PROFMEX-Consorcio Mundial para la Investigación sobre México

In The Open Society and Its Enemies, Karl Popper argues against the “closed society” of unquestioned authority advocated by such thinkers as Plato and Marx. Popper asks ‘How do we organize society’s institutions to prevent leadership (be it in individual or majority) from adopting authoritarianism?’

I give away millions of dollars because I care about the principles of Open Society, and I can afford it.

This work focuses on George Soros and his efforts to foster Open Societies worldwide through his establishment of the decentralized Open Society Foundation Network, to which, as a “responsible capitalist” and economic philosopher he regularly has “donated about half of his investment profits.” Much of that profit has been generated by his controversial Curaçao-based hedge fund operations worldwide, which are not approved by the U.S. Securities and Exchange Commission (SEC), thus preventing direct participation by U.S. investor. Soros, from Hungary via England, has been involved with creating a new bases for Civic Society in places ranging from Haiti to Thailand and from China to India as well as in Eastern Europe upon which we focus here.

To understand the historical importance of Soros, it is important to compare his Decentralized Model to the Centralized Model established by John D. Rockefeller Sr. and his son John D. Rockefeller Jr..

Although many observers have compared Soros to Rockefeller in that both established foundations to use their “dubiously” earned profits, this comparison is not fair for several reasons. First, the profits earned by the Rockefellers came from monopoly capitalism (which assures earnings, but Soros' profits have come from speculative capitalism (wherein no net earnings are guaranteed). Second, whereas John D. Rockefeller Jr. established the Centralized Foundation Model (albeit with de-concentrated administrative offices around the world, as we have seen in previous chapters), Soros founded the Decentralized Model.

Further, where the Rockefellers saw themselves as a God’s steward of wealth, Soros has seen himself (rightly) as fostering what he calls Open Society, a term which I capitalize here. Indeed, Soros contributed magnificently to the creation of Open Society through his donation of such tools of anti-authoritarianism as blank newsprint in the 1970s and fax machines in the 1980s. Both helped bring down the Soviet Empire in Eastern Europe.

Simultaneously, Soros has sought to institutionalize in developing countries Karl R. Popper’s concept of “Open Society,” which Soros equates with “civil society” but is what I denominate in this work as “Civic Society.” Let me summarize at the outset Soro’s thinking as distilled from my interviews with him and from his writing:

This definition fits historically with the desire of many thinkers to institute civilian government elected by and for the people, as distinguished from military- or religious-government and from government by dictators and their authoritarian henchmen (who claim to rule in the name of the people, who in reality have few or no rights and are discouraged from thinking for themselves). Civic society includes the private and non-governmental spheres as well as the governmental sphere. It differs, however, from Civic Society, which is what builds and maintains civil society—a distinction that Soros himself only makes implicitly, but funds explicitly.

As I articulate here the important difference between the Rockefellers and Soros, is that whereas the Rockefellers implicitly funded civic society as the basis for making the world better for mankind, Soros has implicitly funded Civic Society to help organize the civic society, without which the activists of Civic Society may not even be able to survive.

On the one hand, the Rockefeller family used U.S. civil society as its model to take to the world. This view of civil society evolved out of the English colonies and U.S. independence. As the family looked at Latin America, they saw it, in my view, as having been stunted in its development. They funded civil society in hopes of having society change itself.

On the other hand, Soros has much the same model but, in my view, seeks to apply it to places where civil society has been crushed, if it even ever existed. Thus he does not fund civil society, but rather Civic Society. This distinction is important as Civic Society represents the activist, socially responsible sphere of societal organization that makes organized demands on civil government (such as offering inputs and serving as watchdog as well as identifying problems) and cooperates with government to help maintain civil society.

Both the Rockefellers and Soros have used U.S. Tax Exempt Organization (TEO) law to contribute to human betterment worldwide, and they have been headquartered in New York City. But, they have very different ideas about how their grants are spent. Where the Rockefeller Foundation has de-concentrated administration to branch offices in the world, Soros has established independent foundations in the countries to which he donates. These Soros Foundations have a board of directors with leading private citizens who represent the various sectors of civil society and aim to develop the activist program of Civic Society.

Much of the history of the Rockefeller Foundation activities around the world has been written and analyzed because the Foundation itself has commissioned studies and organized its archives for independent analysis. In contrast, Soros has done little self-reflection and, because of his decentralized boards, has not developed a central archive where independent analysis can be undertaken. Both foundation structures rely on oral history to some extent, but the history of the Soros Foundation(s) is much more so, and even perhaps exclusively so.³ For this reason it is regrettable that Soros has spent so little time writing about what his foundations have accomplished and so much trying to elucidate Popper’s Open Society theories about the future of the world economy, without much success, as we will see below.

I began my study of philanthropy with the idea of focusing my research on the history of the activities of the Soros National Foundations. I soon realized the extent of problems in such an undertaking once I first met with George Soros in 1996. However, these discussions gave me an appreciation of his dilemmas.

When I first presented my preliminary thoughts to Soros in an effort to obtain his reaction and opinion, I offered several hypotheses. I suggested juxtaposing and examining at the outset the following issues:

Further, I hypothesized to Soros that he has taken a risky approach to international philanthropy that is uncommon in that he hopes that other U.S. and European foundations will follow him into East-Central Europe and eventually take up funding of his National Foundations once he retires. He has created no endowment to continue his work. In this regard, as he, by himself, has sought to create in each country an Open Society Foundation, which is supposed to become self-supporting, he may face the problem that competing foundations will not want to fund the Soros vision but fund their own. This is a logical conclusion as foundations and other funders tend to be jealous of their own fame. Unless competing foundations are at least co-founders of any initiatives, they rarely seem to want to provide funds at a later date (This truism was lamented by Nelson Rockefeller, whose AIA died in Latin America for wont of the full support needed to remain in operation.)

Further, I stated my concern that unless he suitably seeks to help countries change their TEO laws to meet international standards (such as the U.S,-Mexico international standard), it is difficult for risk-averse U.S. NPPOs to follow him into countries that seem problematic owing to the vagaries of what TEO law means from country to country. (Foundations seek to operate with the certitude that the usual and customary TEO activities may take place, otherwise their TEO status may be at risk in their home as well as the host country.)⁴

With regard to my hypotheses, Soros doubted that his Foundations could be easily compared for results, given the great difference in organization and activities from country to country. Moreover, each National Board is concerned that confidential data might be misused against them, especially where civil society is not strong and where there is no appeal against sanctions taken by governmental authorities.

