with prostitutes, nor his resort to corruption to avoid a
paternity case have phased the population, who were ready to believe his claims that these
“accusations” were part of a sinister campaign of dirty tricks to destroy his candidacy as he
attacked reporters who dared to question him. Not even his drunken harrangue on the night of the
2001 election (managing to get barely one-third of the vote) had a negative effect or disappointed
his fans, who view him as their kind of “macho” guy.

What did hurt, however, was his statement that “Now I have the press in my pocket”, along with
other evidence of his complete disdain for the democratic process and the Peruvian electorate.

The Telephone Deal

Shortly after the April 8 election, Toledo made a deal with Telefonica del Peru, subsidiary of the
international conglomerate Telefonica of Spain that controls most telephone and cable service in
South America. Just days before, Telefonica had faced two problems:

1. An investigation of $6,000,000 of bribes to politicians in Argentina who supported higher

telephone rates and
2. Populist demands (led by APRA candidate Alan Garcia Perez and echoed ny Toledo during
his election campaign) to reduce phone rates in Peru.

Telefonica wanted to help Toledo see things “their way”, so they arranged for the elimination of
a news channel, CCN, (not CNN) that had been critical of Toledo, and provided a pleasant all
expense paid trip to Santo Domingo for Toledo and his entouage. This produced a statement
from Toledo that telephone rates in Peru were, after all, fair and didn’t need to be reduced
further.

Fun in the Sun

The public was told that Toledo and his family had gone to Ayacucho (Peru) for religious
services, but his trip to Santo Domingo during Holy Week was discovered. When information
began to surface that he was in Santo Domingo, there was initially panic from Toledo’s people,
until his spin doctors learned that ex-President Clinton was also going to Santo Domingo.
Toledo’s press releases suddenly indicated that Clinton had summoned Toledo to Santo
Domingo for an emergency meeting. Unfortunately, his writers had misread the advance article
about Clinton in the New York Times and confused the dates of the supposed meeting.

Joseph Maiman, George Soros, & The Peruvian Sol The original reason for concealing Toledo’s
meeting to Santo Domingo was with one Joseph Maiman (a.k.a.Yosef, a.k.a. Josef), now an
Israeli citizen with his own background of financial manipulations, arms deals, Russian
connected corruption, Mid-East intrigue and controlling interests in international gas and oil
projects. Toledo spoke at length with Maiman, first asking him to try to purchase or otherwise
take over Baruch Ivcher’s Frecuencia Latina, whose Channel Two had been giving Toledo some
negative press.

Maiman, however, was more interested in another of Toledo’s proposals. Toledo was upset that
after Garcia placed second in the election (which required a runoff election) and that the news
had not generated more financial panic than it 'deserved', considering that Garcia’s previous
government (1985-1990) was marked by disastrous inflation in Peru. Yet one week after the
election, the Peruvian New Sol was still unchanged and stable on the currency markets. This
piqued Maiman’s interest.

The Monday following this meeting, a systematic attack was begun from Switzerland and Israel
against the Peruvian Sol and Peruvian “Brady” bonds. This Bear market raid led to a 7% decline
in the price of Peruvian Bradys and a drop in the Sol from S/ 3.53 to 3.59 per US dollar.

The success of the currency devaluation move helped Toledo rise in the polls and inspired
Toledo to try another tour of New York and Washington, with an eye to tapping his old pal Soros
for some more ready cash.

Readers of these reports will recall that the reasons for Soros’ investments in Toledo were to take
advantage of currency fluctuations caused by Toledo’s demonstrations, riots and inflamatory
statements. When Toledo, after pocketing a million in July alone, hit on Soros for more money in
October of last year, he was turned down because Soros “hadn’t gotten the desired result” for his
money.

In other words, although the July 28 riots caused death and destruction for the Peruvian people,
there was no sharp change in the Sol’s rate of exchange. Soros’ history of currency
manipulations is legion, and he’s been accustomed to winning as he had done in Peru in 1989
&1992, in England in 1992, in Russia in 1996-7, and in Thailand in1997. But without currency
market fluctuations, there was no gain. Thus Toledo, having manipulated a 2% drop in the Sol,
felt George would give him more money to create furhter destabilization of the Sol.

Boastful as ever, Toledo boldly announced last Sunday that he would engage in a series of
meetings with the heads of 35 US banks, President George W. Bush, and Secretary of State
Adam (sic) Powell, among others. He missed the mark somewhat, but he did manage to speak to
old friends at Amnesty International; Carter’s NWO front organization the National Democratic
Institute; and a group of tourists at the National Press Club. He even went on a tour of the White
House, but his hopes for more money fromSoros were dashed when Soros’ US diector, Miguel
Vivanco, told him that the cupboard was bare and no further funds were available.

Toledo addressed some eight or nine functionaries of various financial institutions, during which
he promised to increase privatizations, especially of Sedepal, the state water utility, and to pay all
foreign debt in a timely manner. Those attending were both impressed and relieved. Luckily,
they had not heard Toledo’s discourses in Lima just ten days earlier in which he swore to end
privatizations, never to privatize water, and to immediately halt payment on 20% of all
outstanding foreign debt.

What happened with the money raised (a total of over $1,600,000 dollars from foreign sources)
for Toledo’s March from the Four Winds demonstration? Among those most surprised to learn of
the large amount of money Toledo had raised were the ten to twenty thousand Peruvians who
actually supported this demonstration. They not only paid their own way, but also contributed
heavily to cover their expenses. Now they were asking “What about me? What about my bus
fare?” The estimated total expenditure for this march (including the five thousand people who
came from outside Lima who were lodged in tents and were fed in communal kitchens, with the
Rimac River serving as their sanitation facility) is around $60,000, including bus fare from those
provinces.

The final tally was $60,000 spent and $1.6 million raised. So, what happened to the rest of the
money? Part of the answer is that much of the money was transferred to the United States under
the names of Toledo family members. Unemployed nephew Jorge Toledo, who lives in Toledo’s
million dollar compound in La Molina, and accompanies him on most trips (including the recent
excursion to the US) deposited over $500,000 cash in Weise-Sudameris Bank, Camacho Branch
on June 13, 2000; with another $200,000 cash deposit on September 29. Funds were also
transferred to an account in Jorge’s name at First Union Bank in Charlotte, NC (US) on August
12, August 17 and September 30, 2000. $200,000 each day for a total of $600,000 in just this one
bank. This is exclusive of the funds obtained from Soros.

The Soros money, according to Toledo spokesman Carlos Bruce, was transferred into Peru in
small amounts going into phantom accounts using aliases and co-operative straw men. Funds
were then withdrawn and laundered through other accounts, and subsequently “used for their
intended purpose.” But since these funds came from Soros’ Open Society Institute in New York,
these machinations and the whole transfer plan are clearly in violation of US, N.Y. and Peruvian
banking laws.

The more that becomes known about Toledo, the one-time Haight-Ashbury party animal, the
more he looks like a loser. He now refuses to speak to the press, insists that any debates should
be between advisors, and not candidates (comedians have said, "First the chauffeurs will debate,
then the bodyguards, then the cooks, etc.). After polling 36% in a largely uncontested election
(less than his 42% in the supposedly fraudulent election of 2000), his 38% standing in current
polls is singularly unimpressive, especially considering the millions of dollars and the two years
spent in campaigning. Alan Garcia Perez, who ran the country during a staggering 2,000,000%
inflation period and was impotent against terrorists and drug lords, is currently polling 32% after
a nine-week low-budget campaign. It seems that Al Gore’s not the only one who lost out after
Clinton left office.

Copyright 2001 Richard Deegan and Educate-Yourself.org All Rights Reserved.

The Bubble of American Supremacy

Speaker: George Soros, chairman, Soros Fund Management; author, "The Bubble of American
Supremacy: Correcting the Misuse of American Power"
Moderator: Charlie Rose, executive producer and host, "The Charlie Rose Show"

Council on Foreign Relations

New York, New York
Wednesday, February 18, 2004

--------------------------------------------------------------------------------
CHARLIE ROSE: If I could get your attention--most of you have been here before. I'm Charlie
Rose, and we are pleased to have George Soros here this evening. You know the way we do this.
There will be--I will remind you that this meeting is on the record. I'll do about 20 minutes of
one-on-one Q-and-A, and then I'll turn it over to you, and we will take your questions. As you
stand, wait for the microphone and speak directly into the microphone. State your name and your
affiliation. And, as always--this applies to me as well--keep your questions concise, so that the
answer will be as fulsome as it might be.

George Soros is known to most of you, I suspect, in this room. His story is known to you from
[being] born in Hungary. When the Nazis came in, he escaped when he was a teenager to
London. London School of Economics had a significant impact on him. [He] came to New York
City and got into the investment business and became famous and very rich because of his
running of hedge funds. [Laughter.]

He has written--and then decided to put his money where his ideas were, with the concept of the
Open Society Institute--and in Central Europe and in the former Soviet Union, promoting the
idea of an open society and the idea of democracy, and has given a lot of money to that effort.

He has written eight books. George has said to me that they were all about the same thing. We'll
explore that idea later. The latest is called "The Bubble of American Supremacy," and we'll talk
about that.

I think the thing that has everybody watching what George Soros does in this particular year is
that it is a campaign year and he has already committed 12.5 million [dollars] at last count, or the
last count that I've seen a record of, to advocacy groups that are supporting--that are anti-Bush. If
he wants to quarrel with anything I'm saying, we'll give him a chance to--a whole range of
different people. Whether it's issue-oriented or whether it is more political-oriented, the effort is
to put his money to defeat George Bush. I think it's that simple in terms of his own philosophy.

The book is in part his criticism of the Bush administration and policies, and the second half of
the book is about his own sense of where foreign policy, American foreign policy, ought to be.
And I want to begin by talking about: just today we just experienced [the] Wisconsin
[Democratic primary], and it looks like we have--first of all, welcome George Soros. [Applause.]
Are you supporting [Democratic presidential candidate and Massachusetts Senator] John Kerry?

GEORGE SOROS: I'm supporting any candidate that is selected. I was keen on [former
Democratic presidential candidate Dr. Howard] Dean. I liked [former Democratic presidential
candidate General Wesley] Clark very much, whom I knew from the Balkans. And I am
delighted to have Kerry as the candidate, partly because he has reunited the Democratic Party,
and partly because his formative experience was the Vietnam War. That's what brought him into
politics. And to have a war hero who has experienced war and who is opposed to going to war
unless it's absolutely necessary confront a president who wants to be a war president, but has
personally avoided the experience of war, I think the choice is quite clear.
ROSE: Is a referendum on the Iraqi war a winning issue in your judgment for the Democrats in
2004 if Kerry is the likely candidate?

SOROS: I think it would be a winning issue, if the election turns into a referendum on Iraq. It's
not at all a foregone conclusion that that will be the case, because I think that the Bush
administration will do everything to make Iraq smaller as an issue as we approach the elections.

ROSE: They're encouraging the U.N. [United Nations] to get in as fast as possible.

SOROS: Well, try to find a--well, number one, reduce the number of body bags, because that is
still a very, very painful burden to have at the time of elections; and secondly, to begin to find an
exit or have the vision of an exit. And that is what has really led the administration to review its
position and bring in the U.N., because only the U.N. has legitimacy to establish a government
that can represent Iraq. I mean, we are the occupying powers, and therefore any government that
we appoint is appointed by the occupying power, and is not accepted--cannot be--will not be
accepted as a legitimate government. So the Bush administration now, belatedly, is doing the
right thing bringing in the U.N.

ROSE: And what are your feelings about direct elections in Iraq with the timetable [of a June 30
handover of sovereignty] the United States has suggested or the coalition powers have
suggested?

SOROS: Well, I'm pretty sure that the timetable can not be met. But I think that there will be a
need for--I mean, we'll see what the United Nations comes up with. But I don't think that you can
deny the legitimate aspirations of the Shiites with appropriate protection of all other groups in
the country. So I think that there will have to be direct elections. And I think if it can be
achieved, and the opposition of the Sunnis can be overcome, the outcome actually will be quite
benign. Because I don't think the policies-- because I don't think that Iran, hardliners in Iran,
could resist if Shiites--

ROSE: Because if there is a Shiite-controlled government in Iraq, it would have a positive

influence on Iran?

SOROS: Right, I think so.

ROSE: That's part of the reason the Bush administration says they went into Iraq.

SOROS: Well, of course we went in there on false pretenses, and--

ROSE: Which one? The weapons of mass destruction only, or--[laughter]--

SOROS: No. Weapons of mass destruction and the connection with al Qaeda. And then now we
are claiming that we went in there to liberate the Iraqis.

ROSE: And promote democracy in the region.

SOROS: Right. And actually that is the claim that upsets me personally the most, because I've
been engaged in the last 15 years in promoting the values of open society, promoting democratic
regime change. And to--so I believe in introducing democracy wherever possible. Using military
force as a means of doing it is to me an [inaudible] idea. I think it's a strange way of doing it--

ROSE: But, I mean the history of the world is replete with ideas where people have used force to
overthrow their own government--

SOROS: Right.

ROSE: --and create democracy.

SOROS: Right. That is a way of doing it--

ROSE: [You are] talking about creating a democracy by force from outside.

SOROS: No, you have an example of the [second] world war where Germany and Japan were
defeated and became democracies. But those countries started the war, were defeated in war, and
then as a defeated country we introduced democracy, and very successfully. So that is a very
different--we didn't start the war to introduce democracy to Germany or Japan. So it's a very
different--it's a false analogy. It's the wrong way to go about it. And if you want to have a
demonstration project, Iraq is the last country that I would use, because of the ethnic tensions
which stopped the previous Bush [President George H. W. Bush] from going to Baghdad.

ROSE: Let me--when did you become so--you have taken a more public position, a larger
commitment of your money in this domestic political race than ever before. When did you
become so obsessed with denying George Bush re-election?

SOROS: Actually the previous book on globalization, which I wrote before September 11th, and
then September 11th came and I sort of included some remarks on it--and then as we were going-
-we were clearly determined to go to war in Iraq, I went to SAIS [School for Advanced
International Studies at Johns Hopkins University] in Washington [D.C.], where [Deputy
Secretary of Defense Paul] Wolfowitz had been dean before, and where I had delivered a
commencement address on open society at his invitation. And I went there to give a speech to
explain where I part company with him, because we used to be colleagues agitating for a more
muscular policy in the Balkans, back during the Clinton administration. So I parted company and
I felt the need to explain why I parted company. So I delivered that speech about a week--it was
in March, just about a week before the invasion actually occurred. And that actually was the
origin of the book. And that's what I then developed into a book.

ROSE: But 9/11 and the Bush reaction has what impact in terms of your own thinking about the
administration, and in terms of formulating how you wanted to be a player in this election?

SOROS: Well, when I studied the situation I discovered that there was this Project on the New
American Century which basically outlined a certain vision of American supremacy based on
military power, more active views, projection of power, which had basically--the signatories
were then the people who were very closely associated with the Bush administration -

ROSE: [U.S. Vice President Dick] Cheney, [U.S. Secretary of Defense Donald] Rumsfeld, and
others.

SOROS: Yes, it wasn't--it was Jeb Bush [governor of Florida] instead of George W. But it was
basically the cast. And of course that group advocated the invasion of Iraq in '98. So there was
that ideology group in the government.

Then came September 11th, and that traumatic experience gave them the opportunity to
implement their ideology. And that is what got me. I supported the invasion of Iraq--of
Afghanistan--that was a very appropriate reaction, because when you want to fight--want to
wage war on terrorism, you must have an address to find the terrorists. And in that case [Osama]
bin Laden lived in Afghanistan, so that was appropriate to go after--

ROSE: So the Afghan war was an appropriate response--

SOROS: It was an appropriate response.

ROSE: --to 9/11 and the attack on Afghanistan.

SOROS: Yes. But then to use the war on terror as a way of implementing an invasion of Iraq,
and to pursue it irrespective of how Saddam responded, how the rest of the world responded, was
to me a demonstration of having gone off the rails. And since the United States is so powerful, to
have it go off the rails is a real danger to the world and to us. I think it endangers open society in
this country and throughout the world.

ROSE: How does it endanger open society?

SOROS: Because a critical process is absolutely essential to an open society. And when Bush
declared war on terrorism it became impossible to criticize him without being unpatriotic. And
when Bush said that those who are not with me are--or not supporting me are supporting the
terrorists--I heard alarm bells. That is when I really became concerned. And in fact if the political
process hadn't been suspended, because it was an emergency and the war and so on, then I don't
think we would have ever gone to Iraq, because I don't think that it would have been possible to
carry it through by hook or crook, because that is what we did.

ROSE: Who failed in terms of making the case against Iraq in a timely manner that may have
created a bigger debate in this country?

SOROS: Who failed?

ROSE: Yes.

SOROS: Well, you mean that the--

ROSE: In other words, should there have been a more vigorous debate, and was there not, and
why not, and who's responsible?

SOROS: Well, there should have been. There wasn't because it was politically inexpedient to be
seen to be opposing the president who was waging war at wartime.

ROSE: But there was a lead-up to the war and there was a debate about going to the U.N. and all
of those kinds of things. But--

SOROS: There was not enough debate, and there was not enough time. And I think some of you
might remember that [U.S. Democratic Senator Joseph] Biden [of Deleware] came here and was
telling us here at the Council that he was working on a bipartisan resolution that would have put
some constraints on the president's ability to go to war, and he would need something like 48
hours to gather bipartisan support for it.

And the next day Bush supported--surrounded by [Senator Joseph] Lieberman and
[Representative Richard] Gephardt--announced that the resolution was going forward. So clearly
there was a division in the Democratic Party, which has actually made it very difficult even now
to reach an appropriate opposition to the Bush policies. And I think the emergence of Kerry as
the candidate shows that there is now--Kerry can reunite--has reunited the party, I think.

ROSE: All right, a couple of questions, and then I want to go to the future. What do you believe
are the lessons of the Iraqi war, and what has it taught us about American foreign policy? I mean,
the title of your book is "The Bubble of American Supremacy." What are the lessons, and then
let's move to some consideration of where--what kind of policies you believe ought to be in
America's interests in the future.

SOROS: I think we have to reconsider our role in the world more profoundly, because having
gone off the rails we have to learn some lessons from it.

ROSE: And they are?

SOROS: And they are that we have a unique responsibility, being the dominant force, the
dominant country in the world, where we set the agenda and the rest of the world has to respond
to the agenda that we set. The rest of the world doesn't have a vote in Congress. Therefore, our
leadership--we have to be concerned about the welfare of the world. In other words, we have to
be concerned about the global political system, which has many shortcomings. There are many
issues that require international cooperation to tackle them, because through globalization we
have become increasingly interdependent. So what happens in other countries is of vital interest
to us. Our security is at stake. What kind of government prevails in Afghanistan can be a direct
danger to us. So we do need to be concerned about the global political arrangements. And we do
need international cooperation to improve our international institutions. We have global markets,
but our political arrangements remain based on the sovereignty of states, and we don't have
strong enough international institutions to deal with the problems of maintaining peace. I mean,
of common interest. And only we are in a position to lead the world in improving those
arrangements. And that is totally contrary to the direction of the Bush administration, which has
demeaned and denounced international treaties and international institutions from the moment it
came into office.

ROSE: How were your views on this instructed by your own life experience?

SOROS: Well, I mean the answer is obvious, because I lived through Nazi occupation, and I
would have perished if my father hadn't had enough foresight to secure false identities. Then I
had the experience of a communist regime, and my life would have been wasted if I hadn't
emigrated. So I learned at a very early age how important what kind of social system prevails--
freedom. And then of course I studied under--well, in the London School of Economics I came
across [philosopher] Karl Popper, and so from there came this open society idea which when I
had enough money to think about what I want to do with it became the objective of my--

ROSE: Creating open societies in Europe and other places that were emerging democracies?