Soros agreed that the future of his National Foundations may expire by between 2010 and 2015 unless new funders step forward and so far success has been negligible. And he admitted that it is ironic that, without responsive TEO laws based on international standards, it will be difficult to create meaningful Open Societies, especially because host countries rarely have a well-functioning donor sector in place without easy tax deductibility.

Nevertheless, Soros indicated to me his concern that attempts to change TEO laws to match the U.S. standard could “backfire,” given the anti-foreign tenor of many U.S. Congressmen who may look for opportunities to develop legislation that could inhibit the transfer abroad of U.S. official and private foundations assistance funds.

Although in my view Soros is unduly worried about possible U.S. Congressional activity against foundations,⁵ nevertheless, I had enough reason to reorient my approach to focus mainly on articulating Soro’s comparative place in U.S. philanthropy, to which he has created the Decentralized Foundation Model and personally offset the long-standing and problematic Rockefeller Centralized Foundation Model.

The question is intriguing about how Soros has become a lone “global trouble-shooter who uses philanthropy to solve problems where no one else dares to go,” and who tries to donate at least “half” of his yearly profits to his Foundations ($350 million in 1996 alone)⁷, which he has dedicated to help break statism in formerly Communist countries and in so many currently authoritarian countries. In this role as anti-statist he has written widely on the future of the world economy, philosophizing about economics.

According to Soro’s official biography posted on the Soros Foundation web site:

The foundations in the Soros network have spent since 1996 the following approximate amounts:

In addition to many articles on the political and economic changes in Eastern Europe and the former Soviet Union, Mr. Soros is the author of:

Although Soros has not talked much about his childhood, by one account he faced life as a child in the battleground that was Hungary, where he lived under German and Russian occupations. Departing for England in 1947, he went to school there and eventually graduated from the London School of Economics in 1952.⁸

By 1956 Soros moved to the USA, where in the 1960s he become an American citizen noted for his risk-taking investment practices, especially in world financial markets. This risk-taking brought him a fortune through currency speculation.

Since 1969, according to Soros on Soros, he has operated the Quantum Fund, which is a “little-regulated, private-investment partnership based in Curaçao” (an island near the coast of Venezuela that belongs to but is autonomous from the Netherlands). The Fund is geared to wealthy non-U.S. individuals, who typically attempt to achieve quick, very large returns based on highly leveraged “bets” that currency will appreciate or depreciate. His early bets on currency culminated in his 1992 “breaking the Bank of England,” which could not maintain the value of the pound in the face of the Soros-led speculation that England’s currency was “seriously over-inflated.”⁹

Soros has not see himself so much as a speculator but as an investor who keeps country central banks “honest.” If they wrongly value their currency for economic and political reasons, he will expose them for going against the free market. Indeed, in 1992 apparently part of his winnings from England came from bad bets on the pound that had been placed by the dictator of Malaysia Mahathir Mohamad, who was himself speculating with his country’s currency—as if it were his own money.

When crony capitalism caught up with Asia in the mid-1997 collapse of currency and markets starting in Thailand and moving on to Malaysia, Indonesia, the Philippines, and South Korea, Mahathir attacked Soros, blaming his speculation for having destabilized the region.¹¹ In a interesting debate conducted in the world press, Soros denied being the cause of the panic, and Mahathir insisted that without currency controls such as enacted by Chile more than a decade earlier, no country could survive the onslaught of billions of dollars in sudden capital inflows and outflow. About the time that Mahathir instituted currency controls on September 1, 1998, however, Chile was already in the process of deciding to return to the free currency market, concerned that unless it did so investment would go elsewhere.

In the meantime, Soros testified before the U.S. House Banking Committee investigating the Asian collapse to say that Malaysia's newly imposed currency controls would have a "disastrous" effect on its own economy and also hurt neighboring countries by causing capital to flee in fear that capital controls might become a generalized solution to the region’s problems. Soros told the Congressional Committee that relief through lower interest rates and stock market gains could only be ``temporary because the borders are porous and money will leave the country illegally . . . . [and] the local capitalists associated with the regime will be unable to salvage their businesses, unless the regime itself is toppled."¹²

What Soros might also have told the Committee was that his New York City computer data banks (which monitor hour-by-hour world prices, exports, imports, and financial flows, among other types of data to be correlated with each other and then related to political information) had detected what Jeffrey Sach’s would articulate in the New York Times as the real Asian problem (which was not Soros) but:

Soros may have won currency bets in Malaysia (if he did win), but he has not always won. He had big losses in Mexico in 1994-1995 when he bet wrong on the peso and on the stability of the country. His losses came also in his purported investment in the Santa Fe Development Project on the western edge of Mexico City. Soros has also noted that he lost $2 billion in the late 1997 collapse of the Russian ruble and stock market values.¹⁴ Soros has admitted that he bet that the G-7 countries would not permit such a loss in value, especially because of the heavy exposure of Germany in Russia. And to matters, Malaysian currency controls turned out to be mildly salubrious, and were relaxed by 2000.

Soros also lost hugely in the collapse of hi-tech stocks in America in March-April 2000 as well as from the continued fall of the Euro in relation to the dollar. These events brought relative disaster to Soros. Danny Hakim of New York Times explained matters on April 29 as follows:

Soros' larger record is intact. The Quantum Fund has returned, on average, 32 percent a year between 1969 and 1999, after fees. Even with the recent troubles, the compound return is phenomenal. Will the vicissitudes of the modern market transforms the hedge fund industry in ways that made it less practical to run a so-called macro fund, which is free to use a wide variety of financial instruments in any area of the world? The world waits to see how Soros will make his next investments, which are needed to generate the profits that maintain his global Network of Foundations operations.¹⁵ Soros standing as the largest owner of cattle and cattle land in Argentina, for example, will not generate the income so needed for his philanthropy in Eastern Europe, not to mention the other areas of the world.

Thirteen years before he won his $10 billion bet against the pound sterling (September 1992) Soros had begun to use his gains from speculation to support the opening of closed societies. In 1979 he established in New York City the Open Society Fund as an NPPO to support dissidents living under the Communist regimes, but he kept a relatively low profile in doing so.

Indeed, Soros had been interested since his period in England in fostering the democratic values of “an Open Society,” as defined by the philosopher Sir Karl Popper. Determined by 1979 to make Popper’s concept into a practical program, Soros established the Soros Foundations/Open Society Fund, Inc.

Soros credits his membership in the Helsinki Watch and Americas Watch human rights groups as sparking his 1980 creation of the Open Society Fund to offer a number of scholarships in the United States to dissident intellectuals from Eastern Europe.¹⁷ To develop that spark, he recruited Aryen Neyer, who was the head of Human Rights Watch, to become the President of Soros’ Open Society Institute in New York City. ..

Recognizing the importance of incisive and responsible journalism, Soros began to fund a broad array of activities to train and equip reporters, editors, and media managers for their new responsibilities in democratic, free market societies. His ultimate goal has been to create an informed electorate that has access to diverse, objective are reports supplied by a press corps with high professional standards.

Soros moved with high visibility into philanthropy by establishing the Soros Foundation in Hungary (1984), China (1986), USSR (1987), and Poland (1988), as shown in Table 1.

After the fall of the Berlin Wall in 1989, Soros began to reorganize his own activity by turning over to his staff the details of managing his hedge fund so he could immerse himself in the world of philanthropy. He was perhaps the first, and among the few, who recognized the urgency of moving to organize civil society and Civic Society in the ruins of the Russian Empire after 1989. Otherwise, the socialists would remain in place. Soro’s diagnosis was correct in that hardly had Russia and Eastern Europe overturned their dogmatic regimes when authoritarian forces attempted to seize power. In arguing that Eastern European countries had a complete absence of democratic experience and no modern political infrastructure in place to support their new and fragile democracies, Soros called for a philanthropic type of Marshall Plan, not to rebuild, but to build basic civil society. When his call went largely unanswered, Soros moved ahead on his own. By 1990 he had created three more foundations. Moving into Central and Eastern Europe and the Soviet Union, he dramatically accelerated his giving level. As Soros explains, “I have used financial markets as a laboratory for testing my theories...[on how to capitalize on] the collapse of the Soviet Empire.”¹⁸

Table 1 Soros National Foundations Sub-Total Actual Outlay, 1994

Founded	Country	US$ Million
1984	Hungary	16.0
1986	China	---(a)
1987	Russia	25.9
1988	Poland	5.0
1990	Bulgaria	6.5
1990	Estonia	3.0
1990	Lithuania	4.5
1990	Romania	12.4
1990	Ukraine	12.6
1991	Yugoslavia	11.5
1992	Albania	2.8
1992	Belarus	3.2
1992	Bosnia & Herzegovina	4.7
1992	Croatia	4.9
1992	Czech Republic	1.3
1992	Estonia	3.0
1992	Latvia	2.9
1992	Macedonia	8.0
1992	Moldavia	2.7
1992	Slovenia	3.0
1993	Kazakhstan	.2
1993	Kyrgystan	.2
1993	Slovakia	2.4
1993	South Africa	5.0
1994	Georgia	.1
1994	Rhoma (Gypsy)	22.7

Sub-Total		164.5

(a) Forced by the Chinese Government to close in 1993
SOURCE: Soros Foundations, Building Open Societies (1994); and OSI, New York (1995)

Calculated from: Soros Foundations,“Building Open Societies" (1994); and Open Society Institute (New York, 1995)

The Soros National Foundations by 1994 stood at 26—excluding China which had been forced to close in 1993 after completing seven years of what the Chinese Government called “subversive activity.” National Foundations now had no office in Asia, but in 1993 it added South Africa. Each of these operations took an inordinate amount of Soro’s time as he interviewed candidates to direct operations in each country and helped to select the distinguished representatives of Civic Society that would determine how the funds are spent.

With regard to budget, data in Table 2 shows that the National Foundations spent 55% of the total Soros Foundation outlay of $300 million in 1994. The Soro’s main office in New York City allocated only 12%, including about 2% for his “Presidential Grant” fund and various programs such as the important construction of a data base on war crimes in the Former Republic of Yugoslavia. The expenditures reveal the Soros concern with the deterioration of U.S. health and medical programs.

The 1994 Soros Foundations expenditures reveal that 17% went for the International Science Foundation (which includes recruiting former Russian scientists and sending them to countries where they can make a living without having to build dangerous weapons systems), and about 8% for Soro’s International Social Science Education Program (which include training in policy studies, economics, and business administration).

The Central European University, which Soros was reluctant to establish but finally did so, accounted for about 13% of his Foundations outlay in 1994, yet another constant commitment. CEU has been more successful than the National Foundations at raising its own funds, but it is still far from having established the necessary endowment to make it self-sufficient.

The Central European University (CEU) was founded in 1990 with campuses in Budapest, Prague, and Warsaw. The CEU is accredited in Hungary as a degree-granting educational institution to “prepare the leaders of the future.” The CEU press publishes in the English, Czech, Hungarian, Polish and Slovak languages provides news on the region in the domains of Literature, Political Science, Economics and European Studies.

The Consortium for Academic Partnership, established in 1993, has expanded to include what Soros calls the “Virtual University.” This program includes:

With regard to research, Soros established the International Science Foundation, especially to fund former Soviet and the Baltic States scientists; and a basic fund of $100 million enabled them to continue their research in their native countries.¹⁹ Emergency grants were given out of $500 to some 30,000 scientists, travel grants and scientific journals were provided. Eventually the International Science Education Program would make the Internet available not only to the scientists but also to schools, universities, libraries and media.²⁰

It has been said that George Soros has his own foreign policy. He has the money to back up his ideas. In 1994 alone, his Foundations around the world gave away $300 million- more than the economies of Portugal, New Zealand, or Ireland. High-profile projects included a water purification plant in Sarajevo.²¹

Although theoretically the National Foundations are independent and can seek funds from any source, the reality has been that because Soros is basically the sole funder, they must develop projects within the Soro’s general guidelines or face non-renewal. Some Foundations, such as the one in Russia, saw Soros oust “corrupt” Open Society leaders, who chose to spend the NPPO funds on new Mercedes autos for the staff rather than follow the Soros guidelines. Soros did not have to personally dismiss Foundation officials, but signaled to the National Board of Directors that no funds would be forthcoming until appropriate changes were made.