SOROS: Right. And then I became quite involved in that. And in fact as the Soviet system
collapsed it became a sort of overarching mission for me, because I think I had a fairly good
understanding of the historic moment, and I had a pretty clear set of values and objectives, and I
had the financial means to make an impact. So the combination of the three put me into a
somewhat unique position. And I devoted five years of my life to setting up this foundation
network. And so now I feel that these values need to be supported and reinforced in this country.
And that I must say is a surprise. I mean, I didn't quite expect that. You know, as I had this
practical experience in the transition from the Soviet system, I had the surprise there, because I
thought there was a division between open and closed societies and that a repressive strong state
is a danger to liberty. And I discovered that the weak state, the collapsed state, can also be a
danger. And so that was a discovery.

But then to find that--so I discovered that open society is sort of endangered from every side. But
nevertheless, to come to feeling that open society is endangered in this country, which is after all
sort of the ultimate in an open society, it came as a surprise to me.

ROSE: Your central criticism, it seems to me in reading a lot that you have said, is that you
believe that the Bush administration wants to live by rules of power and not by rules of law.

SOROS: Yes, yes. There is this belief that it's the survival of the fittest, and who is the fittest is
determined by competition and not cooperation.

ROSE: And why is that detrimental to American interests?

SOROS: Because in fact that is not--the use of power and dominance was not what has made
America great and dominant. And now that we are dominant it is a misuse of that power to try to
impose our will on the world. As I said, with great power goes great responsibility. And our
responsibility now is to help lead the world in improving the world order.
ROSE: I want to go to this audience. And you point out in the book that one model that you like
is the European Community in a kind of--

SOROS: Well, of course, if I lived in Europe I would be pretty critical of the European Union--
[laughter]--and even not living there I'm critical.

ROSE: But you talk about some kind of open society bargain.

SOROS: Yes. But the way it has developed is very sort of quintessential of an open society, and
actually just now the European Commission has developed the concept of a wider Europe--a
wider Europe initiative. And that to me is an expression of the right national strategy. The
European strategy paper I think is a much better one than the Bush--

ROSE: But the idea that is attractive to you is the notion that the European community in terms
of a wider Europe will offer trade and other economic advantages if they, the developing
democracies, commit to a democratic and open society?

SOROS: Yes, yes. And that I think is now very appropriate, because you know the wider Europe
happens to coincide with the near abroad of Russia. And so there is now going to be a kind of
rivalry for influence in countries like Ukraine, Moldova, and so on. And since Russia is very
happy to offer membership to those countries in Russia, wants to re-establish the Russian empire,
the European Union has to offer some--cannot offer membership--must offer some other
advantages to attract those countries towards--

ROSE: Let me go to this audience. Raise your hand and I'll--right here, please. If you'll stand up,
as I suggest, identify yourself, and they'll bring a microphone to you and make your questions
precise. And we'll get as many involved as possible.

QUESTIONER: Thank you. I'm Ann Miller from Bank of America. George, there's some people
in the Bush administration who would contend that because of the strong reaction that America
took to the Iraqi situation, the other trouble areas in the world, such as Libya, we have had a very
strong message and [others] have reacted positively. Do you agree with that? And, if not, why do
you think Libya is behaving the way that it is after the war?

SOROS: I think that Libya, or that [Libyan president Muammar el] Qaddafi has been trying to
come in from the cold for some time, you know, with all the long protracted negotiations, [the
1988 bombing of Pan Am flight 103 over] Lockerbie [Scotland]. The influence of Qaddafi's son
was very important. And I think that the willingness of the United States and Britain to, let's say,
be more welcoming, because it was high time to produce some positive results, helped the
negotiations. So that is in fact a success. Now, Libya is not a democracy by any means, but there
has been a very definitive change in Qaddafi's behavior and in Africa. A few years ago I talked
to [Abdoulaye] Wade [president of Senegal], President Wade, who said that Libya was a big--
Qaddafi was a big troublemaker. And even the conflict in Sierra Leone and Cote d'Ivoire had
Qaddafi's influence. He's now sort of turned around, and he's a reformed character. You know, to
what extent he was influenced by Iraq I think it's a--I think it's very questionable.
ROSE: So you don't think fear played a part that he thought he might be next?

SOROS: I don't think so, because I think that effectively our ability to project power has been
greatly diminished by our--by being bogged down as an occupying power in Iraq. I mean, I can't
imagine us spending another 160 billion [dollars] and putting soldiers at risk to remove another
dictator. So I think we shot our whatever. [Laughter.]

ROSE: Yes, sir, right here.

QUESTIONER: Marty Gross from Sandalwood. What is your ability to spend 12.1 million
[dollars] to unseat an existing president, current president, say about the need for campaign
finance reform? [Laughter.]

SOROS: Well, I think actually I probably contributed more to Republican Party fundraising than
the other side. But I am in favor of campaign reform. I supported it. And I abide both by the
letter and the spirit of the law in what I'm doing, because I'm supporting what are called Section
527 organizations, which were left alone in the campaign finance reform, because the reform is
primarily aimed at denying access to special interests by making political contributions. And if
you make a contribution to these organizations you get no access whatsoever. And because of
that, it's extremely difficult to get people to contribute to it--to them--because you do it, you
know, out of principle, and you don't get any access or rewards.

ROSE: But MoveOn.org and [Clinton White House chief of staff John] Podesta's organization
are clearly progressive Democratic organizations.

SOROS: No question that they are designed, or their aim is to, let's say--

ROSE: Anti-Bush.

SOROS: Anti-Bush, there's no question. But it is legal and it was left--it was left untouched--
they existed and they were left untouched by the campaign reform. And the Republican president
of the Federal Election Commission has in his opinion endorsed these organizations. So it's been,
as I understand it, pretty well reaffirmed.

ROSE: Do you think it's money well spent?

SOROS: I hope so. [Laughter.]

ROSE: All right. Yes, sir, right here. And then I'll come--yes, right there--then I'll come here.

QUESTIONER: Alberto Coll, Naval War College. Mr. Soros, even if we get a Democratic
president in November, how can he do the very difficult job of carving politically both the
Congress and public opinion to establish the kind of more benevolent, magnanimous foreign
policy that you describe in your book, especially in terms of increasing development aid and
changing the way that the American public views foreign policy? How can he do that?
SOROS: Well, I think it will require leadership. But there is a genuine clamor for that kind of
policy, because President Bush himself has supported for instance a lot more money for fighting
AIDS--even to the point of making a contribution to the Global Fund [to Fight AIDS,
Tuberculosis, and Malaria], which is an international organization--and also the [U.S.]
Millennium Challenge Account--which I think both are very positive moves by this
administration and I am a strong supporter of those moves. So it's possible even--I mean, there's
a public demand for this to which Bush responded by doing these things.

ROSE: Yes, sir?

QUESTIONER: Mr. Soros, my name is Roland Paul. You kind of addressed this in some of your
remarks earlier, but this might help to focus it a little bit. You know if the Western democracies
had engaged in something like pre-emptive war against Hitler in the late '30s, many millions of
people's lives would have been saved--20 million Russians, six million Jews, untold numbers of
Germans. By the same token, isn't there some justification for the war in Iraq, regardless of the
motives? And I agree with you there probably were other than this--but some justification in
light of the fact that we freed 25 million people from the boot of a diabolical and delusional
tyrant, who by all odds was responsible for the deaths of 300,000 Iraqis?

SOROS: Absolutely there is a justification, and for instance in the case of Bosnia more recently
we could have saved lives had we moved earlier and more aggressively. And I was also a
supporter of Kosovo. And I think that the great unsolved problem of our global world order is
how to get rid of the likes of Saddam--what to do with tyrants and dictators. And my concern is
that by doing what we did, we actually set back that effort to make it more difficult in the future,
because first of all we weren't doing it for that. There was an ulterior motive which was never
disclosed, and we still don't know what it is--I mean, we can conjecture why we went into Iraq. If
we had been concerned with--to be liberators, we would have gone about it another way. We
would have protected not only the ministry of oil, but all the other ministries and hospitals and
museums. We would have needed more troops to do it, but that would have been--then we would
have been liberators, and probably we would then be regarded as liberators. We would have
probably not given huge contracts to [the] Halliburton [company], which then imports labor from
Bangladesh, but actually given those reconstruction contracts to employ people in Iraq. So this is
a, unfortunately to me, is a deception that we went there. It's a--and it upsets me the most
because it is a very legitimate objective to remove tyrants. And we must find ways of doing it.
And by doing it this way we lose the confidence of the world for cooperating in the future, and
we--it just makes it more difficult.

ROSE: Wait a minute, are you saying that there might have been a legitimate argument that
would have been acceptable to you for George Bush to go into Iraq?

SOROS: Yes.

ROSE: What would that argument be?

SOROS: Well, we would have had to develop a set of rules about intervening in countries like
Iraq. We would have had to carry the Congress, we would have had to explain to Congress that
that's--

ROSE: As well as the U.N.?

SOROS: And he would have had to get a consensus--sufficient consensus that would have not
necessarily been the U.N., because in the case of Kosovo I think our intervention was legitimate,
and it was not through the U.N.

ROSE: Through NATO.

SOROS: Now, of course in Kosovo [former Yugoslav president Slobodan] Milosevic was
actually committing genocide that prompted us to intervene. Saddam had also committed
genocide--killed--gassed the Kurds. But that was in 1985, and [Secretary of Defense Donald]
Rumsfeld went to Saddam and said, "Don't take our criticism too seriously. We still want to help
you in your fight against Iran." So the same person now 20 years later claims that he has gone in
there to remove Saddam. It's deceptive, and it undermines our credibility.

ROSE: You know their answer would be that it's all post-9/11. Let me--there was a lady here--
there was a lady--somebody. Yes, ma'am?

QUESTIONER: Michaela Walsh--

ROSE: I promise you I'll get to the back too. I'm not focusing just on the front.

QUESTIONER: Michaela Walsh. I just would like to take this a slightly different direction.
Given the situation that we're living in now and concerns about this campaign that you're
involved in, if you were asked to define or give your definition of leadership to the younger
generation today, how would you address that?

SOROS: Well, I'm doing it actually. Yesterday I was at Duke University, and I'm going around
universities, because I think it is the future of the students. And I'm basically saying what I'm
saying to you: that being the strong power, we have a special responsibility that goes with that,
and we have to live up to it. That's basically--

ROSE: Defining on an international basis. Here and then the lady here. And then we'll go to the
back. Here--microphone?

QUESTIONER: My name is Alexander Cooley. I teach at Barnard College. I have a question

about two of your areas of expertise--currency markets and international politics. The recent fall
of the dollar--how do you view the medium and long-term impact or a possible erosion of
American power?

SOROS: I think that the decline of the dollar has short-term beneficial effects for the American
economy and that is why it has been tacitly encouraged by the administration. It's a very
dangerous game to play, because once you let the genie out of the bottle it's very difficult to put
it back again. And the global financial system is not functioning properly. The adjustment is not
functioning properly, because more than half--all of Asia basically is tied either directly or
indirectly to the dollar. And therefore the adjustment falls on the rest of the world. It's like a
respiratory system with one lung collapsed. And therefore the adjustment takes longer, and goes
too far. And it has the makings of an eventual crisis. We are on the road to a currency crisis of
some kind.

ROSE: Does that mean that you're betting on the decline of the dollar? [Laughter.]

SOROS: I wouldn't like to say.

ROSE: Yes, here, and then we'll go here, and then I promise you we're coming right to the back.

QUESTIONER: Hello, Mr. Soros, Nazee Moinian. I'm an Iranian American, and I read your
book thoroughly. You dedicate a whole chapter about the merits of open democratic society. Do
you think the Middle East is ready for open democratic society? And if yes, why are we having
insurgents in Iraq fighting against us?

SOROS: What is ready for--

QUESTIONER: Do you think the Middle East is ready for the open democratic society, as you
detailed in your book?

ROSE: Is the Middle East ready for democracy?

SOROS: It probably is more ready than we are willing to give it credit. And actually I think that
for instance people in Palestine are quite ready for something more like democracy. And it's
interesting that there was a spontaneous move to impose some restrictions on [head of the
Palestinian Authority Yasir] Arafat when they brought in a finance minister back from the World
Bank. So I think that there is probably more possibility for democracy than we give them credit
for.

ROSE: Yes, ma'am? Here, then here, then there and then to the back. [Laughter.]

QUESTIONER: Kathleen McCarthy. I'm the director of the Center on Philanthropy and Civil
Society at the Graduate Center of the City University of New York. I was very interested in your
comment that you felt that the institutions of open society in this country were imperiled. We all
know that you made a tremendous impact in helping to strengthen these sorts of institutions in
other parts of the world. What role can private philanthropy play in helping to maintain these
institutions in this country aside from subsidizing individual social advocacy groups?

SOROS: Well, first of all I would like to make it clear that I don't think the institutions are
necessarily imperiled, although the tendency of Bush to nominate quite extremist judges for the
Supreme Court, or for the various courts, is in a way endangering the judicial branch of the
government. But it's not the institutions but it's the suspension of the critical process that I think
has been a danger which has led to the success that manifested in the attack on Iraq.

But we do have elections, and I think that they are having a very beneficial effect, because
actually the bubble is being deflated by the Bush administration itself in order to pass the
goalpost of being reelected. And so that's how we have to turn to the United Nations in Iraq. And
so it's very useful to have those elections.

ROSE: Yeah, here and then there, and then back here.

QUESTIONER: L.G. Flake with the Marie and Mike Mansfield Foundation. Mr. Soros, through
your open society work you gained a reputation as an advocate for human rights. And yet in the
situation of North Korea, strangely, the question of human rights and refugees have really been
the purview of the far right--even Mr. Wolfowitz, as you mentioned. I'm curious, what should the
role of the left or the role of U.S. policy be in regards to the situation in North Korea?

SOROS: Well, we all know that North Korea is one of the most repressive regimes in the world.
The question is what can you do about it. And in fact our ability to project power in North Korea
is very limited. We have actually gone full circle, because Clinton, recognizing that you actually
can't use military power, because that would be 500,000 people killed before you could actually
overrun the country, made a deal which Bush renounced, whereupon the North Koreans went
one better and renounced the membership in the Non-Proliferation [Treaty], et cetera. And we
are now back to trying to make a deal, using the good offices of the Chinese. So there are
limitations to power, but actually I think that the sunshine policy followed by [South Korean
President] Kim Dae Jung held promise. I mean, his idea was that through sunshine you take off
your overcoat. And in fact the regime is so unviable that internal changes have to come. And the
less I think you have an opportunity to bring about change internally.

ROSE: Here, sir, and then we're back--this gentleman here and then back to the back--right
where the hand is raised there.

QUESTIONER: Thank you, Mr. Soros. Henry Hirschberg, McGraw-Hill. I was wondering what
you think of the possibilities of civil war in Iraq and the breakup of the country into three
different countries because of al the ethnic issues--not much different than Yugoslavia.

SOROS: Well, I think in the case of Iraq you are sort of on the knife's edge and you may actually
have a positive resolution brokered by the United Nations, or you may have civil war because all
the sides have militias, and we are withdrawing our troops--the main job of our troops now is to
protect ourselves, and not to necessarily protect the Iraqis. And therefore there is a possibility of
civil war, unless there is an arrangement brokered by the United Nations. And it's up in the air.

ROSE: We'll know in a couple of weeks. Yes, sir, in the back. Yeah, you. Yes, sir? And then
we'll take another.
QUESTIONER: Hi, Jeff Kaplan, Clark & Weinstock. I wanted to ask you a question about the
democratizing power or potential of economic liberalization. Do you think that opening
economies inevitably lead to open societies?

SOROS: Not inevitably, but it can be helpful. And generally economic prosperity tends to lead to
the development of a middle class, and then the middle class demands more freedom. So let's say
if you take South Korea, which was a dictatorship, because a democracy after considerable
economic progress. But it is not at all automatic, and rulers don't usually give up power
willingly. So usually there is sort of a revolutionary moment necessary.

ROSE: Yes, sir. Back in the back too--take your pick. [Laughter.]

QUESTIONER: I'm from Project Renewal. I wonder if we could turn to East Asia again. Trade
with China and within the region--Japan, Korea--is surpassing that in trade with the U.S. now. I
wonder if you might talk about the threat of China to American supremacy in the East Asian
region, specifically if you were in China how would you play your hand going forward? And if
you were in Washington, how would you react to that and how would you engage China to guard
against a threat of a growing China in the region?

ROSE: Did you get it?

SOROS: Not fully.

ROSE: Okay, basically if you were in China, what would you do in terms of maximizing China's
strategic interests, and if you were in the United States what would you do to counteract that or
to compete with it or to coexist with it?

SOROS: I think China is the main beneficiary of globalization, and it's right now in a very
dynamic phase of development, and it actually has a reform-minded leadership, which is aiming
at political as well as economic reform. Whether it gets there remains to be seen, but China is
doing about as well as it possibly can, and certainly is benefiting from our need for their
intercession in North Korea.

As far as the U.S. is concerned, I think that there is a problem with the currency. There has to be
some ways of adjusting the currency. Right now we are in a weak position to push the issue,
because of our dependence on China in this intractable problem of North Korea.

ROSE: When do you think China will have the strongest economy in the world?

SOROS: If you calculate linearly, it's 2025--but it never happens that way. [Laughter.]

ROSE: All right, yes, sir?

QUESTIONER: My name is Eugene Staples. Are we not greatly handicapped, considering all
the issues that you've put before us, by the use of the term the war on terrorism, which seems to
me an unending war that probably never will end? And should we not really be seeking some
other term to change the semantics of this debate?

SOROS: The answer is yes.

ROSE: So what's the term?

SOROS: Well, I, in the book--I said the terrorist attack was a crime against humanity basically
and it ought to be treated as a crime, and you need to--you can't wage war against terrorists
because, in order to wage war, you must have an address where you know where they live so you
can bomb them. Since the terrorists are invisible, when you engage in military action you are
liable to have innocent victims. And in fact the war on terror has already had more innocent
victims than were killed in the World Trade Center, except that they are somewhere else, and so
we don't draw that comparison. But it is a very counterproductive way to go because, of course,
we have to take precautions--we have to increase various security arrangements. But to win the
war on terror you need to get--you need to win the hearts and minds of the populations where the
terrorists live. And that is where we have failed.

ROSE: We're losing that battle?

SOROS: Definitely.

ROSE: Yes?

QUESTIONER: Mr. Soros, if I could go back to the issue of the climate in the United States
leading up to the war, do you think that the media abdicated its critical and questioning
responsibility during that period? And, if so, why in your opinion?

SOROS: Well, the media caters to the market, and any kind of critical expression at the time was
unacceptable. The brilliant comedian Maher who took exception to the terrorist act being
described as cowardly. He said that, you know, it was heinous, terrible--but it wasn't cowardly,
because people sacrificed their lives in order to--he lost his job.

ROSE: Bill Maher.

SOROS: Bill Maher. So it was not a rewarding experience. [Laughter.]

ROSE: But there was a lot of debate about it, a lot of--I had a lot of people like you on my
program who were fiercely opposed to the war--I mean, everybody from you over to
[Massachusetts Institute of Technology Professor] Noam Chomsky.

SOROS: Yeah, but when you followed the war reporting in Iraq on Fox Television and Sky
News in England--

ROSE: Both owned by the same person.

SOROS: --and how different their coverage was--it really quite remarkable. So actually this--I
mean, there is an Orwellian truth machine operating now, and I find it perplexing that when
[George] Orwell in "1984" described the Ministry of Truth, the Ministry of Truth controlled all
the media, and this was based on the experience in Nazi Germany and communist Soviet Union.
So it's not the same situation. It's not comparable. But there is still this ability to manufacture
truth. And I find it puzzling, and don't have the answer to it.

ROSE: That's in fact how you got in trouble, because some people said that you were trying to
compare the Bush administration to Hitler when you made that point.

SOROS: That's correct, yes. But of course that's exactly the differences that we do have, that
democracy and pluralistic media. And yet it's possible to manufacture truth.

ROSE: Right. Yes, ma'am. Back here. I promise you we'll come right back to the person in the
back row there who was holding their hand up right there.

QUESTIONER: Susan Purcell, Council of the Americas. Mr. Soros, if thinking, just imagining
we had found weapons of mass destruction in Iraq after we had gone in pre-emptively, would
you now think that it was a good idea for us to go to war with Iraq, even though the U.N. hadn't
approved it?

SOROS: No.

ROSE: Why?

SOROS: No, I would not think so because effectively when we had the inspectors there we had
the situation under control. There was no way in which those weapons could have been
activated, and we could have kept the inspectors there indefinitely. So that was not a
justification, as long as the inspectors could do their work. And actually they did a much better
work than our intelligence picked up, because effectively there were no weapons left because of
their work. [Laughter.] So when Bush said that containment doesn't work, that is not so.
Containment actually worked.

ROSE: Yes, sir.

QUESTIONER: But on the other hand when we look at how people are now finding out how the
progress that was being made in Iran and even in Libya buying things on the open market or with
the help of Pakistan. It wasn't working there.

SOROS: I say in the book--no, weapons of mass destruction in the hands of governments is a
bigger danger than we give credit to. We, you know, the bogey of terrorists gaining controlling--

ROSE: Why is that a bogey? I mean, with the open market being the way it is, why--

SOROS: You are right, I withdraw--it's not a bogey, it's a real danger, because the same way that
they were selling it to Libya they could have sold it to somebody else.
ROSE: Yes, sir?

QUESTIONER: Thank you. Mahesh Kotecha, SCIC [Structured Credit International

Corporation]. Sir, Mr. Soros, Pakistan has been a state that has helped the government, the U.S.
government, a lot. Yet it has now also found a scientist who has confessed to being a proliferator.
How does--how should the U.S. view the Pakistan government and its relationship with that
government?

SOROS: That's a very tricky situation, because Pakistan is a potentially very dangerous enemy,
if it were--if [President Pervez] Musharraf fell and the country fell into the hands of, let's say, the
Islamic fundamentalist government. So we are extremely dependent on Musharraf. And it's a
very precarious situation. And so probably we did the right thing in allowing him to sort of keep
that scandal under wraps, and just confine it to one scientist who--Dr. [Abdul Qadeer] Khan
[Pakistani scientist who admitted supplying nuclear technology to other countries]--who
confessed and was forgiven. Clearly the military was implicated. But I don't think we are in any
position to punish Musharraf.

ROSE: He's the only bet we have.

SOROS: Pardon?

ROSE: He's the only bet we have right now.

SOROS: Yes.

ROSE: Ted Sorensen. We've got to close this down. I'm sorry to the people I haven't gotten to,
but I've--am I right about that, or are we--[laughter]--oh, let's just go.

QUESTIONER: First, I'm Ted Sorensen from Paul, Weiss. Mr. Chairman, if I may just correct
one statement that you made. John Podesta's organization, which I think George may have
contributed to, is not an arm of the Democratic Party.

ROSE: I didn't say it was an arm of the Democratic Party, Ted. I said that basically that it's a
progressive institution that probably knowing where John Podesta comes from--

QUESTIONER: All right.

ROSE: --he was chief of staff for [former U.S. president] Bill Clinton--he's more likely to be a
Democrat than a Republican. [Laughter.]

QUESTIONER: Well, for legal purposes--[laughter]--members of the board of directors of the

progressive had its first conference on alternative national security, for example. Republican
Senator [Chuck] Hagel [of Nebraska], Republican Congressman [Jim] Leach [of Iowa], who also
want an alternative national security policy--
ROSE: Proud members of the moderate wing of the Republican Party.

QUESTIONER: It's an endangered species--don't embarrass them. [Laughter.] So, George, since
you are the expert on open society, could you explain how it is that the United States of America,
which has called for an open society in Iraq, has been engaged in opposing of all people the
grand ayatollah [Ali al-Sistani] who wants direct elections for the next government of Iraq in
favor of some caucus system where the United States will select the next government of Iraq?

SOROS: Well, I think I trust that actually the United Nations will recommend direct elections.
But it's very clear why it's a very tricky thing to do, because of opposition from the Sunnis who
are engaged in not just voicing their opposition, but in actually killing our soldiers and killing
Iraqis. So it's a very dangerous situation, because the Sunnis are so opposed to it.

ROSE: Yeah, I'm not sure that [U.N. envoy] Mr. [Lakhdar] Brahimi is going to recommend that
direct elections be held by the timetable in July.

SOROS: I think the timetable cannot be met.

ROSE: Right. Let me thank--lots of people here are committed to the idea of getting out of here
on time, and I'm five minutes over. Peter would want me to mention that George's book is titled
"The Bubble of American Supremacy." Please thank George Soros. [Applause.]

George Soros as Rothschild Agent

Selections by Peter Myers, July 31, 2001; update, April 23, 2004. My comments are shown
{thus}.

You are at http://users.cyberone.com.au/myers/soros.html.

It would be foolish to oppose a cause just because George Soros supports it. He backs the right to
voluntary euthenasia for the terminally ill (which I support), and heroin injecting rooms (which I
oppose).

As a strong supporter of the Democratic Party, one would expect that he backs the Kyoto
Protocol, the World Court, and Gay Marriage.

He opposes George W. Bush:

The US Is Now In The Hands of a group of extremists, by George Soros

http://www.guardian.co.uk/comment/story/0,3604,1131132,00.html.

Soros likes to be seen as a modern-day Robin Hood, donating money to "minority" causes, and
even running his own "Human Rights" NGOs. But Executive Intelligence Review says that he is
the public face of the Rothschild bankers - item #1.
"If there was ever a man who would fit the stereotype of the Judeo-plutocratic Bolshevik Zionist
world conspirator, it is me" - item #6 (Sydney Morning Herald interview, November 15, 1997,
Spectrum Features section, soon after the Asia Crisis).

George Soros chose Karl Popper as his guru; but Popper "blessed" Soros & his Open Society
Foundation by accepting the first "Open Society Prize" from him, and by delivering a lecture at
his Central European University in Prague - items #3, 4 and 5.

(1) The true story of Soros the Golem (2) George Soros' International School of Youth
Corruption, by Marek Glogoczowski (3) In June 1994, Popper gave a lecture at Soros' Central
European University in Prague (4) Soros awarded Popper the first "Open Society Prize" (5) SIR
KARL POPPER IN PRAGUE - the "Open Society Prize" Awarding Ceremony (6) George Soros
as "Robin Hood"? - SMH interview soon after the Asia Crisis (7) George Soros' "Alternative
Journalism" donations (8) Soros is one of principal investors in Carlyle Group, a defence
contractor (9) Soros gave $ to Solidarity, Charter 77, Sakharov, & the anti-Milosevic opposition
(10) Soros link to Khodorkovsky's Open Russia Foundation (11) Soros says there "an Orwellian
Truth Machine" in the US

(1) The true story of Soros the Golem Executive Intelligence Review SPECIAL REPORT April
1997.

{p. 18} George Soros is not only one of the world's leading megaspeculators; throughout his
entire life up to this day, he has served as an "errand boy" for the Anglo-American monetarist
establishment, running looting operations against the nations of Eastern Europe, as well as
attacks against the sovereignty of nations ... in September 1992, "in an eyeball-to-eyeball
confrontation with the Bank of England," Soros destroyed the British pound and the Italian lira
and made $12 billion in profit from his speculation, as he later bragged in an interview. ...

{p. 19} Using leveraged loans, Soros raised $40 billion to outspend the Germans. How he was
able to do this, remains a mystery: first, there was the fact that a speculator like Soros is able to
borrow on a margin of 5%, borrowing $1 billion for just $50 million. Second, Soros had ties to
those very British oligarchic circles (epitomized by the Rothschilds) which wanted to undermine
the Bundesbank, at the same time that they considered the pound sterling to be overvalued.
Third, Soros had extensive lines of highly leveraged credit with banks like Citibank N.A., which
is one of two custodians of Quantum. And, fourth, U.S. intelligence sources charge that Soros
has access to a 'hot money" crowd in Israel, politically associated with the Eretz Yisroel goals of
Gen. Ariel Sharon. These provide some leads as to how Soros was able to beat the Bundesbank
and destroy the ERM.

3. Soros the 'philanthropist' and his Open Society Fund

Soros is no Robin Hood. He has been using his largesse, especially since his $1-2-billion profit
from devaluing the pound and lira, to spread the sort of von Hayek "free market" economics that
has destroyed nations. The Open Society Fund, which was the first Soros foundation created in
1979, has, since December 1993, folded into the Open Society Institute-New York. This
Institute, together with an Open Society Institute-Budapest formed in the same year, and now an
Open Society Institute-Moscow, formed in 1995, are the sinews for 24 Soros national
foundations in Central and Eastern Europe, as well as South Africa and Haiti. All of these
foundations, of which George Soros is chairman, are dedicated to his concept of the open society
and a "free market economy." As he puts it: "Open society does not preclude the pursuit of self-
interest. On the contrary, in the absence of perfect knowledge, it is best left to the individual to
define what his interests are, and it is best left to the market mechanism to reconcile those
interests." Total 1994 expenditures for all Soros foundations were approximately $300 million.
The OSI-New York is primus inter pares among Soros's various foundations. In September 1993,
Soros appointed Aryeh Neier to be president of the OSI-New York. (For 12 years, Neier had
been executive director of the Soros-funded Human Rights Watch, and before that, he worked
for eight years as national director of the American Civil Liberties Union, or ACLU.) ...

4. Spreading von Hayek's free market economics

Through his Open Society Foundations, whose activities we detail below, George Soros
positioned himself, long before communism fell, as the man who, on behalf of Anglo-American
banking interests and the IMF, tried to put into place the mechanism for the economic and
political "transition" to occur in the Eastern European countries. He became a staunch advocate
of the policy of "shock therapy," which was approved by British Prime Minister Margaret
Thatcher and her close associate Sir George Bush, after the Berlin Wall had fallen. Along with
former Federal Reserve chairman Paul Volcker. who is today North American chairman of
David Rockefeller's Trilateral Commission; Citibank vice-chairman H. Anno Ruding, who was
formerly with the IMF; and Harvard Professor Jeffrey Sachs, Soros had a big hand in creating
the Polish model of "shock therapy." (As previously mentioned, Sachs drew Soros's attention
through his work in implementing IMF-style "shock therapy" in Bolivia.) In his book,
Underwriting Democracy, Soros sums up his experience with the Polish shock therapy model: "I
considered it essential to demonstrate that the political transtormation could result in economic
improvement. Poland was the place where this could be accomplished. I prepared the broad

{p. 20} outlines of a comprehensive economic program, It had three ingredients: monetary
stabilization, structural changes. and debt reorganization. I argued that the three obJectives could
he accomplished better in combination than separately ... I proposed a kind of macroeconomic
debt for equity swap,, . . I showed the plan to Geremek and Professor Treziakowski, who headed
the economic roundtable in the talks that preceded the transfer of power, and they were both
enthusiastic. ... I joined forces with Professor Jeffrey Sachs of Harvard University, who was
advocating a similar program. and sponsored his work in Poland through the Stefan Batory
Foundation ... The IMF approved and the program went into effect on Jan. 1, 1990. It was very
tough on the population, but people were willing to take a lot of pain in order to see real change.
.. . Inflation has been reduced, but the outcome still hangs in the balance because structural
adjustment is slow in coming. Production has fallen by 30%, but employment has fallen by 3%.
This means the entrenched management of state enterprises is using the respite it gained from
wage claims to improve its profit margins and keep the workers employed, There is an unholy
alliance between management and labor that will be hard to break,"
Whether we look at Poland or at Hungary, Russia, or Ukraine - in each of those cases, Soros
argued in favor of radical free market economy, privatization. and IMF conditionalities so as to
impose monetary discipline. ...

5. The Shatalin Plan: shock therapy approach for the former Soviet Union

With the backing of Soviet President Mikhail Gorbachov and Prime Minister Margaret Thatcher,
Soros reached the height of his inf1uence in the Soviet Union when he was asked to assemble a
team- including Jeffrey Sachs and Romano Prodi of Italy - to critique the Shatalin Plan, which
was based upon IMF-style "shock therapy." "I was a great supporter of the so-called Shatalin
Plan," Soros writes in Soros on Soros. "...

{p. 21} If Gorhachov had accepted the plan, he would have remained in power and the Soviet
Union could have been reformed, instead of disintegrating."

In Underwriting Democracy, Soros said of the So-

{p. 22} viet Union's heavy-industry sector: "We may view the gigantic hydroelectric dams, the
steel plants, the marble halls of the Moscow subway, and the skyscrapers of Stalinist architecture
as so many pyramids built by a modern pharaoh." In a Jan. 4, 1993 commentary in the
Washingtan Post, Soros harped on this monetarist theme:

"... The social safety net would also provide a powerful incentive to shut down loss-making
enterprises. Factories could be idled and the raw materials and energy that go into production
could be sold for more than the output."

Thus, Soros proposed shutting down the entire military-industrial base of the former Soviet
Union in order to sell its energy and raw material inputs cheaply abroad, in exchange for a few
crusts of bread. ... Since his proposal that Russia unload its raw materials and energy, through
such Soros allies as Marc Rich - fugitive financier in Switzerland - Russian raw materials
ranging from gold to aluminum have been looted, along with energy resources. In fact, Rich
dumped so much Russian aluminum on the London Metal Exchange at one point, that he halved
the price and still made a profit. This activity has fuelled the growth of the Russian Mafia.

6. The human rights mafia

One of George Soros's earliest experiments in "human rights" is a group known as Charter 77
(C77), which works closely with the Helsinki Citizens Assembly (HCA). ... C77 is part of the
interconnected web of the "human rights" mafia, which in turn overlaps the drug legalization
lobby, as exemplified in the case of Human Rights Watch, for which Soros is a prominent
financier. Human Rights Watch (HRW), and its close ally, the British Foreign Office's Amnesty
International, have established themselves as a tightly coordinated international hit squad against
nations which oppose free trade and globalization; they package their attacks as campaigns
against "human rights" violations. Human Rights Watch World Report 1995 launched a violent
attack on those individuals and governments who share "a vision that equate[s] economic self-
interest with the common good," and it labels that outlook a "mercantilist threat" to its concept of
"human rights."

{p. 32} Chapter 4 The secret financial network behind George Soros by William Engdahl

The reality behind George Soros is something other than his carefully cultivated media image. ...
George Soros is merely the visible face of a vast and very nasty network of private financial
interests, controlled by the leading aristocratic and royal families of Europe. ...

{p. 33} Rather than use the direct powers of state to achieve crucial geopolitical goals, a secret
cross-linked vast holding of private financial interests, tied to the old aristocratic oligarchy of
Western Europe, was developed. It was in many ways modelled on the 17th-century British or
Dutch East India Company models. According to knowledgeable sources, the center of this Club
of the Isles is the financial center of the old British Empire, the City of London. George Soros is
a member of what were called in medieval days Hofjuden, or "Court Jews," who were and are
run by this powerful, secretive network of aristocratic old families.

... Soros speculates in world financial markets through his secret offshore company, Quantum
Fund N.V., a wholly private investment fond called a "hedge fund." ( Hedge funds have been
identified by international police agencies as the fastest-growing outlet for illegal money
laundering today.) ... Soros's Quantum Fund is registered in Curacao, Netherlands Antilles, the
Caribbean tax haven - so he avoids paying taxes, and also hides the nature of his investors, and
what he does with their money. By moving his legal headquarters to Curacao. Soros was able to
avoid the kind of U.S. government supervision of his financial activities, that any U.S.-based
investment fund must agree to, in order to operate. The Netherland Antilles, a possession of the
Kingdom of Holland, has repeatedly been cited by the International Task Force on Money
Laundering of the OECD as one of the world's most important centers for laundering the illegal
proceeds of the Latin American cocaine and other drug traffic.

Soros has also taken care that none of the 99 individual investors who form his various funds, is
an American national. By U.S. securities law, a hedge fund is limited to no more than 99
investors of highly wealthy individuals, so-called "sophisticated investors." By structuring his
investment company as an offshore hedge fund, Soros avoids public scrutiny. Soros himself is
not even on the board of Quantum Fund. Instead, for legal reasons, he serves as official
"Investment Advisor" to Quantum Fund N.V. through his company, Soros Fund Management, of
888 Seventh Avenue, New York City. If any demand be made of Soros to reveal the details of
Quantum Fund, he can claim he is "merely its investment adviser."

... According to knowledgeable U.S. and European investigators, Soros is part of a circle which
includes Marc Rich of Zug, Switzerland and Tel Aviv, the indicted metals and commodity
speculator and fugitive; Shaul Eisenberg, the secretive Israeli arms and commodities dealer; and
"Dirty Rafi" Eytan - both linked to the financial side of the Israeli Mossad, and to the family of
Jacob Lord Rothschild.

Understandably, Soros and the Rothschild interests prefer to keep their connection hidden far
from public view, so as to obscure the powerful friends Soros can claim in the City of London,
the British Foreign Office, Israel, and the U.S. financial establishment. The myth has therefore
been created that Soros is a lone financial investment "genius" who, through sheer personal
brilliance in detecting shitts in markets, has become one of the world' s most successful
speculators. According to those who know him and have done business with him, Soros never
makes a major investment move, whether against the pound or the franc or gold, without
sensitive, high-level insider information. On the board of directors of Soros's Quantum Fund
N.V. is Richard Katz. Katz is a Rothschild man who is also on the board of the London N.M.
Rothschild & Sons merchant bank, and the head of Rothschild Italia S.p.A. of Milan. Another
Rothschild family link to Soros's Quantum Fund is Quantum board member Nils O. Taube.
Taube is the partner of the London investment group, St. James Place Capital, whose major
partner is Lord Rothschild. The London Times columnist, William Lord Rees-Mogg, is also on
the board of Rothschild's St. James Place Capital.

{p. 34} Another member of the board of Soros's Quantum Fund is the head of one of the most
controversial Swiss private banks, Edgar de Picciotto, who has been called "one of the cleverest
bankers in Geneva," ... De Picciotto is a long-time friend and business associate of Edmund
Safra, another Lebanese-born banker who controls the Republic Bank of New York. Safra's
Republic Bank today has been identified in U.S. investigations into Russian organized crime, as
the bank involved in transferring billions of U.S. Federal Reserve notes from New York to
organized crime-controlled Moscow banks, on behalf of Russian organized crime. As well, Safra
is under investigation by U.S. and Swiss authorities for laundering Turkish and Colombian drug
money. ...

George Soros's relation to the secretive international Rothschild finance circle represents no
ordinary or casual banking connection. It goes a long way toward explaining the extraordinary
success of a mere private speculator, and Soros's uncanny ability to "gamble right" so many
times in such high-risk markets. Soros has access to the "insider track" in some of the most
important government and private channels in the world. Since the Second World War, the
legendary Rothschild finance family, at the heart of the financial apparatus of the Club of the
Isles, has gone to great lengths to mislead, to create for itself a public aura of insignificance,
behind which stands one of the world's most powerful and murkiest financial combinations. The
family has spent significant sums cultivating a public image as a family of wealthy but quiet
"gentlemen," ...