Table 3 Soros' New National Foundations 1995-1997

Founded	Country
1995	Haiti
1995	South Africa
1995	Burma*
1997	Guatemala
1997	Southern Africa

* In Burma, what had been a Project in 1994 operated out of the New York Office because of the military dictatorship's hostile view of the idea of Open Society

Table 4 Soros’ 31 National Foundations in 2000 (Organized alphabetical order)

Country	Name
Albania	Open Society Foundation for Albania
Armenia	Open Society Institute Assistance Foundation - Armenia
Azerbaijan	Open Society Institute - Azerbaijan
Belarus	Belarusian Soros Foundation
Bosnia and Herzegovina	Open Society Fund -Bosnia and Herzegovina
Bratislava (Slovakia)	Open Society Fund - Bratislava
Bulgaria	Sofia Open Society Foundation - Bulgaria
Croatia	Open Society Institute – Crotia
Czech Republic	Prague Open Society Fund
Estonia	Open Estonia Foundation
Georgia	Open Society Georgia Foundation
Guatemala	Soros Foundation - Guatemala
Haiti	Foundation Connaissance Et Liberté
Hungary	Soros Foundation - Hungary
Kazakstan	Soros Foundation - Kazakstan
Kyrgyzstan	Soros Foundation - Kyrgyzstan
Latvia	Soros Foundation - Latvia
Lithuania	Open Society Fund - Lithuania
Macedonia	Open Society Institute – Macedonia
Moldovia	Soros Foundation - Moldavia
Mongolia	Foundation for Open Society Mongolia
Poland	Stefan Batory Foundation
Romania	Foundation for an Open Society Romania
Russia	Open Society Institute - Russia
Slovenia	Open Society Institute - Slovenia
South Africa	Open Society Foundation For South Africa
Southern Africa	Open Society Initiative For Southern Africa
Tajikistan	Open Society Institute - Tajikistan
Ukraine	International Renaissance Foundation
Uzbekistan	Open Society Institute - Uzbekistan
Yugoslavia	Fund for an Open Society - Yugoslavia

With regard to the make-up of the 31 National Boards, the Soros Foundation Internet page announces that each is formed by “distinguished citizens from different ethnic, geographic, political, and professional backgrounds. Given the diversity of social, political, and economic conditions in the countries of the network,” and although the National Boards and their programs vary in nature and urgency from one foundation to another, “all of the Foundations' activities share an overarching common mission: to support the development of an Open Society.” The local nature of the decision-making process at the Foundations is “one of the distinctive features of Mr. Soros' approach to philanthropy.”²³

A list of the 31 Soros National Foundations serving as Operating Foundations is shown in Table 4. According to Soros, these national foundations are committed to certain common goals, such as the rule of a democratically elected government, a vigorous, diverse civil society, respect for minorities, and a free market economy. They also share a commitment to working together across national, ethnic, and religious boundaries to achieve these goals and such regional objectives as cooperation and peace among neighboring countries.

The manner in which the National Foundations pursue these goals is up to each board of directions and staff, which sets program priorities in response to the particular situation and problems in each country. These National foundations support, in part or in whole, a variety of fellowships abroad as well as national meetings and projects to train a corps of persons who understand the goals of Open Society and the need for NPPOs to serve as countervailing power to government.

Soros' Foundations do not enjoy a support base of NPPO activity such as in the USA where the NSFRE (National Society of Fund-Raising Executives) holds seminars with leaders in the private sector. NSFRE informs them of their responsibility to raise NPPO funds for the general welfare of the country. The Soros National Foundations have taken on this responsibility. They train business executives to make them aware of the fact that the NPPO sphere has two sides—fund raising from citizens and companies as well as fund expenditures.²⁴

To inculcate the “culture of giving” and the “charitable impulse,” the National Foundations, have drawn on NSFRE documents providing both a “Code of Conduct for Fund Raisers,” and a “Donor Bill of Rights.” The Code reads as follows:²⁵

[NSFRE and its Code of Conduct exist] to foster the development and growth of fund-raising professionals and the profession, to promote high ethical standards in the fund-raising profession and to preserve and enhance philanthropy and volunteerism. Members of NSFRE are motivated by an inner drive to improve the quality of life through the causes they serve. They serve the ideal of philanthropy; are committed to the preservation and enhancement of volunteerism; and hold stewardship of these concepts as the overriding principle of their professional life. They recognize their responsibility to ensure that needed resources are vigorously and ethically sought and that the intent of the donor is honestly fulfilled. To these ends, NSFRE members embrace certain values that they strive to uphold in performing their responsibilities for generating philanthropic support.

Further, the Soros National Foundations draw upon NSFRE’s Donor Bill of Rights to teach the “inner-meaning” of philanthropy to fund-raising executives in the private sector but also to reassure prospective donors as follows:²⁶

That the Soros National Foundations must create the “culture of giving” reflected in the NSFRE Code and the Bill of Rights constitutes an added burden on organization and activities that is almost beyond comprehension in the USA. American NPPOs take for granted that organizations such as NSFRE provide the infrastructure for funding philanthropy. For example, America enjoys the advantage that NSFRE-trained executives not only convince their employers to contribute to NPPOs, but also move back and forth between the NPPO sector and the private sector.

Beyond NSFE, it is important to note that the graduates of the UCLA School of Public Policy represent the new trend in U.S. public-policy training. Previously most graduates went into government or international-agency service. Today only one-third do so, one-third go into the private sector, and one-third into the NPPO sector. The profession of philanthropy represents one the growth services in America, whether it is on the fund raising side as a Certified Public Fundraiser or as a foundation staff member.

Without the infrastructure described above and the supporting context of the NPPO sector to support his National Foundations, Soros has been concerned from the outset about how to end his role as sole funder. In his 1994 Annual Report, for example, suggested that the National Foundations must at once build the culture of giving as the basis of Open Society. He sees these interacting goals, which he admits are perhaps too ambitious,²⁷ as building the infrastructure and institutions necessary for the National Foundations to create an Open Society based on a broad array of programs for education, children and youth, civil society, human rights and humanitarian aid, science and medicine, arts, culture, and economic restructuring as well as innovative media and communications programs.

Soros has used media (newspapers, telecommunications and eventually the Internet) as the main tools in his crusade to establish the opening of societies. His prominent role in bringing down the Iron Curtain is indisputable.

The dramatic revolution and expansion in communications of the late 1970s was expanded to Eastern Europe through the distribution of fax and copying machines. These began to break the Communist hold on distribution of information. With the human-rights orientation of spreading information, one of Soros’ first projects was to offer photocopying machines to cultural and scientific institutions. This was the perfect way to undermine the Communist Party control of information in Hungary. As copying machines increasingly became available in 1984, the Party apparatus could not control the machines and the dissemination of information. As Soros has stated, his foundation in Hungary enabled people who were not dissidents to act, in effect, like dissidents. Similarly the Soros grant program for writers increased their independence, therefore helping to bring about the “disarming” of the Party.²⁸

Soros also tried to set up a foundation in China. He established in 1986 the Fund for the Opening and Reform of China. The Chinese government in the long bitter aftermath of the Tiananmen Square massacre closed down this China operation. In the process, Soros was labeled a “CIA agent.”²⁹ He remains optimistic about China, because of the increasing number of foreigners living there and the rise of the Internet. This new technology builds on the success of the fax in spreading information, making it increasingly impossible to re-establish the rigid thought-control that prevailed previously.