{p. 35} Among other things, they have wished to become known, since 1948, as being devoted
to the cause of the new state of Israel, playing on the world's outrage over the Nazi Holocaust
against the Jews during World War II. Indeed, since British Foreign secretary Arthur Balfour
wrote his famous November 1917 letter to Lord Rothschild expressing official British
government backing for establishment in Palestine of a national homeland for the Jews, the
Rothschilds have been intimately involved in the creation of Israel. It is no surprise, therefore, to
find that today Soros and Rothschild have ties to Israeli intelligence, as well as to British and
American.

But behind their public facade as a family donating money for useful projects such as planting
trees in the deserts of Israel, N.M. Rothschild of London is at the center of various intelligence
operations ...
N.M. Rothschild is considered by City of London insiders to be one of the most influential
components of that part of the British Intelligence establishment tied to the Thatcher "free
market" wing of the Tory Party. Rothschild & Sons made huge sums managing for Thatcher the
privatization of billions of dollars of British state industry holdings during the 1980s, and today,
for John Major's government. As well, Rothschilds is at the very heart of the world gold trade,
being the bank at which, twice daily, the London Gold Fix is struck by a group of the five most
influential gold trade banks. Gold forms a major part of the economy of drug dealings globally.

But N.M. Rothschild & Sons is also implicated in some of the filthiest drugs-for-weapons secret
intelligence operations. Because it is well-connected to the highest levels of the British
Intelligence establishment, Rothschilds managed to evade prominent mention of its complicity in
one of the more sordid covert intelligence networks, that of BCCI (Bank of Commerce and
Credit International). Rothschilds was at the heart of the vast international web of money-
laundering banks used during the 1970s and 1980s, by Britain's MI-6 and the network of Lt. Col.
Oliver North and Vice President George Bush, to finance such projects as the Nicaraguan
Contras.

On June 8, 1993, the chairman of the Banking Committee in the U.S. House of Representatives,
Henry Gonzalez of Texas, made an extraordinary speech in which he charged that the U.S.
government, under the Bush and Reagan administrations, had systematically refused to prosecute
BCCI, and that the Department of Justice had repeatedly refused to cooperate with Congressional
investigations into the BCCI scandal, as well as what Gonzalez said was the intimately related
scandal of the Atlanta, Ga. branch of Banca Nationale del Lavoro (BNL), which was alleged to
have made billions of dollars in loans from the Bush administration to Saddam Hussein, just
prior to the Gulf War of 1 990-91. ...

But, what has never been identified in a single major Western press investigation, was that the
Rothschild group tied to George Soros was at the heart of the vast illegal web of BCCI.

{p. 36} ... According to these reports, among Soros's silent investors are - as mentioned above -
the reclusive fugitive metals and oil trader. Marc Rich, based in Zug, Switzerland, and Israeli
arms merchant Shaul Eisenberg, who has been identified as a decades-long member of lsraeli
Mossad intelligence, and who functions as a major arms merchant throughout Asia and the Near
East.

{p. 39} Central European University and the intellectual subversion of Central and Eastern
Europe

by Mark Burdman

George Soros -or what might be called the "George Soros spider web of institutions" - is at the
center of a vast cultural-political operation of deconstruction in Central and Eastern Europe, and
throughout the territory of the former Soviet Union. The focal point of this endeavor is the
Soros-created and Soros-patronized Central European University, based primarily in Budapest,
but with important branches in Warsaw and Prague.
The CEU represents an effort to impose what might be called 'cultural determinism" throughout
the formerly communist areas. After having lived for decades under communism, the targetted
populations are beingo offered a completely irrational notion of "freedom," the components of
which include the following "doctrines": that any attempt to affirm a scientifically grounded
intelligible truth is "totalitarian"; that the sovereign nation-state is evil, and is opposed to the
"individual"; that economic liberalism is a good thing. Typical of the mentality involved, is a
series of annual conferences on "The Individual vs. the State," co-sponsored by Soros's New
York City-based Open Society Institute and the CEU. Equally relevant was the visiting
professorship at CEU of arch-deconstructionist theoretician Jacques Derrida.

{p. 40} At least one Soros conference was co-sponsored by the New York Council on Foreign
Relations, the American branch of the Royal Institute of International Affairs. During 1996,
Soros himself greatly upgraded his work with the CFR. He headed a CFR task force, on the
theme of why the United States should increasingly subordinate itself to the supranational United
Nations Organization. He wrote a piece on the European economic and political situation, for the
CFR' s Foreign Affairs Journal. Knowledgeable sources have told EIR that Soros has pumped
considerable sums of money into the CFR. although this has not been independently confirmed.

Additionally, the nexus of foundations that turn up, at one point or another ... include the
Rockefeller Brothers Fund (most prominently), the German Marshall Fund, the Mott Foundation,
the Ford Foundation, the Mellon Foundation, and the Washington, D.C.-based Eurasian
Foundation.

Soros, Communitarianism, and the Frankfurt School

One should see Soros's deconstructionist push eastward as parallel to. and in symbiosis with,
related deconstructionist movements in the Western world. What needs to be stressed, is the
symhiosis or mutual interaction between the Soros cultural-ideological offensive in Eastern and
Central Europe, and the evolution of the movement of "Communitarianism" in the United States,
Germany, Britain, and other Western countries. At the July 12-14, 1996 First Communitarian
Summit in Geneva. Communitarian founder-guru Amitai Etzioni said: "Iam very close to George
Soros, we have been friends for 25 years." He said that Soros was very supportive of his efforts.
and he insisted that Soros's support was not strictly a question of money.

If one looks at the curriculum for the Political Science Department ot the CEU in Budapest, one
finds a course given hy Department head Janos Kic, a leading communist-era figure in Hungary's
'democracy movement" and an important individual at the CEU. The course is described thus:
"Theoretical models: utilitarianism, contractarianism, hermaneutics, substantive conceptions:
liberalism, communitarianism, civic republicanism." The section of the prospectus on Political
Science begins with a photograph of Professor Charles Taylor of McGill University in Canada,
constantly cited by the "communitarians" in their literature as being one of their leading
philosophers. Similarly, a key Soros colleague, Lord Ralf Dahrendorf of St. Antony' s College,
Oxford, is a regular contributor to the Communitarian house journal, The Responive
Community. ...
{end of EIR material}

To purchase this Report from Executive Intelligence Review: http://www.larouchepub.com/.

Although Lyndon Larouche is branded an "AntiSemite" by the Sharon-Netanyahu faction of

Zionists, his organisation is said to include a number of Jews at a high level. Executive
Intelligance Review has regularly reported on Soros' activities, especially in connection with the
"Asia Crisis". The following item is from Vol. 24, #44, October 31, 1997:

Soros's financial warfare is under increasing investigation

by Gail G. Billington and Cynthia Rush

George Soros is facing new, possibly criminal investigations into his hostile hedge-fund-centered
speculation against Asian currencies and stock markets. Despite the best efforts of the
mouthpieces of Wall Street and London to spiff up his public image, as the contagion of Soros-
style financial hit-and-run attacks spreads to Taiwan and Hongkong, and continues to devastate
the weakened nations of Southeast Asia, these nations are aggressively organizing, bilaterally,
regionally, and internationally, to put this looting on the agenda of every major intemational
meeting through the end of 1997.

Nor are Soros's problems limited to Asia. His name dogged President Clinton throughout his tour
of three Ibero-American nations on Oct. 12-18; and, thanks to EIR, public debate on Soros's
sordid activities erupted in Argentina, during a press conference with U.S. White House drug
policy adviser, Gen. Barry McCaffrey (ret.). The President didn't mention Soros's name in
public, but Argentine figures who met with Clinton privately, said he expressed concern that
Asian-style monetary instability might erupt in Argentina and throughout Ibero-America.

The attacks on Soros, launched by Malaysian Prime Minister Dr. Mahathir Bin Mohamad at the
Association of Southeast Asian Nations (ASEAN) summit in late July, and, again, with renewed
pungency, at the International Monetary Fund and World Bank Annual Meeting in Hongkong in
September, have served as a rallying cry that is now being echoed among "emerging market"
nations worldwide. The intensity of this momentum increases in tandem with the spread of the
financial hemorrhaging, and the view that the crisis is spinning out of the control of the IMF.

Following the Oct. 20-23 hedge-fund assault that sank the Hongkong exchange 23%, and parallel
attacks which forced Taiwanese authorities to float their currency on Oct. 17, Denmark's
Jyllands-Posten headlined its report on Oct. 22, "The Taiwanese Financial Oversight Board Is
Opening Up Investigations Against George Soros." The lead article in the paper's two-page
coverage reported, "Taiwan and South Korea have become victims of the unpredictable market
forces which to a large extent are controlled by the computers of secret funds, hunting paper-thin
exchange margins and, again, the American multi-speculator and political philanthropist George
Soros is in the focus.... The Futures and Securities Commission (FSC) of Taiwan has now
opened up an investigation into the transactions of George Soros's multibillion-dollar fund on the
Taiwanese futures exchange and on the Singapore Monetary Exchange, SIMEX. The FSC thinks
that the speculations of Soros's fund was one of the primary reasons for the panic sellings which
Friday last week and Monday this week, cost almost 15% on the stock exchange index." An FSC
spokesman says, "Mr. Soros has put our markets under extraordinary pressure through his
speculative trading on the SIMEX. Our investigations have not been completed yet, and we have
not yet decided what actions to take."

The paper reported that on Dec. 2, the finance and economics ministers of the Asian nations will
meet in Japan to draft the charter of the Asian Monetary Fund (AMF), the $100 billion fund
proposed by Japan at the IMF meeting in September, with the support of China, South Korea,
Taiwan, ASEAN, and with a positive nod from U.S. Treasury Secretary Robert Rubin. During
bilateral talks in Tokyo between Thai officials and their Japanese allies and creditors in early
October, Thai Finance Minister Thanong Bidaya told reporters, "The purpose of the Asia fund is
to round up the funding requirements and the contributions of Asian countries in case of a crisis,
and it is a good idea. But somehow it has been delayed. Why not put it in the APEC forum? Why
just keep it in Asia? The IMF will not have enough to deal with any crisis by itself, and [the
AMI;l is an effort to prepare something solid."

Japan's Deputy Finance Minister Eisuke Sakakibara toured Asian capitals during Oct. 14-22 to
discuss the AMF idea, which several leaders have said could be used to blunt the effect of crises
caused "by accident." As Thanong Bidaya's comments suggest, the AMF, which was the subject
of discussions in 1995 between influential Japanese circles and ElR's Founding Editor Lyndon
LaRouche, will not solve the crises hitting these countries today. It would, however, blunt the
worst effects of IMF "conditionalities" in the transition to complete overhaul of global monetary
arrangements.

Soros on the hot seat

There has been no letup in organizing on this theme since the IMF Annual Meeting. Malaysia's
Dr. Mahathir continues to act as a spokesman in this effort, taking up the subject during his Sept.
25-Oct. 5 tour of four Ibero-American nations (see EIR, Oct. 10 and 17, 1997), where, despite a
delayed reaction of the press and institutions, his message re-emerged in headline stories in
Venezuela and Brazil, which greeted President Clinton upon his arrival in those nations. The
stories linked Dr. Mahathir's call for reining in the speculators, to the AMF, and to LaRouche's
Urgent Appeal for a New Bretton Woods Monetary agreement. ...

{end of EIR material}

(2) George Soros' International School of Youth Corruption, by Marek Glogoczowski

(The slightly enlarged version of speech delivered by Marek Glogoczowski during the EU(RO)-
skeptic Youth Camp held at Ljublana, Slovenia, Sept. 26-27, 2001.)

George Soros is a businessman-philanthropist, whose activities are known to professionals

worldwide. In USA he operates the Institute of Open Society, in countries belonging to the
former Soviet Block he operates a number of similar foundations, which in case of Poland holds
the "royal" name of Bathory Foundation. These "philanthropist" institutions have ? or had ? a
substantial influence on composition of consecutive post-communist governments in Eastern
Europe, especially governments of big countries - in Poland, with George Soros Fund are linked
three first "independent" Prime Ministers (Mazowiecki, Bielecki, Suchocka); in Russia to Soros'
"boys" belong such ardent reformers as PM Gajdar, Kirylenko and Niemcov. In his book
"Underwriting Democracy" of 1993, George Soros claims to be ? together with his associate,
professor Jeffrey Sachs ? a true Funding Father (or rather a Godfather) of all these "Protocols of
Zion" styled reforms, which we had to suffer in Eastern Europe.

Today, with Soros Fund is linked in Poland the most influential journal "Gazeta Wyborcza" ?
which journal already in 1989 paved the way for the "Solidarity" electoral victory over PZPR,
the declining at that time Polish Communist Party. In Slovakia with Soros' Invisible Empire is
linked the TV station "Markiza", which helped to remove, during 1998 elections, the supposedly
undemocratic Meciar's government. Inside Serbia the Soros Fund operated in Kosovo, until 1999
NATO bombings, a Civil Center in Pristina, which fought for the national independence of the
local Albanian majority, and in Belgrade it still operates the famous 'Radio B-92", which played
a substantial role in anti-Milosevic's student riots in 1996/7. (And than, in October 2000, it
helped the "civilized" ? i.e. bulldozer and Parliament fire assisted ? destruction of the last
socialist regime in Europe.) At present many of Soros Fund linked intellectuals are in key
positions of institutions controlling economies and cultures of former East Block countries, and
in Budapest this Foundation operates a whole International University of Central Europe. George
Soros plays also an important role in USA foreign politics, already in 1980 he organized,
together with his close associates, Secretaries of State Zbig Brzezinsky and Mad Albraight, a
National Endowment for Democracy (NED) fund, which is a kind of joint venture of CIA and
private business, greed oriented, activities.

The best summary of George Soros humanitarian activities in South-East Europe gave Gilles
d'Aymery in an article "Mapping the Human Rights Crowd in the Balkans" published on July 23,
2001 in the Jugoinfo vitrine:

"Behind the veil of legitimacy and humanitarian concerns can be found the same powerful
people and organizations such as the Open Society Institute of the billionaire and - as always
characterized - philanthropist, George Soros, the Ford Foundation, the United States Institute of
Peace, the National Endowment for Democracy and many more, financing and using a maze of
well known NGO's such as Human Rights Watch, Amnesty International, the International Crisis
Group, etc., as well as more obscure entities ... But, among all of them, shining as the Southern
star, is George Soros who, like an immense Jules Verne octopus, extends his tentacles all over
Eastern Europe, South-Eastern Europe, the Caucasus as well as the republics of the former
Soviet Union. With the help of these various groups (it is possible) not only to shape but to
create the news, the agenda and public opinion to further aims which are, in short, the control of
the world, its natural resources and the furtherance of the uniform ideal of a perfect world polity
made in America."

Despite such richness of this philanthropist activities, the general public hardly knows his name.
During our meeting at Ljublana, young, 20 ? 25 years old, EU sceptics from several countries
virtually ignored the name of Soros, my equal age, 59 years old Swiss German friend from
Zurich wrote me that in his well informed country perhaps 2 percent of people knows about this
billionaire. And in Poland surely no more than 10 percent of adult population knows who was
the true author of widely despised "Balcerowicz's reforms". Despite this "educated" public
ignorance, Soros' "missionary" role is perceptible at the planetary scale: according to Schiller's
Institute data, the "man of Soros" in the European Commission is professor Romano Prodi, in
Malaysia our philanthropist is officially searched for enormous financial frauds, and in Italy he is
officially considered persona non grata for similar reasons. We can take for granted that these
last facts are only summits of a whole "iceberg" of fraudulent affairs in which our billionaire-
philanthropist-politician is ? or was ? engaged in. The mystery of his success in world-wide
speculation George Soros explained in a surprisingly honest statement, during an interview he
gave to the Swiss weekly "L"hebdo" of May 1993. He said "I SPECULATE ON
DISCREPANCY BETWEEN THE REALITY AND THE PUBLIC IMAGE OF THIS
REALITY, UNTIL A CORRECTIONAL MECHANISM OCCURS, WHICH APPROACHES
THESE TWO." It is evident that a skillful speculator is not used to wait passively until such
discrepancy occurs. To the contrary, with his "creativity of an investor" he purposefully enlarges
the gap between the 'real reality' and its public image. (To put this statement into a plain
language, a good speculator, knowing principles of the stock exchange, is feeding the public with
the fake information ? or, in more polite words, with DISINFORMATION ? in order to gather
personal profits.) The "liberal' idea of a purposeful construction of a fake image of the world ? in
order to get the political power ? is also expressed in Soros' book "Underwriting democracy' (in
French version "Sauver la démocratie a l'Est") published in 1993. He writes there for example:
"In a normal state of affairs it is necessary that a movement (a political one, but also commercial,
scientific and religious ones ? M.G.) is pushed sufficiently far, before forces occur, which are
able to correct the deformation (of image of reality) which was at its base." Putting this statement
once again into a plain language, it means that the more aggressively a person ? or a group, a
coterie or a Mafia ? is able to lie-up the image of reality, the longer this group is expected to
remain in power. (The same maintained Goebbels 70 years ago: the bigger the lie is, the better it
holds.)

George Soros even explains in detail how the elaborated by him program of "Americanization' of
Eastern Europe works. He informs in "Underwriting Democracy" that behind his philanthropic
idea of creation of Open Society Foundations was "the creation of an international web (...) at the
heart of which will be the computerized base of (personal) data, which enable the Western
Multinational Societies to find candidates, which they are searching for"g'. In short, all these
Soros-Fundation educated and kept in computer memories young men and women are prepared
to fulfill functions of so-called "influence agents', which behave in a way similar to that of
Japanese geishas. These Young Urban Professionals, thanks to their fluent knowledge of
languages and multiple, delicate social contacts with bureaucracy in target countries, facilitate
the implementation in their homelands not only of Western Multinationals, but also of Western
sub-cultures and Western habits of consumption of appropriate, personality enriching,
commercial goods. For the first time I heard that Soros Fundation corrupts young people, from
the mouth of Piotr Ikonowicz, about twenty years younger than me leader of the Polish Socialist
Party. How does this corruption is organized in detail? In general it takes the form of an ordinary
training very similar to the one practiced while teaching young dogs to bark at a "stranger'. In
case of 'education' of "Soros youth" (SorosJugend) the "food" necessary for such training
consists of all these computers, lavish scholarships, luxury cars and invitations for dinners and
seminars in four stars hotels. In general this was/is sufficient to bribe not only the young but also
adult "intellectuals" in a target country. An example of this gave few years ago the former
finance minister of Poland, Grzegorz Kolodko, in a Warsaw satirical "Nie" weekly. He reported
there the story how a "well known investor' (his name he dared not to disclose) was able to buy,
only at the cost of few dozens of millions of dollars spent for Warsaw's "elite", the Polish Bank
Handlowy having the value of 1,5 billion of dollars.

The specific task of all these Bathory Foundation trained 'watchdogs' of Open Society consist of
"barking" (in tune with Their Master's Voice), against all individuals which may endanger the
Private Property of 'feeding' them Lord. Observing the behavior of journalists linked with this
'watchdog' formation, one finds easily that all their vigor and sense of humor is exploited for the
task of continuous, monotonous defamation of national leaders, which have an authentic, popular
support. (This was the case, for example, of Soros/NED sponsored Students in Market Theology
"Otpor" movement in Serbia; the similar baiting of Lukashenko we witness today in Belorussia.)

Once competent people are removed from key posts of a target country, its pillage, by the gang
of "Global Investors", can proceed at full speed, thanks to utter cretins (like Walesa or Buzek in
Poland), or opportunists (like Djindzic in Serbia), which get installed at commands of the state. It
is evident that in order to obtain the public (i.e. media) consent for such 'reforms', all more
observant and honest people have to disappear from the public life. Usually it is sufficient to
associate them with despised (by "Soros' Family", of course) 'communists, fascists, reactionaries
and populists'; but in particular cases it becomes necessary to kidnap them to the Hague's ICTY.
(Or simply, to murder them by the 'invisible death squads" ? inside Serbia, after Milosevic was
ousted from power, about 20 personalities were liquidated in this way.) The best, and at the same
the shortest description of the general direction of all "reforms" we have in Eastern Europe was
given to me, in May 1999, by an old professor of Slavic literature, Vladimir Bozkov from
Skopie, Macedonia. At that time he witnessed nearly every day how B-52 bombers fly towards
his former homeland. Impressed by this techno-spectacle he told me, during our meeting at
Moscow, "Oni chotiat' ubit' vsiech umnych ljudi": (THEY WANT TO KILL ALL THINKING
PEOPLE). I think that this is the essential goal, which our beloved "Global Investors" are aiming
at.

The very ethics of "misinformation as a tool of survival and conquest" belongs to the
"aristocratic" pattern of behavior, which spontaneously developed among Stock Exchange
players. It is already in 1813 brothers Johannes and Nathan Rotschild, by a skillful, gossiped at
London's & Paris Stock Exchanges, lie about the outcome of the Waterloo battle, were able to
earn in one "scoop" 40 million francs, making out of their family the richest Banking Group in
Europe. (By the way, according to Schiller's Institute, George Soros is associated with this
famous Rotschild Banking Group.)

Here I come to the point, which I want to stress in the conclusion. Already in the Antiquity the
Greek philosopher Socrates argued that (in contradiction with the Biblical version of original sin)
people are not evil by their nature, but they are becoming evildoers out of their ignorance. The
Global Stock Exchange is by its very nature the place where the MISINFORMATION (or the
production of ignorances) has become the principal source of personal enrichment of 'Investors'.
By an imitation of Stock Exchange 'Super Stars' like George Soros, every day more and more
numerous 'young wolves of interest' are polluting the Planet with lies supposed to bring them
their selfish, pecuniary happiness. It is precisely from Stock Exchanges radiates in all directions
the Lie ? and thus automatically also the Evil and Ugliness ? which has become the ever more
visible symbol of Our Civilization. (By the way, these B-52 bombers, which 2,5 years ago
impressed so much professor Bozkov from Skopie, I can see at present over Tatra Mountains,
during their return to Germany from antiterrorist missions in Afghanistan.)

Stock Exchanges and bourgeois Banks were permitted to operate only in 16 century Europe by
our religious reformers, dreaming about 'New Jerusalem'. We can trace thus the origin of these
modern 'Temples of Lie', back to the Old Jerusalem's Temple of Merchants two thousand years
ago. At that time Jewish dissidents considered their Temple of Hypocrites as "brigands cavern".
Considering this last expression as an 'approaching the reality' description, we can take for sure
that nothing will turn for a better in our Brave (observe the military stout of Americans!) World
until we kick Global Investors out of our homelands.

MG, November 2001

{end}

(3) In June 1994, Popper gave a lecture at Soros' Central European University in Prague

Sir Karl Popper

http://www.osi.hu/debate/karlpopp.htm

Sir Karl Popper, for whom the Karl Popper Debate Program is named, is well known for his
important contributions to the philosophy of science, political theory, and sociology. With his
1945 book The Open Society and Its Enemies, Popper is responsible for popularizing the notion
of "open society" a concept which would come to have a significant influence on the philosophy
that underpins George Soros's philanthropic activities.

Simply stated, an open society is a form of social organization based on the recognition that
nobody has a monopoly on the truth, that different people have different views and interests, and
that there is a need for institutions to protect the rights of all people to allow them to live together
in peace. As becomes apparent from this definition, debate is an integral component of an open
society.

{What about the Nazi Holocaust as dogma, i.e. beyond debate; is this consistent with "open-
ness"? Not only is debate a jailable offense, but the archaeological excavation of human remains,
which might resolve the issue, is rejected}

... It was while pursuing a Masters degree at LSE that George Soros first came into close contact
with Popper and his ideas. While he did not study directly under the philosopher, Soros
submitted several essays to Popper for his consideration and review. In 1962, well after he had
finished his studies, Soros wrote a philosophical treatise entitled, "The Burden of
Consciousness." Soros sent this work to Popper, who was extremely supportive and encouraging
of Soros's ideas. Their association continued, growing closer over the years. In June 1994,
Popper delivered a lecture at the Central European Univeristy in Prague, which Soros had
established as a intellectual center to promote the ideals of open society in Eastern Europe and
the former Soviet Union. .... {end}

(4) Soros awarded Popper the first "Open Society Prize"

(5.1) (What Soros Really Wants)

http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=19657825

... The "Open Society Prize" Awarding Ceremony: The first winner of the Prize, Sir Karl Popper
is decorated by George Soros who delivers a short address on the occasion. Sir Karl was by the
92 years of age and would die several months later.

(5.2) http://www.nationmaster.com/encyclopedia/Karl-Popper

Article last updated: 2:56pm, December 23, 2003 Database last updated: 3:20pm, January 09,
2004

Karl Raimund Popper (July 28, 1902 - September 17, 1994), was an Austrian-born, British
philosopher of science. ...

Born in Vienna in 1902 to middle-class parents of Jewish origins, Karl Popper was educated at
the University of Vienna. He took a Ph.D. in philosophy in 1928, and taught in secondary school
from 1930 to 1936. In 1937, concerns about the growth of Nazism led him to emigrate to New
Zealand, where he became lecturer in philosophy at Canterbury University College,
Christchurch. In 1946, he moved to England to become reader in logic and scientific method at
the London School of Economics, where he was appointed professor in 1949. He was knighted
by Queen Elizabeth II in 1965, and was elected Fellow of the Royal Society in 1976. He retired
from academic life in 1969, though he remained intellectually active until his death in 1994. He
was invested with the Insignia of a Companion of Honour in 1982.

(5) SIR KARL POPPER IN PRAGUE - the "Open Society Prize" Awarding Ceremony

(SUMMARY OF RELEVANT FACTS WITHOUT COMMENT) Czech

http://www.lf3.cuni.cz/aff/p1_e.html

Autumn 1992

Professor Hoeschl invites Sir Karl Popper to Prague. Sir Karl postpones the visit till Spring 1993
explaining that at the original date he is engaged in Kyoto where he should be awarded a
prestigious prize.

Spring 1993
Sir Karl Popper's assistant, Melitta Mew, excuses Sir Karl for not coming to Prague due to
possible health hazards.

Winter 1993-94

Professor Ernest Gellner, Central European University, Prague College, invites Sir Karl to give a
seminar to staff and students at the Prague College. Sir Karl was delighted to accept. After
coordinating his intentions with the Organizational Division of Charles University Rectorate,
Professor Hoeschl renewed the invitation which Sir Karl was delighted to be in a position to
accept.

26.4.1994

Professor Hoeschl invites American financier, George Soros, together with Sir Karl, for a private
dinner given by the 3rd Faculty of Medicine, and for a ceremony in Carolinum.

Monday, 23. 5.1994,

13.50

Arrival to Prague on a British Airways Flight, No. 856. Sir Karl Popper and his companions are
welcomed by Prof. Hoeschl Dean of the 3rd Faculty of Medicine, Professor Jiri Musil, Academic
Director of the Central European University in Prague, and Professor Richard Rokyta, Deputy
Dean for Foreign Relations, the 3rd Faculty of Medicine.

16.00

In the Palace Hotel, Sir Karl receives Marie Heligandova, Documentary Film Company Director.

Tuesday, 24. 5.1994, 10.00

Cars of the Prague Psychiatric Centre provide a sightseeing tour around Prague. Participants: Sir
Karl, Melitta Mew, Mr. Mew, Dr. Libiger. Sir Karl expresses the wish to visit the grave of Tycho
Brahe and the house in which Johann Kepler had once lived. He then visited the Tynsky Church
and Charles Bridge. The Johann Kepler dwelling was unpresentable.

14.00

President Havel receives Sir Karl for an almost 40-minute talk at the Prague Castle.

Wednesday, 25. 5.1994, 9.50

George Soros arrives at Ruzyne Airport on a private jet.

11.00
Sir Karl Popper and Professor Leopold Pospisil are awarded Honorary Doctorates in the
Carolinum.

12.00

Sir Karl meets the Rector of Charles University; Prince Karl Schwarzenberg; George Soros; and
other distinguished personalities. Wednesday Afternoon Sir Karl gives several interviews to
newspapers and the Documentary Film Company.

19.00

Red Wheel Restaurant A dinner served for an intimate circle that included Sir Karl Popper, Mr.
George Soros, Melitta Mew, Mr. Mew, Professor Hoschl, Professor Musil, Professor Rokyta, Dr.
Libiger. What Sir Karl appreciated most were sweet pancakes. Mr. Soros ordered roast duck.

Thursday, 26.5.1994, 10.30

A panel discussion (seminar) held by Sir Karl Popper at the Prague College of the CEU.

11.00

The "Open Society Prize" Awarding Ceremony: The first winner of the Prize, Sir Karl Popper is
decorated by George Soros who delivers a short address on the occasion.

Friday, 27.5.1994, 14.50

Departure of Sir Karl on the British Airways Flight, No.857.

31.5.1994

Extract from Melitta Mew's fax message addressed to prof. Hoeschl: "Our minds are still aglow
with the most& wonderful memories of our trip to Prague. The reception you and your
colleagues gave Sir Karl, my husband and myself was truly heart-warming and will never be
forgotten."

Thursday, June 2, 1994

Lidove Noviny, No.129, page 1: "American financier, George Soros, acquires archives of Radio
Free Europe: George Soros has instructed his companies to start investing in Central and Eastern
Europe. Federal Radio Television Administration accepted his offer that he would take over and
fund the archives of Radio Free Europe. G. Soros intends to move the archives to Prague; he
plans to spend U.S.$ 15 million on their maintenance and modernizing scheme."

(6) George Soros as "Robin Hood"? - SMH interview soon after the Asia Crisis

THE MAN WHO SOLD THE WORLD ... AND THEN GAVE AWAY THE PROFITS
by Jennifer Hewett,

Sydney Morning Herald, November 15, 1997, Spectrum Features section

{Spectrum p. 1} GEORGE Soros admits he always had exaggerated expectations of himself,

even an imperilled Jewish kid in wartime Hungary. "It's only recently that reality has caught up
with my expectations," he says.

And then some. Reality to Soros turns out to be the rest of the world's idea of fantasy. Imagine
giving $1 million to a worthy cause. Or perhaps $10 million, $100 million? Soros can and does-
about $US350 million ($500 million) worth every year.

Imagine taking on the Bank of England by betting against the value of the pound and winning.
Soros could and did in 1992 - making $USl billion in the process.

Imagine using the global free market to make billions several times over by speculating and then
warning darkly that capitalism and free markets are increasing threats to democratic society.
Soros does just that whenever he gets a chance.

{Spectrum p. 6} He is 67 now, with a shock of often tousled grey hair, a mobile, lined face and a
still strong Hungarian accent in which he speaks with great firmness and certainty.

Modesty is not at issue. He is not really joking when he speaks about his early "messianic
tendencies". He was too vain, he once said, to be just rich.

The result allows one unlikely individual to have an impact on people all around the world. The
twin foundations of that impact are to be found in two offices in central Manhattan. One is Soros
Fund Management, which operates hedge funds with $US 18 billion in assets. The basic
rationale of the hedge funds is to make huge and highly leveraged bets on movements in stocks,
currencies bonds and commodities - often going against the trend.

A few blocks away is the headquarters of the Soros philanthropic network, operating under the
name of the Open Society Institute.

Until recently the money making and spending operations were located in rather shopworn floors
of the same building. But it is the Open Society staff who have just moved into new offices.

The reach of the philanthropic and market networks is so vast and so radically different that it is
hard to grasp they both come from the brain of one man.

Consider Soros's most recent big donation. He is planning ts give $US300 million to $US500
million - count it - to Russia over three years, He wants it to go health care, particularly for
mothers and babies, education, cultural institutions and job training for those laid off by the now
decrepit Soviet military. That compares with about $US100 million in foreign aid to Russia from
the US Government last year.
But the Soros causes are remarkable in diversity as well as size. They range from $US50 million
in humanitarian t aid for Bosnia to $US20 million to educate doctors and improve the experience
of dying in the US to $USI million to provide scholarships for Burmese dissidents and broadcast
radio programs into Burma.

There are now Soros foundations operating as a network of autonomous organisations with local
independent boards of directors in 30 ountries. Not to mention any number of programs that fund
universities and scientific and cultural programs across regions. ...

In a cover story in The Atlantic Monthly last January, he said the spread of market values into all
areas of life was endangering democratic society. "The main enemy of the open society, I
believe, is no longer the communist but the capitalist threat," he said. ... {soros2.html}

Mahathir was not the first to accuse him of being involved in some form of grand Jewish plot.
He has become a target for the paranoias of extremists, an example, he says, of the truth that no
good deed goes unpunished.

"If there was ever a man who would fit the stereotype of the Judeo-plutocratic Bolshevik Zionist
world conspirator, it is me," he says with irony - and well before Mahathir had even thought
about the topic.

In fact, he is noticeably neutral on the subject of Israel and says has no interest in Zionism. His
mother, he says, was ashamed of being Jewish and quite anti-Semitic herself. Soros does not give
to Jewish or Israeli causes and, although he supports the Middle East peace process, he says
Israel should be dealing with Hamas rather than the PLO because Arafat has lost the support of
the Palestinians. ...

{Spectrum p. 7} The good works of George Soros

Foundations or Institutes In: Albania, Armenia, Azerbaijan, Bosnia, Bulgaria, Croatia, Czech
Republic, Estonia, Georgia, Gumatamala, Haiti, Hungary, Kazakhstan, Kyrgyzstan, Latvia,
Lithuania, Macedonia, Moldova, Mongolia, Poland, Romania, Russia, Slovakia, Slovenia, South
Africa, Tajikistan, Ukaine, Uzbekistan, Yugoslavia.

In the US, Soros supports efforts to: ¥ Assist victims of crime and find altematives to high jail
populations. ¥ Help legal immigrants obtain full citizenship and rights. ¥ Broaden debate on drug
policy and suggest alternatives. ¥ Improve maths and algebra education in inner-city schools. ¥
Ease the experience of dying and educate doctors on the needs of the terminally ill and their
families. ¥ Solve problems of poverty, crime, drug-abuse and poor education in inner-city
Baltimore. ¥ Reform election campaign financing.

Overseas, projects supported include: ¥ English language schools, mainly in central and eastern
Europe. ¥ Expansion of Internet use, from public centres in Mongolia to an independent
Pslaestinian web site to computer equipment for Burmese dissidents in Thailand. ¥ Promotion of
contemporary artistic culture. ¥ Training Courses for publishers and booksellers, and better
Iibraries and training for librarians. ¥ Special education for children vith disabilities or from
underprivileged backgounds. ¥ Education for Burmese refugees and radio broadcasts into Burma
in support of the democratic movement of An Suu Kyi ¥ Provision of early warning of forced
migrations and response to refugee emergencies. ¥ Science education in Russia, Ukraine and
Georgia. ¥ Raising public awareness of landmines and introduction of an international ban. ¥
Production of films and videos on contemporary human rights issues. ¥ Development of
independent media, particularly radio, in Southern Africa. ¥ Various human rights and civic and
cultural groups. ¥ Aid to Russia for improved health of mothers and babies, education, culture
and job training for ex-military. ¥ University eductaion for students throughout central and
eastern Europe. ¥ Study of political, econornic and social transition and privatisation policies in
eastem Europe. ¥ Training and intern programs in the US for eastern European professionals.

(7) George Soros' "Alternative Journalism" donations

Date: Wed, 21 Jan 2004 06:16:59 +1000 From: "makichris" <chrispaul@netpci.com>

George Soros' "Parallel Anti-War Media/Movement"

by bob feldman

http://www.questionsquestions.net/feldman/soros.html

Perhaps Amy Goodman should finally make full disclosure of all foundation grants that either
the Pacifica Foundation, WBAI, Democracy Now, WBAI, KPFA, the Indymedia Centers, Free
Speech TV, Deep Dish TV, the Pacifica Campaign or the Downtown studio from which she
broadcasted in 2000 and/or in 2001 have received since 1992?

Regarding George Soros' U.S. alternative media gatekeeping/censorship network, the following
recap might be of use to U.S. grassroots anti-war activists whose political work is not being
subsidized by Establishment Foundations such as Billionaire Global Speculator George Soros'
Open Society Institute:

1. In 1999, George Soros's Open Society Institute gave a $50,000 grant to the Nation Institute "to
support project to improve performance and reach of Radio Nation, weekly public radio news
and commentary program." George Soros' personal advisor for politics, Hamilton Fish III, is also
a top executive at The Nation Institute.

2. In 1999, George Soros's Open Society Institute gave a $50,000 grant to the National
Federation of Community Broadcasters, which used to be headed by former Pacifica Foundation
Executive Director Lynn Chadwick.

3. In 1999, George Soros's Open Society Institute apparently gave a $125,000 grant to the
Citizens for Independent Public Broadcasting [CIPB} group (on whose board sits
FAIR/CounterSpin co-host Janine Jackson) "to cover administrative and start-up costs for
launching national campaign entitled Citizens for Independent Broadcasting."
4. In 1999, George Soros's Open Society Institute gave a $78,660 grant to Don Hazen's Institute
for Alternative Journalism/IMI/Alternet in San Francisco "to fund start-up of Youth Source, a
youth Web site which will be part of a larger web poral, Independent Source."

5. In 1999, George Soros's Open Society Institute gave a $126,000 grant to the International
Center for Global Communications Foundation "toward launch of Media Channel, first global
media and democracy supersite on the Internet."

6. In 1999, George Soros's Open Society Institute gave 4 grants, totalling $118,000, to the
Internews Network.

7. In 1999 George Soros's Open Society Institute gave a $12,000 grant to Downtown Community
Television Center. (There's a possibility that this was the group which provided studio facilities
for Democracy Now after the 1999 WBAI Christmas coup).

8. In 1999, George Soros's Open Society Institute gave a $150,000 grant to the Fund for
Investigative Journalism. (Is this the same media group which provided some funding for
KPFA's Dennis Bernstein during the 1990s?) 9. In 1999, George Soros' Open Society Institute
gave a $35,000 grant to American Prospect magazine.

10. In 1999, George Soros's Open Society Institute gave a $30,000 grant to the Center for
Defense Information.

11. In 1999, George Soros's Open Society Institute gave a $75,000 grant to the Center for
Investigative Reporting.

12. In 1999, George Soros's Open Society Institute gave 4 grants, totalling $220,000 to the
Committee to Protect Journalists--on whose board sits NATION magazine co-owner and
editorial director Victor Navasky.

13. In 1999, George Soros' Open Society Institute gave 2 grants, totalling $272,000, to the
"Project on Media Ownership."

14. In 1999, George Soros' Open Society Institute gave a $100,000 grant to the Public Media
Center in San Francisco.

15. In 1999, George Soros's Open Society Institute gave a $73,730 grant to the dance company
of a Pacifica Network News staffperson's domestic partner.