Censorship in Central and Eastern Europe and the former Soviet Union is now less explicit than it was under communist regimes. These authoritarian governments required that all broadcasts and newspapers pass through an official censor. Governments still control much of the physical infrastructure of media transmission therefore exercising indirect censorship.³⁰ To offset their censorship, the Soros Foundations have provided the print media access to international news services and electronic mail as well as equipment, including desktop computers, printing presses, and even blank newsprint. In Russia, the foundation is providing funds to refurbish more than two dozen independent radio stations and to organize them into a network for sharing information. Other subsidies from national foundations in the region include:

Radijocentras, Lithuania;
Radio Vitosha, Bulgaria;
Uniplus, Romania;
Radio Tallin, Estonia;
Radio Echo of Moscow, Russia;
Feral Tribune, Croatia;
Ieve magazine, Ukraine;
Pritonmost, Czech Republic;
Vreme, Yugoslavia

One of the most controversial initiatives undertaken by the Soros-funded programs in Romania and Macedonia has been the acquisition of second-hand American printing presses. Soros' support for democratic movements has been criticize as meddling in internal affairs. For example, in Romania in 1991 the Soros Foundation faced the government’s attempt to quash news by increasing prohibitively the price of newsprint at election time. The Foundation bought newsprint abroad and trucks to import paper so that independent newspapers could continue to publish. President Iliescu subsequently accused Soros of supporting the opposition, to which Soros responded that he was only supporting a pluralistic, free press.³¹ Since 1994, Soros has been conducting the first Romanian public surveys ever taken. They are published as the Public Opinion Barometer. The goal is to take the pulse of opinions about the country’s economic and political life.

On another front, Soros Foundations in Romania, Russia, and Ukraine have sent local journalists to CNN’s U.S. headquarters in Atlanta, Georgia, for the six-week International Professional Program. The Foundation in the former Yugoslavia sent reporters to London for two months of training and work on the Balkan War Report, a highly regarded publication of the Institute for War and Peace Reporting. These projects reflect the Soros Foundations’ priority on communications that support the establishment of a strong, competitive and independent media, as well as the expansion of telecommunications throughout the above mentioned regions.

Rather than creating competition, ironically Soros found that in one major case he has had to subsume it in order to save it—the case of Radio Free Europe. With the tremendous reduction in funds supplied by the USA, Radio Free Europe would not have survived had Soros not moved it in 1994 to Prague and reorganized it as part of his Open Media Research Institute (OMRI).³² In this case Soros entered into a joint-venture to acquire Radio Free Europe’s Research Institute and, under a fifty-year lease, its archives.³³

Two of the most relevant educational programs of the Soros Foundation are the Transformation of the Humanities Project and the Social Science Projects, which attempt to undo the previously state-controlled educational system in Russia and the other countries of the former Soviet Union and ex-satellite states. The ambitious project to replace Marxist-Leninist text books and teaching in school and universities has been undertaken in cooperation with the Ministry of Education and commissioned thousands of books, training professors, giving grants to innovative schools, introducing new curricula at selected demonstration sites in various disciplines.³⁴

The new textbooks, as well as Western texts adapted and translated for Russia, are being published at a rate of ten a month and 10,000 copies a run. The Transformation of Humanities Project has been replicated in Ukraine, Lithuania, Belarus, Estonia, Kazakhstan, Kyrgystan, Romania, Bosnia and Herzegovina, and Macedonia.

Russia has been a difficult country for Soros. He began organizing the Soviet Cultural Initiative Foundation in 1987 only to have the management of it fall into the hands of a reformist clique of Communist Youth League officials, who paradoxically proceeded to form a closed society to promote an open one.³⁵

For Soros, Gorbachev had the great merit to have first shaken the rigid power structure and boken the isolation into which the Soviet Union had fallen. Gorbachev thought of Europe as an open society, where frontiers lose their significance. He envisioned Europe as a network of connections, not as a geographic location. This network extended the concept of civil society through an international arena. Gorbachev could not implement such ideas, but he must be credited with having planted them in fertile soil.³⁶

By the 1990s, the Soros Foundations began widespread dissemination of the computer in Russia and Eastern Europe to open the even the most remote areas to the expanded communications links required for mass organization and concerted action. Thus, the Hungarian-born philanthropist Soros has embarked on an ambitious plan to set up 30 Internet training centers across the far-flung regions of Russia.

Meanwhile, Bill Gates, whose business visit to Russia happened to coincide with one of many Soros’ visits, may have been influenced implicitly by Soros. He has established his own program to help set up in Russia Internet training and access to Internet data bases.³⁷ Gates, who has no philanthropic infrastructure of his own around the world, is helping to establish the spread of computer culture in the developed world. This culture created the Internet, which Soros has used to link his National Foundations via electronic communication as well as to facilitate the spread of his ideas.

Soros’ goal has been to turn the closed society of totalitarianism into an Open Society that follows Popper’s prescription for setting “free the critical powers of man.”³⁸ Before the revolutions that swept Central and Eastern Europe, dissidents had a similar goal; they called it “civil society,” defined by some as “the connective tissue of democratic political culture.”³⁹

At the end of 2000 we were fortunate to witness in the Czech Republic a case which helped us to define the concepts of civil society and Civic Society. Staff at Czech Television refused to accept the appointment of new director-general Jiri Hodac. They saw the parliament-elected Czech Television Council as dominated by Vaclav Klaus, leader of the Civic Democrats (ODS) who was mainly interested in politicizing the news by interfering with their editorial independence.⁴⁰

Rebel employees led by the station's journalists occupied studios, which they saw as an organ of civil society. They declared a strike and began producing their own versions of new programs. Backed by journalist organizations and unions throughout the Czech Republic (including 120,000 petition signers) and Europe, they have demanded through Civic Action that the station retain its non-political role in civil society. Although Hodac managed to blackout the rebels' broadcasts and replace them with news prepared by a team loyal to him, viewers with satellite and some with cable could still see the rebels' news.

Reuters News Service reported the Czech television conflict as having exposed growing rifts in Czech society over the shape of democracy, 11 years into post-Communist transition. It cited the following facts:

Here the concepts of civil society and Civil Society are clearly juxtaposed; and the difficulty of maintaining freedom of the press under State Television is clear until Civic Society remains vigilant, as in today’s Czech Republic. Further, the case raises the question about whether or not the Czech Republic is ready to join the European Union.