16. In 1999, George Soros' Open Society Institute gave a $50,000 grant to Youth Radio in
Berkeley.

17. In 1999, George Soros's Open Society Institute gave 2 grants, totalling $393,000, to the Tides
Foundation.

18. George Soros's Open Society Institute recent gave a $102,025 grant to Radio Bilingue.
19. George Soros's Open Society Institute has also apparently been providing funds to subsidize
a "parallel left" section of the prisoner solidarity movement. Critical Resistance, the Prison
Moratorium Project, the Ella Baker Center for Human Rights and The Sentencing Project are all
being funded by George Soros's Open Society Institute.

20. In 2001, George Soros's Open Society Institute also gave grants to help subsidize the Jews
for Racial and Economic Justice group, the Malcolm X Grassroots Movement group, the Million
Mom March group and the Center for Investigative Reporting.

21. After 9/11, George Soros's Open Society Institute gave a $75,000 grant to the American Arab
Anti-Discrimination Committee Research Institute, a $250,000 grant to the ACLU and a grant to
the LCEF group on whose board Mary Frances Berry used to sit.

Billionaire Soros's War Stock Investments

Like the former Corporation for Public Broadcasting Chairperson who owns a major chunk of
the Columbia University-linked Nation magazine, Clinton-Gore Campaign Fundraiser Alan
Sagner, the global speculator whose Open Society Institute gave KPFA a $40,000 grant in 1995
has some interesting special economic interests.

In his 1990 book The New Money Masters, John Train has a chapter entitled "George Soros:
Global Speculator" in which he indicated how Soros obtained his surplus wealth:

"Soros...has always had partners on the management side, such as Jim Rogers...In 1969, aged 39,
he [Soros] ...joined with Jim Rogers to found Quantum Fund... "It is not registered with the
SEC...so the shareholders are foreigners, mostly Europeans...It engages in multidirectional
international speculation in commodities, stock, and bonds...Thanks to Rogers, the fund was one
of the first to recognize the investment merits of defense stocks." According to The New Money
Masters book, Soros's business partner in the 1970s and early 1980s, Jim Rogers, "became the
largest outside shareholder of Lockheed in 1974."

As of 1989, the portfolio of Soros Fund Management Equity Holdings included $27 million
worth of Boeing stock, $106 million worth of RJR Nabisco tobacco company stock, $3.5 million
worth of Lockheed stock, $2.2 million worth of CBS stock, $2.3 million of Time Inc. stock,
$12.8 million worth of Warner Communications stock and $6.5 million worth of Wal-Mart
stock.

A Senior Fellow at the Soros Foundation's Open Society Institute who is a former president/ceo
of Twin Cities Public Television in St. Paul, Minnesota "is aiding the Open Society Institute in
considering issues of professionalism in media and related public policy questions," according to
the Soros Foundation/Open Society Institute website.

{end}

(8) Soros is one of principal investors in Carlyle Group, a defence contractor

George Soros

NS Profile

NEIL CLARK / New Statesman 2jun03

http://www.mindfully.org/WTO/2003/George-Soros-Statesman2jun03.htm

The billionaire trader has become eastern Europe's uncrowned king and the prophet of "the open
society". But open to what? George Soros profiled by Neil Clark

George Soros is angry. In common with 90 per cent of the world's population, the Man Who
Broke the Bank of England has had enough of President Bush and his foreign policy. In a recent
article in the Financial Times, Soros condemned the Bush administration's policies on Iraq as
"fundamentally wrong" - based as they were on a "false ideology that US might gave it the right
to impose its will on the world".

Wow! Has one of the world's richest men - the archetypal amoral capitalist who made billions
out of the Far Eastern currency crash of 1997 and who last year was fined $2m for insider trading
by a court in France - seen the light in his old age? (He is 72.) Should we pop the champagne
corks and toast his conversion?

Not before asking what really motivates him. Soros likes to portray himself as an outsider, an
independent-minded Hungarian emigre and philosopher-pundit who stands detached from the US
military-industrial complex. But take a look at the board members of the NGOs he organises and
finances. At Human Rights Watch, for example, there is Morton Abramowitz, US assistant
secretary of state for intelligence and research from 1985-89, and now a fellow at the
interventionist Council on Foreign Relations; ex-ambassador Warren Zimmerman (whose spell
in Yugoslavia coincided with the break-up of that country); and Paul Goble, director of
communications at the CIA-created Radio Free Europe/Radio Liberty (which Soros also funds).
Soros's International Crisis Group boasts such "independent" luminaries as the former national
security advisers Zbigniew Brzezinski and Richard Allen, as well as General Wesley Clark, once
Nato supreme allied commander for Europe. The group's vice-chairman is the former
congressman Stephen Solarz

Take a look also at Soros's business partners. At the Carlyle Group, where he has invested more
than $100m, they include the former secretary of state James Baker and the erstwhile defence
secretary Frank Carlucci, George Bush Sr and, until recently, the estranged relatives of Osama
Bin Laden. Carlyle, one of the world's largest private equity funds, makes most of its money
from its work as a defence contractor.

Soros may not, as some have suggested, be a fully paid-up CIA agent. But that his companies
and NGOs are closely wrapped up in US expansionism cannot seriously be doubted.
So why is he so upset with Bush? The answer is simple. Soros is angry not with Bush's aims - of
extending Pax Americana and making the world safe for global capitalists like himself - but with
the crass and blundering way Bush is going about it. By making US ambitions so clear, the Bush
gang has committed the cardinal sin of giving the game away. For years, Soros and his NGOs
have gone about their work extending the boundaries of the "free world" so skilfully that hardly
anyone noticed. Now a Texan redneck and a gang of overzealous neo-cons have blown it.

As a cultivated and educated man (a degree in philosophy from the London School of
Economics, honorary degrees from the Universities of Oxford, Yale, Bologna and Budapest),
Soros knows too well that empires perish when they overstep the mark and provoke the
formation of counter-alliances. He understands that the Clintonian approach of multilateralism -
whereby the US cajoles or bribes but never does anything so crude as to threaten - is the only one
that will allow the empire to endure. Bush's policies have led to a divided Europe, Nato in
disarray, the genesis of a new Franco-German-Russian alliance and the first meaningful steps
towards Arab unity since Nasser.

Soros knows a better way - armed with a few billion dollars, a handful of NGOs and a nod and a
wink from the US State Department, it is perfectly possible to topple foreign governments that
are bad for business, seize a country's assets, and even to get thanked for your benevolence
afterwards. Soros has done it.

The conventional view, shared by many on the left, is that socialism collapsed in eastern Europe
because of its systemic weaknesses and the political elite's failure to build popular support. That
may be partly true, but Soros's role was crucial. From 1979, he distributed $3m a year to
dissidents including Poland's Solidarity movement, Charter 77 in Czechoslovakia and Andrei
Sakharov in the Soviet Union. In 1984, he founded his first Open Society Institute in Hungary
and pumped millions of dollars into opposition movements and independent media. Ostensibly
aimed at building up a "civil society", these initiatives were designed to weaken the existing
political structures and pave the way for eastern Europe's eventual colonisation by global capital.
Soros now claims, with characteristic immodesty, that he was responsible for the
"Americanisation" of eastern Europe.

The Yugoslavs remained stubbornly resistant and repeatedly returned Slobodan Milosevic's
unreformed Socialist Party to government. Soros was equal to the challenge. From 1991, his
Open Society Institute channelled more than $100m to the coffers of the anti-Milosevic
opposition, funding political parties, publishing houses and "independent" media such as Radio
B92, the plucky little student radio station of western mythology which was in reality bankrolled
by one of the world's richest men on behalf of the world's most powerful nation. With Slobo
finally toppled in 2000 in a coup d'etat financed, planned and executed in Washington, all that
was left was to cart the ex- Yugoslav leader to the Hague tribunal, co-financed by Soros along
with those other custodians of human rights Time Warner Corporation and Disney. He faced
charges of crimes against humanity, war crimes and genocide, based in the main on the largely
anecdotal evidence of (you've guessed it) Human Rights Watch.

Soros stresses his belief in the "open society" propounded by the philosopher Karl Popper, who
taught him at the LSE in the early 1950s. Soros's definition of an "open society" - "an imperfect
society that holds itself open to improvement" - sounds reasonable enough; few lovers of
genuine liberty would take issue with its central tenet that "the open society is a more
sophisticated form of social organisation than a totalitarian one". But Soros's "open societies"
don't tend to be all that open in practice.

Since the fall of Milosevic, Serbia, under the auspices of Soros-backed "reformers", has become
less, not more, free. The recently lifted state of emergency saw more than 4,000 people arrested,
many of them without charge, political parties threatened with bans, and critical newspapers
closed down. It was condemned by the UN Commission on Human Rights and the British
Helsinki Group. But there was not a murmur from the Open Society Institute or from Soros
himself. In fairness, Soros has been far more critical of his former protategate Leonid Kuchma,
president of the Ukraine, a country described by the former intelligence officer Mykola
Melnychenko as "one big protection racket", and now possibly the most repressive police state in
Europe.

But generally the sad conclusion is that for all his liberal quoting of Popper, Soros deems a
society "open" not if it respects human rights and basic freedoms, but if it is "open" for him and
his associates to make money. And, indeed, Soros has made money in every country he has
helped to prise "open". In Kosovo, for example, he has invested $50m in an attempt to gain
control of the Trepca mine complex, where there are vast reserves of gold, silver, lead and other
minerals estimated to be worth in the region of $5bn. He thus copied a pattern he has deployed to
great effect over the whole of eastern Europe: of advocating "shock therapy" and "economic
reform", then swooping in with his associates to buy valuable state assets at knock-down prices.

More than a decade after the fall of the Berlin Wall, Soros is the uncrowned king of eastern
Europe. His Central European University, with campuses in Budapest, Warsaw and Prague and
exchange programmes in the US, unashamedly propagates the ethos of neoliberal capitalism and
clones the next pro-American generation of political leaders in the region. With his financial
stranglehold over political parties, business, educational institutions and the arts, criticism of
Soros in mainstream eastern European media is hard to find. Hagiography is not. The Budapest
Sun reported in February how he had been made an honorary citizen of Budapest by the mayor,
Gabor Demszky. "Few people have done to Budapest what George Soros has," gushed Demszky,
saying that the billionaire had contributed to "structural and mental changes in the capital city
and Hungary itself". The mayor failed to add that Soros is also a benefactor of Demszky's own
party, the Free Democrats, which, governing with "reform" communists, has pursued the c

The Soros strategy for extending Pax Americana differs from the Bush model, particularly in its
subtlety. But it is just as ambitious and just as deadly. Left- liberals, admiring his support for
some of their favourite issues such as gay rights and the legalisation of soft drugs, let him off
lightly.

Asked about the havoc his currency speculation caused to Far Eastern economies in the crash of
1997, Soros replied: "As a market participant, I don't need to be concerned with the
consequences of my actions." Strange words from a man who likes to be regarded as the saviour
of civil society and who rails in print against "market fundamentalism".
source: http://www.mail-archive.com/marxism@lists.panix.com/msg45266.html 3jun03

(9) Soros gave $ to Solidarity, Charter 77, Sakharov, & the anti-Milosevic opposition

George Soros: - The billionaire trader has become eastern Europe's uncrowned king and the
prophet of "the open society". But open to what?

by Neil Clark, New Statesman, June 2, 2003

A review by Karen Talbot

Centre for Research on Globalisation 4jul03

http://www.globalresearch.ca/articles/TAL307A.html 3jul03

George Soros, is known as a Hungarian atemigrate philanthropist, a proponent of human rights

and the "open society," and, just incidentally, a financier - one of the richest men in the world.
Soros recently criticized George W. Bush saying in an article in the Financial Times of London
that his administration's Iraq policies were "fundamentally wrong" and that they are premised on
the "false ideology that U.S. might gave it the right to impose its will on the world." Many of us
in the peace movement would say: "he got that right!" We might be inclined to praise him and to
believe that this confirms that he really is a "do-gooder" - an image, by the way, that he carefully
cultivates, especially through various NGOs. In fact numerous non-profit organizations have
received funds from his foundation because they have bought into that perception.

But let's take a closer look to see what is motivating Soros. Neil Clark, writing in an incisive
article the New Statesman (June 2, 2003), points out that Soros "made billions out of the Eastern
currency crash of 1997," and that he was fined last year "for insider trading by a court in France."
In fact currency speculation is his modus operandi and if this contradicts his pronouncements
against "market fundamentalism" and in favor of "civil society, "well, so be it. In fact, Clark
reported that when queried about the turmoil his speculation caused to Far Eastern economies in
1997, Soros replied: "As a market participant, I don't need to be concerned with the
consequences of my actions."

But all of this is just the tip of the iceberg. What of the NGOs Soros established and finances?
Who are the other leaders of these groups? Clark informs us that at Human Rights Watch, for
example, there is Morton Abramowitz, U.S. assistant secretary of state for intelligence and
research from 1985-1989` and now a fellow at the Council on Foreign Relations; Warren
Zimmerman former ambassador "whose spell in Yugoslavia coincided with the break up of that
country"; and Paul Goble, director of communications "at the CIA-created Radio Free
Europe/Radio Liberty (which Soros also funds)."

According to Clark, Soros' International Crisis Group "boasts such 'independent' luminaries as
the former national security advisers Zbigniew Brzezinki and Richard Allen, as well as General
Wesley Clark, once NATO supreme allied commander for Europe. The group's vice-chairman is
the former congressman Stephen Solarz, once described as 'the Israel lobby's chief legislative
tactician on Capitol Hill' and a signatory, along with the likes of Richard Perle and Paul
Wolfowitz, to a notorious letter to President Clinton in 1998 calling for a 'comprehensive
political and military strategy for bringing down Saddam and his regime'."

So much for Soros' opposition to Bush's Iraq policies.

There's more! Who are Soros's business partners at the Carlyle Group---one of the world's largest
private equity funds, which makes most of this profit from defense contracts? They include the
former secretary of state James Baker and Frank Carlucci, former defense secretary, George
Bush, Sr, and "until recently, the estranged relatives of Osama Bin Laden." Soros has invested
more than $100 million in Carlyle, Clark tells us.

He also points out that "Soros may not, as sometimes suggested, be a fully paid-up CIA agent.
But that his corporations and NGOS are closely wrapped up in U.S. expansionism cannot
seriously be doubted."

This brings us back to the question; "why has Soros lambasted Bush?" The answer lies in
understanding that, more than ever, within the Wall Street power elite there may be differences
in tactics but seldom are there significant differences in the end goal---opening the way for the
maximization of corporate profits everywhere around the world. Today, there is basically a
oneness of purpose in promoting U.S. imperial dominance, and in the process, attempting to
solve a deepening global economic crisis by controlling diminishing petroleum and energy
resources.

How does this play out where Soros is concerned? As Clark points out, "Soros is angry not at
Bush's aims---of expanding Pax Americana and making the world safe for global capitalists like
himself - but with the crass and blundering way Bush is going about it. By making U.S.
ambitions so clear, the Bush gang has committed the cardinal sin of giving the game away. For
years, Soros and his NGOs have gone about their work extending the boundaries of the 'free
world' so skillfully that hardly anyone noticed. Now a Texan redneck and a gang of overzealous
neo-cons have blown it"

Soros' way is to use a few billion dollars, some NGOs and a "nod and wink from the U.S. State
department" to bring down foreign governments that are "bad for business" to seize a nation's
assets, and even get thanked for your 'benevolence,' according to Clark. This method has worked
for Soros and his cohorts.

Take the collapse of the Soviet Union, for example. Clark points out that "Soros' role was
crucial: "From 1979, he distributed $3 million a year to dissidents including Poland's solidarity
movement, Charter 77 in Czechoslovakia and Andrei Sakharov in the Soviet Union. In 1984, he
founded his first Open Society Institute in Hungary and pumped millions of dollars into
opposition movements and independent media. Ostensibly aimed at building up a 'civil society",
these initiatives were designed to weaken the existing political structures and pave the way for
eastern Europe's eventual exploitation by global capital. Soros now claims with characteristic
immodesty, that he was responsible for the "Americanization" of eastern Europe."
More recently, there is the case of Yugoslavia. As Clark puts it:

"The Yugoslavs remained stubbornly resistant and repeatedly returned Slobodan Milosevic's
reformed Socialist Party to government. Soros was equal to the challenge. From 1991, his Open
Society Institute channeled more than $100 million to the coffers of the anti-Milosevic
opposition, funding political parties, publishing houses and""independent" media such as Radio
B92, the plucky little student radio station of western mythology, which was in reality bankrolled
b one of the world's richest men on behalf of the world's most powerful nation. With Slobo
finally toppled in 2000 in a coup d'etat financed, planned and executed in Washington all that
was left was to cart the ex Yugoslav leader to the Hague tribunal, co-financed by Soros along
with other custodians of human rights, Time Warner Corporation and Disney. He faced charges
of crimes against humanity, war crimes and genocide, based in the main on the largely anecdotal
evidence of (you guessed it) Human Rights Watch."

Clark points out that "since the fall of Milosevic, Serbia, under the auspices of Soros- backed
"reformers", has become less, not more, free. The recently lifted state of emergency saw more
than 4,000 people arrested, many of them without charge, political parties threatened with bans,
and critical newspapers closed down" This has been so blatant that it was condemned by the UN
Commission on Human Rights and the British Helsinki Group

"Soros has made money in every country he has helped to prise 'open'. In Kosovo, for example,
he has invested $50 million in an attempt to gain control of the Trepca mine complex, where
there are vast reserves of gold, silver, lead and other minerals estimated to be worth in the region
of $5 billion. He thus copied a pattern he has deployed to great effect over the whole of eastern
Europe of advocating 'shocking therapy' and 'economic reform', then swooping in with his
associate to buy valuable state assets at knock-down prices," according to Clark.*

In Hungary, Soros is the benefactor of the Free Democrats party "which has pursued the classic
Soros agenda of privatization and economic liberalization---leading to a widening gap between
rich and poor," says Clark.

"The Soros strategy for extending Pax Americana differs from the Bush model, particularly in its
subtlety. But it is just as ambitious and just as deadly," Clark concludes.

Of course, in the case of Yugoslavia, ultimately the Soros approach was not enough so the
overwhelming might of the U.S. military was brought into play.*

For background information on the former Yugoslavia, see "The Real Reasons for the War in
Yugoslavia: Backing up Globalization with Military Might," by Karen Talbot,
http://icpj.org/millitary_build.html

{end}

(10) Soros link to Khodorkovsky's Open Russia Foundation

(10.1) Putin warns Russia's business elite

The Age, Melbourne, November 8 2003

By Ron Popeski

Rome

http://www.theage.com.au/text/articles/2003/11/07/1068013393887.htm

President Vladimir Putin, grilled by Western leaders over a legal assault on Russia's top oil firm,
has issued a blunt warning to his country's business elite.

Speaking after a Russia-European Union summit, Mr Putin said authorities were watching all
those who came into billions of dollars in the chaotic privatisations of the 1990s.

EU officials said Mr Putin had assured them Russian law had been upheld in the arrest of Yukos
head Mikhail Khodorkovsky and the freezing by prosecutors of a large stake in the oil giant.

Mr Khodorkovsky, Russia's richest man, is in jail facing charges of fraud and tax evasion.

Critics see the arrest as a Kremlin attempt to punish the billionaire for funding political
opposition before parliamentary and presidential elections this year and next.