This case fits within Soro’s conception of Open Society, wherein closer association between the nations of Europe is desirable, provided that the State not define or dominate the international activities of the citizenry. His concept holds great appeal for people who have been deprived of the benefits of an Open Society.

Soros’ priority is to help provide access to the world of information not only to journalists, as we have seen, but to other professional groups, especially including librarians and scientists as well as individual citizens. For Soros it is Electronic mail and Internet connectivity that hold the possibility of bringing to East-Central Europe and Russia a new method of communications particularly suitable to the building of open societies. This is exemplified by the Czech use of the media against the attempt by Statist-oriented politicians to control the media.⁴²

Soros has never been able to separate his business thinking from his philanthropy, which is perhaps a good thing, except that he has wasted his time attempting to rephrase the meaning of Karl Popper’s thoughts about Open Society. He has done this almost as if to convince himself rather than his readers that Popper’s theory is more as a practical guide than a philosophical insight.

In his travels to Russia and Eastern Europe in the early 1990s, Soros became convinced that many citizens there were disillusioned and angry with the West, because the imported market economy concept lacked a concept of common interest.⁴³ Hence he soon found himself arguing that the U.S. model of untrammeled pursuit of self-interest could not always or everywhere represent the common interest.

Overly generalizing the meaning of his travels at one point in time, Soros argued that the U.S. model, which now dominates world development thinking, requires new rules and standards of behavior to circumscribe and contain competition in order to sustain it. To this end he has suggested that the concept of Open Society has the answer for developing new standards—Open Society being based on recognizing the fact that the world in which we live is inherently imperfect, as is human understanding of it. In Soro’s philosophy, the great merit of Open Society is to permit correction of faults. So far, so good, but then Soros has suggested that the Western democracies are morally bankrupt if they subsume common interest to the pursuit of narrow self-interest.⁴⁴

Taken by these ideas, in 1998 he wrote The Crisis of Global Capitalism: Open Society Endangered,⁴⁵ in which he spent too little time telling us about his own experiences in the market and too much time telling us how the world should be reorganized to prevent capitalism from destroying itself.

Now in 2000 he has written yet another philosophy of the market place entitled Open Society: Reforming Global Capitalism, wherein he tries to keep up with modern philosophic studies by adding equations, which only muddy his thoughts about the nature of Open Society.⁴⁶

But let us see what Sylvia Nasar, a fellow at Cambridge University who is writing a book on 20th-century economic thinkers has to say in her brilliant analysis of Soros' economic philosophy:⁴⁷

Open Society: Reforming Global Capitalism is only a marginally better book than the windy and portentous Crisis of Global Capitalism, published just two years ago--and then mostly because in the new book Soros recants some of his old conclusions. It's a shame. Buried under all those vague philosophical musings, pretentious phrases (''reflexivity,'' ''radical fallibility'') and grandiose proposals, Soros has a valid point.

[Soros] is correct in saying that capitalist economies tend to be unstable and that the source of instability can usually be traced to the logic--or illogic--of financial markets. The idea that financial markets are prone to booms and busts, herd behavior and self-justifying panics is, of course, not exactly new. Nor is the notion that investors' mood swings can, unless contained by government intervention, inflict horrible and utterly unwarranted damage on the ''real'' economy. John Maynard Keynes--the great British economist, who also happened to be a highly successful investor--made these very observations at the start of Great Depression when he urged financial authorities to adopt an active role in stabilizing investors' expectations.

While Soros' point is hardly original, it's one that tends to be forgotten in good times. If Wall Street were only left to its own devices, goes a sanguine and often heard refrain, the global capital market would always reward economic virtue and punish only vice. For most of the last quarter-century, this laissez-faire attitude seemed to fit the facts. As global finance grew by leaps and bounds, most developing countries grew faster than developed ones. And those emerging economies that tied their fortunes most closely to international financial markets grew fastest.

Then in the late 1990's virulent panics not seen on a large scale since the 1930's suddenly caught the world by surprise. Just three years after Mexico's 1994 peso crisis, the Asian miracle economies were toppling like dominoes. By 1998 Russia had defaulted on its foreign debt and within a year Brazil was teetering on the brink. The global crunch hardly conformed to the notion of a few bad countries getting their just deserts. Market fundamentalists tried to claim that the guilty were only getting the punishment they had coming. But to most observers, including Alan Greenspan, the chairman of the Federal Reserve, the consequences seemed vastly disproportionate to the causes. Investors rushed for the exits, making even the United States begin to look vulnerable. As the Dow dived and the bond market froze, it appeared to some that the triumphant march of global capitalism was about to come to an abrupt and nasty end.

''Prophecy is the most gratuitous form of error,'' the novelist George Eliot once dryly remarked. At the height of the crisis in 1998, Soros abandoned his earlier, prudent habit of avoiding public comment, and embarked on a series of wildly mistaken pronouncements. In The Crisis of Global Capitalism, he claimed that global capitalism was ''coming apart at the seams'' and predicted its imminent demise.

[Soros admits:] ''In retrospect, I was wrong to predict disaster, and now I have some egg on my face.'' Unlike the Yom Kippur war in 1973 or the Iranian revolution of 1979, the turbulence on the far side of the globe did not produce recession in the United States or Europe. Meanwhile, the economies that were knocked down during the panic have staged an amazingly fast comeback. Mexico, the first victim of capital flight in the 1990's, has since repaid its $26 billion bailout and now boasts 6 percent growth and an inflation rate of less than 10 percent. South Korea is expanding at 11 percent, wiping out the 7 percent decline in its output during the crisis. Singapore, Hong Kong and the Philippines have also rebounded. Thailand and Indonesia are still struggling, but show signs of recovery. Brazil, which got a $45 billion aid package at the end of 1998, is expanding at a 4 percent rate after two years of zero growth.

Soros's even more dire political prophecies did not pan out either. ''I predicted that nationalist forces will engage in an orgy of expropriation,'' he says. Instead of embracing fascism, as he feared, most of the affected countries adopted reform programs and, eager to keep new technology coming their way, did their best to get foreign investment flowing again. ''Under current conditions it simply does not pay to opt out of the system,'' he writes now. ''There may be some rogue states, but they are unlikely to bring down the capitalist system. The end of the system is not currently in sight.''

In explaining his wrongheaded predictions, Soros says that he underestimated the speed and smoothness with which financial authorities--including the much-maligned International Monetary Fund--would contain the crisis. (Someone else might go farther and say that international financial safeguards and intervention worked far better in the 1990's than they had during the third-world debt debacles of the 1980's.)

Thus it's odd that Soros hasn't abandoned his quixotic enthusiasm for a big fix. To be sure, he admits that there's little political appetite for his pet proposals, whether a world central bank or an economic NATO. This may be an age of global finance, but it's surely not an age of global government. And vague as he is on details, he never says why he thinks that the kinds of piecemeal reforms that are currently on the table--like tougher international banking standards, debt forgiveness or more gradual financial deregulation in emerging economies--aren't a workable way of regulating markets without strangling them.

The most interesting passages in Open Society are the introspective ones, in which Soros reflects on his own fortunes. Like the financial wizards who ran Long-Term Capital Management, Soros wound up with more than egg on his face. The man who brought the Bank of England to its knees in 1992 [and bet correctly] against the Thai baht in 1997 . . . became the chief victim of his own bearish theories. ''I envisaged declines of various shapes and sizes, but the idea that the stock market may go on to new heights did not enter my field of vision,' he writes.

The great contradiction in Soro’s philosophy of economics is not only that he engages in the type of prophesizing that his “mentor” Popper warned against,⁴⁸ but that as leader of Open Society, he calls for huge new bureaucracies and even a “Grand Alliance of Democratic Countries” to regulate world economy, currency flows, and trade.

Yet in late 2000 when interviewed in Chile, he sounded much as if he would be an excellent candidate for Ernesto Zedillo to invite to join the new U.N. Commission on Financing the Globalization of Underdeveloped Countries. (This Commission is more concerned about assistance funding—dear to Soros’ heart—than with investment flows. Soros seems to agree implicitly with Ernesto Zedillo, the former President of Mexico who chairs the Commission, that “the problem that the world faces is inadequate capital flows from countries at the center to countries on the periphery. It is going to be a chronic, not a temporary crisis, and I believe it is already underway . . . . [A] crisis cannot be avoided, but I believe that positive incentives can be created that could promote investments in emerging countries and those should be put in place by the international financial institutions.''⁴⁹

But at least Soros is brilliantly consistent. In his world of philanthropy he has created a huge bureaucracy involving 31 National Foundations and countless programs. Indeed by the late 1990's, he began to be as much concerned with problems in the USA as with those where his National Foundations are located.

Soros’ Foundations have heralded an era in which social and cultural responsibility, controlled by the State up to 1989 in Russia and Eastern Europe, is defined by private giving. Soros Foundation grants to Eastern Europe outstrip the amounts given by most Western corporate foundations in Europe. Soros’ funding has gone less to construct capitalism than to rediscover the human riches of intellect that communism plundered.

Soros’ 1989 call for Marshall Plan for Eastern Europe and Russia to build civil society from the ground up was unfortunately not heeded by Western governments who preferred to promise much (but deliver little) economic aid. Germany was the exception owing to the cost of reuniting East with West Germany into one Germany. Tragically, Soros’ new Marshall plan (1989) was “greeted with amusement” by European leaders,⁵⁰ who clearly lacked the imagination and will to understand the depth of development problems faced where the Communist Party had ruled.

Although Soros called for the building of civil society, he himself has funded what I call Civic Society, except in the case of the $50 million he granted to the new Macedonian State in order to save it from bankruptcy.⁵¹

As we have seen in analyzing Soros’ programs, where many have had a salutary impact by giving hope (if not always working out the way Soros and the National Foundations had hoped), plans did not work out in China and Belarus. Further, in other countries Soros has suffered temporary setbacks (each of which demands an extraordinary amount of his time). For example, in 1996 a problem emerged in Serbia when the Milosevic regime in Belgrade dealt a financial blow to the Soros National Foundation and its media subsidies in two ways. It hurt all independent media by revoking the registration of the Soros Foundation, forcing it to close down operations in Serbia and Montenegro. This also slowed the work of the Open Society Institute work in Belgrade that was developing an important part of its Balkan War Crimes Database.⁵² In the end, Soros persevered and helped bring about the end of the Milosevic regime in 2000.

Another setback came in 1995 from within Soros' own National Foundations network during the Tallin (Estonia) meeting of the East-East Program. Soros, had inveighed his National Foundations to seek donations from U.S. and European foundations until a responsible civil society could be created to foster the culture of giving and be able to fund them (in a matter of decades). Instead, at this meeting he heard his Foundation delegates from Eastern Europe and Russia conclude the opposite. Ironically, the Open Society Institute meeting, which itself was funded from the USA, determined that “international funding is not the solution for the long term future” of the NPPO sector in Russia and Eastern Europe. Hence, the meeting concluded that it should look inward to develop private funding sources in each country of the region.⁵³

The East East conclusion not only ran counter to Soros’ own experience of encouraging the flow of NPPO funds from outside into Eastern Europe and Russia, but owing to the lack of domestic philanthropy in each country, placed the burden of continued funding directly on Soros’ shoulders.

Perhaps the problem has been caused by Soros himself, who as indicated above, has never fully or effectively recognized the need to develop the NPPO legal framework that will facilitate the in-flow of funds from the USA. Without this, the NPPO sector fostered by Soros will remain stunted. The exception is PHARE funding from the EU, which often mixes its philanthropic grants with small business grants that run counter to U.S. NPPO law. Neither the governments nor the private sectors in Russian and Eastern Europe have the funding needed to substitute for and expand upon Soros’ funding. This funding is limited by Soros' own personal ability and pace.

The problem comes back to the fact that without a NPPO legal framework to encourage internationally-oriented foundation “investment” in the human capital of Eastern Europe and Russia, the Soros Foundation Model cannot easily be followed. This leaves Soros to stand alone as the funder of only resort. His challenge is not to be the sole funder in each country. The task of establishing the open basis for civil society requires the spending of billions of dollars by funders making the thousands of decisions no one organization can make.

Beyond Soros’ use of funds to support debate and spread of information, he must now support the NPPO legal basis for the establishment of competing foundations. Without competition, the Soros Foundations' decisions about whom to fund have the political consequence of alienating those who are not funded and who are without other recourse as the State contracts. This is a daily fact of life faced by the National Foundations, who are often accused of favoritism. Where NPPOs in the USA have the luxury of suggesting to applicants for funding that they apply to a foundation with which they compete, the National Foundations have little such luxury.

What is needed is the establishment of U.S.-Mexican type NPPO legislation that will facilitate the inflow of funds from U.S. grant making NPPOs as well as permit foreign investors to establish company foundations that would leave some of their profits in Eastern Europe and Russia. This strategy was followed by the Ronald McDonald Foundation in Romania. This organization has unrivaled experience in such ventures. Their action helped ward off the attack of “nationalists” who claim, erroneously (I hope), that their country is being sacked by greedy foreign capitalists.