Mr Putin, standing alongside the summit's host, Italian Prime Minister Silvio Berlusconi, and
other top EU officials, said: "Our aim is not to go after specific individuals but to establish order
in our country. And we will do so in a consistent and tough fashion without regard to whatever
attempts these people may make to defend themselves or even resort to blackmail."

Mr Khodorkovsky's arrest has raised fears that Russian justice could call to account other
"oligarchs" who acquired state industries in 1990s sell-offs.

Mr Putin said authorities were monitoring the "oligarchs". "People earned billions, I repeat
billions, of dollars in the space of five to six years. This would not have been possible in any
West European country," he said.

Mr Putin said those reaping fortunes "will spend tens, hundreds of millions to safeguard their
billions. We know how the money is being spent - on lawyers, PR agencies, politicians." ...

Mr Khodorkovsky was plucked from an aircraft by security forces on October 25.

- Reuters

(10.2) Moscow 'thugs' raid Soros office

The Age, Melbourne, November 8 2003

By Kim Murphy

Moscow

http://www.theage.com.au/text/articles/2003/11/07/1068013393893.htm

The Moscow offices of the Soros Foundation were raided early yesterday by dozens of men in
camouflage gear and wielding stun guns. They hauled away documents and computer data
covering 15 years.

The seizure followed public support by US financier George Soros for jailed Russian billionaire
Mikhail Khodorkovsky.

The operation, which began just after midnight, was carried out by private security forces
ostensibly hired by a businessman with whom the foundation had been having a legal dispute.

But Soros Foundation officials said they could not rule out a connection to the Yukos Oil case, in
which Moscow offices have been raided in recent months by authorities seeking evidence against
the oil tycoon.

"I cannot rule out that it is some kind of revenge on the part of some agencies who resort to the
use of bandits and thugs for Mr Soros's position and his attitude toward Mr Khodorkovsky," said
Yekaterina Geniyeva, director of the Open Society Institute-Soros Foundation in Russia.

Mr Khodorkovsky, Russia's richest oligarch, is under arrest, charged with tax evasion, forgery
and fraud in a case that has erupted into the most serious crisis of President Vladimir Putin's
administration.

The New York-based Soros Foundation has spent more than $US1 billion ($A1.4 billion) on
charitable projects in Russia in the past 15 years. Mr Khodorkovsky had based his own charitable
organisation, the Open Russia Foundation, on Mr Soros's institute, and had close links to the US
foundation's work in supporting libraries, internet education, community development and the
promotion of civil society.

Mr Soros spoke out this week against the arrest, saying: "The crackdown by Mr Putin sends an
unmistakeable message that independence of action will not be tolerated." Pressure from the
West against a trend toward "state capitalism" could result in "Russia being forced out" of the
Group of 8 industrialised nations, he said.

- Los Angeles Times

{end}

(11) Soros says there "an Orwellian Truth Machine" in the US

(11.1) George Soros says that there "an Orwellian Truth Machine" in the United States
Mar 03 04 © 2004 Commonwealth Club of California

GEORGE SOROS

War, the Press & U.S. Power: Diplomacy and Conflict in the Post-9/11 World

George Soros, Orville Schell

The audio of Orville Schell's conversation with George Soros is available in RealAudio format.
http://www.commonwealthclub.org/archive/04/04-03soros-audio.html.

Soros, in the following interview with Charlie Rose, seems to identify with Noam Chomsky.
Chomsky is mentioned by Rose, then, a little further on, Soros uses a Chomsky-like expression,
"manufacture truth". Chomsky wrote a book named The Manufacture of Consent.

(11.2) Soros likens Bush to Hitler; yet the "Orwellian Truth Machine" is the Jewish-owned or
managed media, a fact which neither Soros nor Chomsky ever mention. Further, Bush does the
bidding of the Zionists.

CFR Publications: The Bubble of American Supremacy

http://www.cfr.org/pub6787/george_soros_charlie_rose/the_bubble_of_american_supremacy.ph
p

... Speaker: George Soros, chairman, Soros Fund Management; author, "The Bubble of American
Supremacy: Correcting the Misuse of American Power" Moderator: Charlie Rose, executive
producer and host, "The Charlie Rose Show"

Council on Foreign Relations New York, New York Wednesday, February 18, 2004

... ROSE: But there was a lot of debate about it, a lot of--I had a lot of people like you on my
program who were fiercely opposed to the war--I mean, everybody from you over to
[Massachusetts Institute of Technology Professor] Noam Chomsky.

SOROS: Yeah, but when you followed the war reporting in Iraq on Fox Television and Sky
News in England--

ROSE: Both owned by the same person.

SOROS: -- and how different their coverage was--it really quite remarkable. So actually this -- I
mean, there is an Orwellian truth machine operating now, and I find it perplexing that when
[George] Orwell in "1984" described the Ministry of Truth, the Ministry of Truth controlled all
the media, and this was based on the experience in Nazi Germany and communist Soviet Union.
So it's not the same situation. It's not comparable. But there is still this ability to manufacture
truth. And I find it puzzling, and don't have the answer to it.
ROSE: That's in fact how you got in trouble, because some people said that you were trying to
compare the Bush administration to Hitler when you made that point.

SOROS: That's correct, yes. But of course that's exactly the differences that we do have, that
democracy and pluralistic media. And yet it's possible to manufacture truth.

{end}

The "Asia Crisis" was unleashed soon after ASEAN decided to admit Burma; George Soros and
Madeline Albright had been trying to get ASEAN to reject Burma: asia-crisis.html.

Kinhide Mushakoji on Japan's secret co-prosperity sphere: mushakoji.html.

Soros the Good Guy? Soros the philosopher of the Open Society, opposing Capitalism?
soros2.html.

The differences between Karl Popper and Arnold Toynbee over the interpretation of Karl Marx's
philosophy. Should Karl Marx be viewed as a social scientist, or as the prophet of a religion? Did
the Totaliarianism of the Soviet Union derive from Plato's Republic, or from Judaism? popper-
vs-toynbee.html.

Fallibilism as a theory of knowledge; Falsifiability as a criterion for dismissing theories:

perspectivism.html.

Write to me at mailto:myers@cyberone.com.au.

HOME

George Soros: Prophet of an "Open Society"

Karen Talbot
www.globalresearch.ca 4 July 2003
The URL of this article is: http://globalresearch.ca/articles/TAL307A.html

--------------------------------------------------------------------------------

George Soros: “The billionaire trader has become eastern Europe’s uncrowned king and the
prophet of “the open society”. But open to what? by Neil Clark, New Statesman, June 2, 2003

A review by Karen Talbot

George Soros, is known as a Hungarian émigré philanthropist, a proponent of human rights and
the “open society,” and, just incidentally, a financier ---one of the richest men in the world. Soros
recently criticized George W. Bush saying in an article in the Financial Times of London that his
administration’s Iraq policies were “fundamentally wrong” and that they are premised on the
“false ideology that U.S. might gave it the right to impose its will on the world.” Many of us in
the peace movement would say: “he got that right!” We might be inclined to praise him and to
believe that this confirms that he really is a “do-gooder”—an image, by the way, that he carefully
cultivates, especially through various NGOs. In fact numerous non-profit organizations have
received funds from his foundation because they have bought into that perception.

But let’s take a closer look to see what is motivating Soros. Neil Clark, writing in an incisive
article the New Statesman (June 2, 2003), points out that Soros “made billions out of the Eastern
currency crash of 1997,” and that he was fined last year “for insider trading by a court in
France.” In fact currency speculation is his modus operandi and if this contradicts his
pronouncements against “market fundamentalism” and in favor of “civil society, ” well, so be it.
In fact, Clark reported that when queried about the turmoil his speculation caused to Far Eastern
economies in 1997, Soros replied: “As a market participant, I don’t need to be concerned with
the consequences of my actions.”

But all of this is just the tip of the iceberg. What of the NGOs Soros established and finances?
Who are the other leaders of these groups? Clark informs us that at Human Rights Watch, for
example, there is Morton Abramowitz, U.S. assistant secretary of state for intelligence and
research from 1985-1989` and now a fellow at the Council on Foreign Relations; Warren
Zimmerman former ambassador “whose spell in Yugoslavia coincided with the break up of that
country”; and Paul Goble, director of communications “at the CIA-created Radio Free
Europe/Radio Liberty (which Soros also funds).”

According to Clark, Soros’ International Crisis Group “boasts such ‘independent’ luminaries as
the former national security advisers Zbigniew Brzezinki and Richard Allen, as well as General
Wesley Clark, once NATO supreme allied commander for Europe. The group’s vice-chairman is
the former congressman Stephen Solarz, once described as ‘the Israel lobby’s chief legislative
tactician on Capitol Hill’ and a signatory, along with the likes of Richard Perle and Paul
Wolfowitz, to a notorious letter to President Clinton in 1998 calling for a ‘comprehensive
political and military strategy for brining down Saddam and his regime’.”

So much for Soros’ opposition to Bush’s Iraq policies.

There’s more! Who are Soros’s business partners at the Carlyle Group---one of the world’s
largest private equity funds, which makes most of this profit from defense contracts? They
include the former secretary of state James Baker and Frank Carlucci, former defense secretary,
George Bush, Sr, and “until recently, the estranged relatives of Osama BinLaden.” Soros has
invested more than $100 million in Carlyle, Clark tells us.

He also points out that “Soros may not, as sometimes suggested, be a fully paid-up CIA agent.
But that his corporations and NGOS are closely wrapped up in U.S. expansionism cannot
seriously be doubted.”
This brings us back to the question; “why has Soros lambasted Bush?” The answer lies in
understanding that, more than ever, within the Wall Street power elite there may be differences
in tactics but seldom are there significant differences in the end goal---opening the way for the
maximization of corporate profits everywhere around the world. Today, there is basically a
oneness of purpose in promoting U.S. imperial dominance, and in the process, attempting to
solve a deepening global economic crisis by controlling diminishing petroleum and energy
resources.

How does this play out where Soros is concerned? As Clark points out, “Soros is angry not at
Bush’s aims---of expanding Pax Americana and making the world safe for global capitalists like
himself—but with the crass and blundering way Bush is going about it. By making U.S.
ambitions so clear, the Bush gang has committed the cardinal sin of giving the game away. For
years, Soros and his NGOs have gone about their work extending the boundaries of the ‘free
world’ so skillfully that hardly anyone noticed. Now a Texan redneck and a gang of overzealous
neo-cons have blown it”

Soros’ way is to use a few billion dollars, some NGOs and a “nod and wink from the U.S. State
department” to bring down foreign governments that are “bad for business” to seize a nation’s
assets, and even get thanked for your ‘benevolence,’” according to Clark. This method has
worked for Soros and his cohorts.

Take the collapse of the Soviet Union, for example. Clark points out that “Soros’ role was
crucial: “From 1979, he distributed $3 million a year to dissidents including Poland’s solidarity
movement, Charter 77 in Czechoslovakia and Andrei Sakharov in the Soviet Union. In 1984, he
founded his first Open Society Institute in Hungary and pumped millions of dollars into
opposition movements and independent media. Ostensibly aimed at building up a ‘civil society”,
these initiatives were designed to weaken the existing political structures and pave the way for
eastern Europe’s eventual exploitation by global capital. Soros now claims with characteristic
immodesty, that he was responsible for the “Americanization” of eastern Europe.”

More recently, there is the case of Yugoslavia. As Clark puts it:

“TheYugoslavs remained stubbornly resistant and repeatedly returned Slobodan Milosevic’s

reformed Socialist Party to government. Soros was equal to the challenge. From 1991, his Open
Society Institute channeled more than $100 million to the coffers of the anti-Milosevic
opposition, funding political parties, publishing houses and “independent” media such as Radio
B92, the plucky little student radio station of western mythology, which was in reality bankrolled
b one of the world’s richest men on behalf of the world’s most powerful nation. With Slobo
finally toppled in 2000 in a coup d’etat financed, planned and executed in Washington all that
was left was to cart the ex Yugoslav leader to the Hague tribunal, co-financed by Soros along
with other custodians of human rights, Time Warner Corporation and Disney. He faced charges
of crimes against humanity, war crimes and genocide, based in the main on the largely anecdotal
evidence of (you guessed it) Human Rights Watch.”
Clark points out that “since the fall of Milosevic, Serbia, under the auspices of Soros- backed
“reformers”, has become less, not more, free. The recently lifted state of emergency saw more
than 4,000 people arrested, many of them without charge, political parties threatened with bans,
and critical newspapers closed down” This has been so blatant that it was condemned by the UN
Commission on Human Rights and the British Helsinki Group

“Soros has made money in every country he has helped to prise ‘open’. In Kosovo, for example,
he has invested $50 million in an attempt to gain control of the Trepca mine complex, where
there are vast reserves of gold, silver, lead and other minerals estimated to be worth in the region
of $5 billion. He thus copied a pattern he has deployed to great effect over the whole of eastern
Europe of advocating ‘shocking therapy’ and ‘economic reform’, then swooping in with his
associate to buy valuable state assets at knock-down prices,” according to Clark.*

In Hungary, Soros is the benefactor of the Free Democrats party “which has pursued the classic
Soros agenda of privatization and economic liberalization---leading to a widening gap between
rich and poor,” says Clark.

“The Soros strategy for extending Pax Americana differs from the Bush model, particularly in its
subtlety. But it is just as ambitious and just as deadly,” Clark concludes.

Of course, in the case of Yugoslavia, ultimately the Soros approach was not enough so the
overwhelming might of the U.S. military was brought into play.*

For background information on the former Yugoslavia, see “The Real Reasons for the War in
Yugoslavia: Backing up Globalization with Military Might,” by Karen Talbot,
http://icpj.org/military_build.html

To:D.Austin who wrote (1000)

From: D.Austin Monday, Jan 5, 2004 11:10 PM
Respond to of 1050

(What Soros Really Wants)

“My attempts at formulating my philosophy have not been crowned by success. As a young man
I tried to state my views in a short book entitled The Burden of consciousness but, by the time I
had completed it, I found it wanting and so it was not published. Then came a series of attempts
at reformulation, which ended only when one day I could not make head or tail of what I had
written the day before. I gave up abstract philosophy and devoted myself to making money.”
(George Soros)

Soros claims Popper as his mentor yet their affinity is questionable, even early on as a student at
London School of Economics; Soros was hardly a Popper student as we traditionally think of
Philosophers and their Socratic like students. This is not Plato studying under Socrates,
Nietzsche discovering his educator, Schopenhauer, or even Neo-Hegelian idol worshipping. In
fact Soros only managed to slip a thesis of his to Popper and took advantage of Poppers twilight
years (Karl Popper, 1902 - 1994)

The "Open Society Prize" Awarding Ceremony: The first winner of the Prize, Sir Karl Popper is
decorated by George Soros who delivers a short address on the occasion. Sir Karl was by the 92
years of age and would die several months later.

“It was while pursuing a Masters degree at LSE that George Soros first came into close contact
with Popper and his ideas. While he did not study directly under the philosopher, Soros
submitted several essays to Popper for his consideration and review. In 1962, well after he had
finished his studies, Soros wrote a philosophical treatise entitled, "The Burden of
Consciousness."

Soros sent this work to Popper, who was extremely supportive and encouraging of Soros's ideas.
Their association continued, growing closer over the years. In June 1994, Popper delivered a
lecture at the Central European University in Prague, which Soros had established as a
intellectual center to promote the ideals of open society in Eastern Europe and the former Soviet
Union."

What Soros Really Wants

Soros is not the first person, nor will be the last, to believe in a misconceived and complicated
ideology that sounds nice but carries little relevance. When all is said and done, Soros is merely
part of a new group of commercial philosophers to have made their appearance in the post-
modern period. Many of these "pomosophers" ["pomo" = post modern + "sophos" = wise] are
business people and popstars with nagging conscious', who like to surround themselves with a
host of intellectuals and artists in order to satisfy their vanity and make themselves feel
intellectually important. In Europe, for instance, a like counterpart to Soros is Burda, who
incidentally has close personal ties with Stoiber, the right-wing premier of Bavaria. Thus, even
pomosophers can be dichotomized between left and right variants: in this case, Soros supports
the pomo left; Burda, the pomo right.

What Soros really wants, at the end of the day, is to be recognized as a major philosopher and to
be granted respect for his ideas and activities. As Robert Slater, Soros' biographer, rightly
pointed out: "Soros wants that respect; he didn't get it from Gorbachev, he would have loved to
have become a kind of economic advisor to an American President, or to a Secretary of State,
and I think it's always bothered him that a lot of the attention that he's gotten has been from the
fact that he made so much money." As the story goes with most famous philosophers and
prophets, if they aren't already predestined for greatness (usually signified by a miraculous birth
or beginning of some sort), then they are either outcasts or successful members of society who
undergo a psychological experience, or awakening, the result of which is a fundamental shift in
their values. This culminates in a fortuitous and blessed change in their life and, in turn, that of
the rest of humanity. In other words, they "see the light". Soros appears, or makes himself
appear, to be following in this same tradition among philosophers and prophets. As Morton
relates, "in his autobiography, Soros says that he underwent a psychological crisis in the early
'80s. For a long time, he simply couldn't accept that he was a success, and the more money he
made, the more insecure he felt. He separated from his wife and his business partner, and
decided that he needed a new orientation in life." According to Soros himself, "after a great deal
of thinking, I came to the conclusion that what really mattered to me was the concept of an open
society." Many more examples of this ostentatious personality can be found in a full six-hour
audio tape version of his autobiography.

Hidden Meanings

Along with the Soros paradox (a successful capitalist disseminating anti-capitalist views), what
makes people wary of him and his activities is the vague concept of the Open Society itself.
People can't help but feel suspicious when a successful businessman throws money around - and
a lot of it - for not very clearly defined reasons. In Central and South America, people have
already had a comparable negative experience of this when Rockefeller, under the guise of
philanthropy, successfully displaced farmers from their land which, in turn, served the business
needs of Standard Oil. The fact that Soros has been busy in the region with not only his
philanthropic activities, but also is very much involved in media and communications
infrastructure, has been worrying some that history may be.

Apart from his business interests, questions are raised as to what exactly Soros means by the
Open Society. Ralf Dahrendorf, an economist and close friend of Soros, affirms that most of
Soros' philanthropy is attributable to his mentor, Karl Popper. Popper's book, "The Open Society
and its Enemies", does not define properly what the Open Society is, but merely points out what
it is not and what it seeks to do. Along with facilitating non-violent change, "institutions" would
be responsible for "piecemeal" social engineering as opposed to holistic social engineering, i.e.,
changing society all at once or in a big way. Aside from not properly defining the Open Society,
Popper's concept has been criticized in a number of ways. The non-violence aspect to the Open
Society comes under stress when put to the test, especially when confronted with the issue of
nationalism. At the 1996 "Geist und Natur" (Mind and Nature) world conference in Hannover,
for example, Popper observed that the outbreak of the Second World War was due in large part
to the effort to avoid war in the first place. Does this cryptic observation, then, sanctify the use of
violence? What is perhaps most troubling is Popper's notion of piecemeal social engineering.
There are certain similarities between this and the social engineering values of Nazism and
Communism, albeit the threat to personal safety is not the same.

Common to all is social engineering and population control serve as a primary focus, in which
popular discontent can be suppressed or channeled so that it doesn't forcefully or violently
confront the controlling mechanisms of society -- be it the State, the Party, or "institutions".
Hence, wherein Nazism, Communism, and Popper/Sorosism differ is the level in which social
engineering takes place: Nazism bases it values on a national level; Communism on an
international level; and Popper/Sorosism on an individual level. The Open Society, therefore,
appears to take on the form of a society run by a benevolent oligarchy, and in which a small-
scale private life is combined with large-scale constraints that are controlled and monitored by
various institutions. With the doctrine of control-throughempowerment as its focus, people
would become more concerned about their own immediate environments rather than worry about
the big picture, which instead would be the reserve of a technocratic elite. Reform would replace
revolution, and the State would ultimately fade into insignificance. Since the State in a
democratic society is theoretically made up of its citizens - in other words, we are the State - the
decline of State power in favour of certain institutions (of which we are not a part) means that a
citizen, in theory, loses a degree of political power. Although we may still have the right to hold
dissident views, the fact that these dissident views can't be acted upon by ourselves and in our
own way renders such a right almost meaningless. It may be good for the individual
psychologically (to say what they have on their minds) but that is about all.

In the end, what would appear as the hallmarks of an Open Society - a general dissatisfaction and
apathy toward the political process and state apparatus, coupled with an ensuing lack of social
responsibility - poses as a direct threat to democracy. Whether this is how it will all operate
remains yet to be seen. Still, in the absence of a properly defined concept, when Soros talks
about the Open Society it invariably comes to mean both everything and nothing at the same
time.

Inside The Dems' Shadow Party

How they're using soft money and private groups to combat the GOP money machine

In 2002, as campaign-finance reform was about to become law, a few savvy Democratic activists
saw the future -- and it was potentially devastating. The problem: While the Democratic Party
raised $520 million in the 2000 election cycle, nearly half of it came in big-buck "soft-money"
donations that the McCain-Feingold Act would all but eliminate. In the upcoming Presidential
election, the Dems would be even more badly outgunned by the GOP, which in 2000 pulled in
$712 million -- but only $246 million of it in soft money. To make an end run around the new
campaign law, these behind-the-scenes players rushed to set up political committees that can
legally collect soft money, pay for issue ads, and encourage voter turnout.

The downside: They cannot give to candidates or be directly connected to a political party.
Known as 527s after a provision of the federal code that grants them tax-exempt status, the
committees have been spectacularly successful since they got under way last year, having
already raised almost $100 million in soft money. More important than the dollars, though, is the
highly sophisticated political machine under construction -- a web of interlocking, like-minded
organizations that could at once save and partly supplant the Democratic Party. And if the 527s
don't give presumptive nominee Senator John Kerry an edge against George W. Bush, they will
at least help level the playing field.

This strategy is largely the brainchild of Steve Rosenthal, former political director of the AFL-
CIO. His group, America Coming Together (ACT), hopes to raise $95 million to build an elab-
orate operation that will spur Democratic voters to the polls in 17 battleground states. ACT is
working closely with the Media Fund, set up by former Clinton aide Harold Ickes, which hopes
to raise an additional $50 million to target the same voters with issue ads.

These two big committees are coordinating with smaller 527s, as well as with more than two
dozen left-leaning organizations such as the Sierra Club and Planned Parenthood (table). The two
groups even have jointly hired their own pollsters, opposition research, and public-relations
team. "We're a lot like a campaign, but without a candidate," says Ickes.
DIFFERENT AGENDAS? The $300 million or so that ACT and the other 527s intend to raise
from the likes of financier George Soros could surpass the hard money raised by the party,
experts say. But even if Democratic National Committee Chairman Terry McAuliffe ultimately
drums up more cash, many decisions that will be key to victory, such as which message to push
and where, will be made by 527s, which under McCain-Feingold are not allowed to
communicate with the DNC. In essence, Rosenthal, Ickes & Co. are building something that
could -- and in fact legally must -- be an alternative Democratic Party. "It's possible once the
campaign gets started that there may be different agendas between these groups; the jury's still
out," says New Mexico Governor Bill Richardson, a Democrat who heads America Moving
Forward, a 527 aimed at Hispanics.

The heart of Rosenthal's plan is to connect with core Democratic voters such as minorities,
industrial workers, and the working poor, much as he did with union members when he ran the
AFL-CIO's political operation from 1996 to 2002. In 1992, labor households constituted 19% of
the national electorate, according to exit polls. By 2002, they had jumped to 26% -- an
astonishing figure, given that unions represent 13% of the workforce.

How did Rosenthal do it? By coordinating thousands of labor activists and local officials who
reached out -- in person -- to their union brothers and sisters. Today, dozens of unions turn out
volunteers and paid staff to visit colleagues at home and work. Then they follow up with phone
calls, e-mails, and leaflets. "We want to apply the lessons we learned with union members," says
Rosenthal. "Talk to people as close to them as you can get, and talk to them a lot."

PAID FOOT SOLDIERS. To make that happen, ACT is hiring several thousand foot soldiers in
17 swing states, including Florida and Ohio. Guided by seasoned campaign officials and armed
with handheld organizers loaded with voter lists of households likely to lean Democratic, the
canvassers have started knocking on doors. They offer to register anyone who's not already
signed up. Without mentioning parties or even individual candidates, they also try to engage
voters on key Democratic issues like jobs, health coverage, and education.

Canvassers then build a profile of each person willing to listen, entering their positions and other
information onto the handhelds to construct a database. Over the next eight months, ACT and its
sister 527s, most of which are pursuing the same approach, plan to contact each receptive voter 5
to 10 times.

ACT and the Media Fund, whose offices are two floors apart in a building across the street from
AFL-CIO headquarters in Washington, will coordinate troops and ads to maximize their impact.
Like the canvassers, Ickes' air war -- which was set to begin a 15-state, $5.2 million ad campaign
on Mar. 10 -- will attempt to steer clear of McCain-Feingold by avoiding open partisanship. But
like so many of the issue ads that have become commonplace on both sides these days, the
Media Fund's views will be clear, Ickes says. ACT canvassers can even play ad snippets on their
handhelds during their home visits.
As slick as all this sounds, it's by no means clear that Rosenthal can replicate his labor successes.
When union activists call or visit a fellow member, they often know each other. Even if they're
total strangers, members often will at least hear out what their union has to say.

By contrast, ACT and the other Democratic 527s are using low-wage canvassers hired off the
street to make cold calls to people who have never heard of them or their group. Alvin Anderson,
a 48-year-old former Winn-Dixie (WIN ) supermarket worker, was on long-term disability after
his arm was crushed by a forklift in 1991. Then last December, a friend introduced him to Voices
for Working Families, a 527 set up by unions to register minorities. Today, Anderson guides
about 40 mostly minority canvassers as they go house to house in primarily black and Hispanic
Miami neighborhoods. While Anderson says his canvassers are largely locals who know the
community, it's still hard work. They earn $8 an hour and go out in pairs for two four-hour shifts
a day, with each canvasser taking one side of a street.

Nonetheless, Voices Executive Director Suzy Ballantyne says the group already has talked to
16,600 people and registered 7,000 of them since it started in Miami last fall. Says Anderson:
"We're saving them a trip downtown to register, so you'd be surprised at the positive response we
get."

Even if these new groups can't boost turnout as much as labor, a systematic effort will go way
beyond what either party has ever managed. The GOP has an ambitious goal to register 3 million
new voters by November. But neither it nor the Democrats traditionally have built long-term,
personal relations with voters.

Rosenthal's plan pushes the envelope in another way, too. Under the banner of America Votes,
he and other Democratic heavyweights such as Richardson have created a sort of supercouncil
that oversees the political committees of traditional organizations such as labor unions and the
Sierra Club. Their political directors meet every two weeks to plot strategy and avoid
duplication. "The Democratic Party might be more worried because they have less control now,
but we've never had such close coordination," says Sierra Club political director Margaret
Conway.

There are still plenty of questions about the new 527s that go beyond their ability to turn out
voters. ACT and the Media Fund have a joint fund-raising operation, which has pulled in a total
of about $75 million so far, say Ickes and Rosenthal. But $57 million of that has gone to ACT,
and it's not clear if Ickes can really raise as much as he hopes. In addition, the Federal Election
Commission is likely to issue new rules governing 527s in May, which could rein them in.

McCain-Feingold's primary goal was to curb checkbook politics, and Rosenthal argues that 527s
do that by breaking the direct link between fat-cat donors and politicians. That may be true, but
meanwhile, Democrats seem determined not to be outspent in November.

By Aaron Bernstein, Paula Dwyer, and Lorraine Woellert in Washington

George Soros Is Back in the Game
The hedge-fund vet is again running his Quantum funds

When immense losses pummeled George Soros' Quantum Fund in April, 2000, it was, it seemed,
the end of an era. Although Soros did not shutter his money-management empire, as fellow
hedge-fund magnate Julian H. Robertson Jr. had done the month before, Soros reorganized his
funds and even farmed out Quantum's portfolios to outside managers. Clearly, the
superinvestor/philanthropist/amateur philosopher was not going to remain a force to be reckoned
with in the world markets. "I no longer want to set any records," he said at a news conference.

Well, George Soros is back. And by all accounts, he seems well on his way to recouping some of
his lost prestige as a world-class investor--even while grappling with a French prosecution for
insider trading. The word from people familiar with Soros Fund Management LLC--whose
execs, including Soros, declined to be interviewed for this article--is that the 72-year-old,
Hungarian-born financier has returned to the helm. While still devoting much of his energy to
far-flung philanthropic endeavors, Soros is again running his flagship $7 billion Quantum
Endowment Fund and myriad other investment vehicles. Says one veteran Soros-watcher: "He
gave a line for a while that he was 70 and didn't want to gamble anymore. But none of that's true,
and he's trying hard as ever to make money."

The results are impressive. Quantum gained 13.8%, vs. a 13% decline in the Standard & Poor's
500-stock index, in 2001, when the fund was largely under outside management. In 2002, with
the fund back under internal management, it's down just half a percent through Dec. 6, beating
the S&P by a staggering 21 percentage points. What makes the Quantum results even more
impressive is what Soros didn't do to get them. He's no longer making the controversial, huge,
highly leveraged currency bets--such as his widely publicized wager against the pound in 1992--
that reaped immense gains for him in the 1990s.

People familiar with his operation say that Soros has become a major player in emerging markets
such as Eastern Europe. They say he has also quietly beefed up his real estate investments, via a
$4.5 billion investment partnership. He still makes currency bets, a former Soros exec says, but
they are nowhere near as large or as risky as in the past. In the U.S., though Soros has
occasionally taken large equity stakes, SFM's holdings as of Sept. 30 included just one major
equity position--his previously announced 15% stake in JetBlue Airways (JBLU ). "The days of
the gunslinging hedge funds are largely gone," says Barry H. Colvin, chief operating officer of
Tremont Advisers Inc., a hedge-fund consulting firm.

The new, slimmed-down Soros approach is very much the product of the downsized, more
modest, post-bull-market environment. For Soros, it all began in April, 2000, when Quantum lost
20% as a result of a disastrous, ill-timed bet on high-tech stocks. The spring massacre led to the
departure of his deputy, Stanley Druckenmiller, who had operated the fund on a day-to-day
basis. Quantum ended 2000 down 15%.

Soros began to reverse course and pull back money from outside managers early in 2002, say
people familiar with his organization. In January, 2002, he hired as chief investment officer
Robert Bishop, a principal of the Maverick Capital Ltd. hedge-fund group and manager of a $2
billion global portfolio. More recently, he announced that the chairman of Goldman, Sachs &
Co. (Asia), Mark Schwartz, would join SFM as CEO on Jan. 1.

The top-level shuffle is emblematic of Soros' revised investment strategy. Bishop's Maverick was
noted for realizing sizable returns without substantial leverage, and Schwartz's Asian experience
will give a boost to SFM's efforts in overseas markets. Soros has already been making forays
back into global equities, such as his participation in a consortium that took private the Irish
telecommunications monopoly Eircom Ltd. (EIR ) More recently, he briefly took a 2 million-
share stake in UAL Corp. (UAL ), which he cashed out as bankruptcy loomed.

Only one cloud could dim this generally upbeat picture. On Dec. 20, a magistrate in Paris will
render a verdict on an insider trading case brought against Soros and two other businessmen.
Soros stands accused of trading on insider knowledge of financier Georges Pebereau's plans to
attempt a takeover of Société Générale in 1988. Soros, who is vigorously fighting the charges,
made about $2 million by buying shares in the bank in September, 1988, and reselling them two
months later. At the trial in November, Soros contended that he was paying a courtesy call when
Pebereau told him about the plan to buy the shares, and that the pending takeover was very
widely known.

The consensus in the French legal community is that the case is a slam dunk from Soros'
perspective. His attorneys argue the prosecution is improper because France's insider trading
laws came into effect at the end of 1989. François Lenglart, a law professor at HEC School of
Management in Paris, agrees that Soros stands a good chance of acquittal. Prosecutors are
seeking a $2 million fine.

Soros doesn't exactly face the Bastille. He could pay that fine from the loose change in his sock
drawer. And French insider trading convictions just don't carry the kind of consequences--such
as being kicked off Wall Street--that they do in the U.S. Nope, it will take more than an
overzealous Gallic prosecutor to rain on George Soros' parade.

By Gary Weiss in New York, with Christina W. Passariello in Paris

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MARCH 15, 2002

NEWS ANALYSIS

Soros: Bush Is Stiffing the World's Poor

The billionaire financier argues that the President's new plan to boost foreign aid is "absolutely
inadequate"
George Soros certainly isn't impressed with President Bush's offer of financial help for the
world's poor. On Mar. 14, Bush announced that the U.S. would boost aid by $5 billion over the
next three fiscal years, starting in fiscal 2004. Big deal, says the billionaire financier.

Considering that the new funds probably won't start flowing until 2004, Soros calculates that the
package essentially amounts to $1 billion annually over the next five years. He estimates that he
donates $500 million of his own fortune to economic and health programs in the developing
world. "For the U.S. government to [be increasing its spending by] only double what I am
spending is absolutely inadequate," Soros said on Mar. 14 in a meeting with journalists at his
Manhattan offices.

By being tight with foreign aid now, Soros argued, the U.S. again is tarnishing its credibility as a
leader willing to work with other nations on important international issues. What's more, the
Bush Administration threatens to turn next week's Financing for Development conference in
Monterrey, Mexico, into a diplomatic bust.

"THE MAIN OBSTACLE." The huge conference, to be attended by Bush and 50 other heads of
state, is aimed at galvanizing global support for a coordinated campaign to dramatically improve
living standards for the some 1 billion people living on less than $1 a day. The U.N. and the
World Bank hope Monterrey will catalyze rich nations to heed its call to boost foreign aid by $40
billion to $60 billion annually. Britain is calling for a "Marshall Plan for the developing world."

The meager Bush Administration response, Soros charged, shows "the U.S. is the main obstacle
to more aid and international cooperation" on fighting poverty. Soros noted that even though the
Administration is asking for a moderate increase in developmental assistance, the sum still will
be around 0.1% of gross domestic product. Most European nations spend three times that
percentage. To build support for devoting greater resources to the problem, "the U.S. is
absolutely critical," Soros said. "Unless the U.S. does more, nothing much will happen."

Certainly, not everyone has been as harsh as Soros. World Bank chief James Wolfensohn was
present when Bush announced the aid increase at the Inter-American Development Bank in
Washington, D.C. Rock star Bono, a leading antipoverty crusader, also was on hand. Bush said
the $5 billion aid hike will go directly to programs for at severe poverty, which he said is
"leaving a dark shadow across a world that is increasingly illuminated by opportunity." The new
funds will be directed to programs for educating poor women, fighting AIDS, instructing young
professionals to use computers, and helping Africans sell their goods abroad.

WASTED MONEY. And even most development experts would agree with Bush's assertion
that "money that is not accompanied by legal and economic reform is oftentimes wasted.... In
these situations, more aid money can actually be counterproductive, because it subsidizes bad
policies, delays reforms, and crowds out private investment." (The full text of Bush's speech is
available on the White House Web site.)

The Administration's position, expressed repeatedly in recent speeches by Treasury Secretary

Paul O'Neill, is that foreign aid over the past five decades has been largely wasted on badly run
governments and economies. Rather than throw billions more at the problem, the aid now spent
should be managed more carefully to assure that the funds really reduce poverty and increase
education and health standards.

Once aid programs have proved to yield results, he says, then resources can be increased. Also,
Administration officials say, the most important thing is to get developing nations to enact the
right domestic policies in order to boost private investment -- the real driver of economic growth.

MANAGING AID. Soros said he agrees that aid must produce results. For starters, most aid in
Africa should go to the dozen or so countries, such as Mozambique, Senegal, and Uganda, that
have democratic governments and have begun implementing sound, progrowth economic
policies. He also said there's already ample proof that well-run programs, when combined with
proper incentives, can spur tremendous progress for little money.
The World Bank also insists that recent studies show that the effectiveness of development
programs has been increasing. While Soros admitted that many of the millions he has donated in
corrupt, ill-managed nations are frittered away, a number of projects funded by his Open Society
Institute -- the main vehicle for his philanthropic efforts -- have yielded impressive returns on
investment. He cites programs in Russia and other former Soviet states to halt the spread of
AIDS, improve government planning in small towns, and set up Internet centers at provincial
universities as achieving major results with modest funds.

Soros also has been pushing his own, rather involved proposal for how foreign aid could be
better managed. He says the key is to build incentives into the process to encourage recipient
nations to compete for funds, and to make sure programs are properly implemented. He suggests
that nations donate to a new pool administered by the International Monetary Fund. The IMF
would have about $18 billion to work with, and each donor would have "special drawing rights"
to use the money for Third World antipoverty programs.

MENU OF PROJECTS. Because donor nations now tend to use projects to pursue their own
interests, rather than addressing the real needs of poor countries, they could not use the funds any
way they chose. Instead, they would select from a "menu" of development projects that had been
screened by a panel of politically independent outside experts. The specific projects would be
proposed by countries or nongovernment organizations, so essentially they would be competing
for a limited pool of funds.

After a donor decided on a project to fund, the project would be rigorously monitored -- and new
funds would depend on how well it performed. "The programs that are well conceived and fulfill
targets will get reinforced," Soros explained. "And the ones that fail, fail."

The IMF and G-8 nations actually have been discussing similar special drawing-rights proposals
for more than a decade. Only one nation has refused to endorse it -- the U.S. "O'Neill has said it
is too complicated for him," Soros said. "He has effectively put the kibosh on it."

SELLING O'NEILL. But Soros said his idea meets the Administration's desire to tie aid to
performance. "We really aren't that far apart," he said. In fact, Soros said he recently met O'Neill
to personally sell him on the scheme. "I said, O.K., let's make it simple. Just start with $3 billion.
Work with other nations to decide which countries qualify for the money. Then, you can increase
the total to $18 billion and really have an impact." Soros said O'Neill still isn't convinced.

The flaw in the new Bush program is that the amount of aid doesn't substantially escalate in the
future, even if analysis shows that the projects work splendidly. More important, Soros said, the
Administration has spurned efforts to coordinate antipoverty programs with other nations. "What
is lacking is a willingness to operate with others," he said. "They want to go it alone."

As a result, Soros said, he fears the new U.S. aid will be used just as it has been for decades -- as
a reward to Third World regimes for geopolitical purposes. "That is the reason foreign aid has
such a bad reputation," he said. "I am afraid it will be of the same character as the aid during the
Cold War."
TOO MUCH IMAGE. Where the U.S. is willing to spend lavishly is on military efforts. And
when it comes to trying to win "hearts and minds" after September 11, the main thrust has been
in communications efforts to sway public opinion. "We are spending a lot on propaganda," Soros
said. "But that in itself won't work. We need to spend more on substance, and then the image will
take care of itself."

To convince the world that the U.S. is "putting its money where its mouth is," Soros said, Bush
will have to come up with much more foreign aid than he is now offering.

--------------------------------------------------------------------------------

By Pete Engardio in New York

Edited by Douglas Harbrecht

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