Soros argues that to delve too deeply into national laws regulating the activities of his National Foundation invites a bad press. However, developing a standard NPPO legal framework for Russia and Eastern Europe will facilitate the in-flow of funds from the USA. Without it, the NPPO sector fostered by Soros will remain stunted. Neither the governments nor the private sectors in Russian and Eastern Europe have the funding needed to substitute for and expand upon Soros’ funding, which remains the sole responsibility of Soros’ personal ability to maintain his profits at the level required to support the giant 31 National Foundations.

By creating a bureaucracy of Foundations, Soros faces two contradictions that he must have feared from the outset. First, how can he prevent his Foundations from becoming the kind of unresponsive operations run by a meritocratic elite (thus requiring long lead time to develop projects) that is more concerned with its own well being that that of its grantees. This has happened too often in many of the Rockefeller and Ford Foundation offices, as well as in and too many multilateral development banks and agencies. Such bureaucracies defeat the purpose for which they were established because their leaders seek to protect themselves (and their jobs) by becoming risk-averse. In making so many appointments to establish the National Foundations, Soros faces the problem from the outset as to how (or to what extent) to appoint risk-takers, who might not be able to work well within countries where new national bureaucracies have been attempting to establish their own risk-averse positions.

Second, as a consequence of the first point, Soros has been able to do what most foundations cannot do not only because his entire financial trading history is based upon that of being a risk-taker who grasps the moment. Yet the very nature of the foundations' bureaucracies and the foundations themselves is to avoid risk, not seize the moment. Because most foundation leaders and all leaders of multilateral development and banking agency tend to be risk averse, too often they miss the opportunity to be a part of genuinely new programs.

One big step in resolving the above problems came in the 1997-1998 initiative by Soros and Françoise Girard (regional director for Romania in New York) when they decided to focus on legal reform issues. The legal reform program consists of three areas:

With the conundrum Soros faces outside the USA as to how to stimulate new thinking, it is no wonder that he has turned much of his focus to problems in American society. He has been especially interesed in the U.S. health-care crisis since the early 1990s and philanthropy for medical projects. His concerns about the American situation led him to initiate a “Project on Death and Dying,” dedicated to research and issues of terminal illness and pain management (which he had faced in the death of his own father). He intends to focus more of his energies and funds on this project with the goal of expanding the understanding of and transforming the forces that have created and sustained the current culture of dying. The $5 million project supports epidemiological, ethnographic, and historical research, as well as other programs that illuminate the social and medical context of dying and grieving.⁵⁵ In Soros’ own words within the American medical culture, “modern medicine is so intent on prolonging life that it fails to prepare us for death.” The results of the research will help encourage family involvement and to reduce the dehumanizing effect of medical treatment. By becoming involved in identifying solving U.S. problems, Soros has diverted funds from his National Foundations to support a host of other American projects, such as the Reproductive-Rights Program,⁵⁶ the Emma Lazarus Program, and, the Center for Crime Prevention Program.

Although Soros has not led foundations to follow him into Eastern Europe and Russia (with perhaps the exception of Bill Gates who will build libraries and Internet educational sites in Russia), in the long term his Foundations provide a model for the future—a model that works without regard to borders.

Regardless of what his detractors claim, Soros has tried to put half of his profits to good use. He has helped open a healthy competition by engaging in the "race of giving” with Ted Turner (owner of CNN) and Bill Gates (Microsoft.). Where their programs have tried to solve global problems (such as disease prevention), Soros stresses national development of civic society and Civil Society. To this end, Soros has most recently focused on human rights issues in what appeared to have been lost cases such as Haiti and Guatemala, where education for the masses and open communications have been nearly non-existent.⁵⁷

Soros is a “responsible” capitalist committed to building and promoting democratic institutions. In 1999, he helped lay the basis of the 1999 Warsaw Pact, which promoted global democracy.⁵⁸ He has helped build democracy in many nations by implicitly replicating the U.S. NGO model. This consists of an open elected board made up of local prestigious people from different interest groups: businessmen, doctors, academics, union leaders etc. Where Rockefeller failed, Soros has created successful NGOs, with local boards.

Soros’ local boards of directors make their decisions openly and transparently. Projects are being funded by open review of the projects. They spend their funds with transparency and also submit a final report at the end of the year. If NGOs have not been successful in completing the operation, no further funding will be available.

Clearly this major world figure not only has created the Decentralized Model of Philanthropy, but he continues to be ever more active around the world. Ironically, his move out of hedge-funds in 2000 will give him even more time to keep his existing NPPOs operating. If he runs true to form, Soros will no doubt surpass 31 as the number of Foundations he seeks to leave to world history.

¹ Lazin interview with George Soros, New York City, 15 May 1996. Popper’s book was published in 1945.

² Quoted in Interview by Harvey Shapiro, “Advocating an Open Society” United Airlines Hemispheres Magazine (March 1996), 15.

³ The Soros Foundation is comprised of many Foundations (usually one in each country to which he is able to send grants from the USA because they are organized on the U.S. TEO Model even as they try to meet the legal requirements of the host country) and many Funds (such as the Open Society Fund/Foundation—some of the terms being used interchangeably. Although some critics argue wrongly that Soros seems to create a separate Fund or Foundation for each new idea that he has, he has created a series of inter-locking administrative units, the funding of which is not always easy to track.

⁴ Bureaucratically conservative foundations, especially those based in the USA where the largest corpus of tax-free funds is domiciled, do not in the main take the risks of donating abroad because they fear becoming enmeshed in legal problems related to tax reporting in their home base of operations as well as the host country. Foundations such as Rockefeller and Ford with years of international experience are the exception rather than the rule, although this is changing.

⁵ It is noteworthy that the U.S. Senate approved of the U.S.-Mexican standards for mutual recognition of the TEO spheres; and the U.S. Congress has not succumbed to the “simplifying” flat-tax approach that implicitly would perhaps make charitable donations irrelevant. Soros' own activities of personally funding the medical use of marijuana in states such as Arizona and California would seem to be a greater problem for him, especially because many of his critics do not realize that he does not route such “political lobbying” funds through his Foundations and Funds.

⁶ This history of Soros, his views discussed, and his financial speculations and investments draws upon Soros’ own oral interviews, speeches, books, and articles as well as my interviews with his staff and observers of his activities in such places as Budapest, Mexico City, Moscow, and New York City. Given the Soros' justifiable concern about confidential information about his financial dealings, those of his staff and many close observers of his activities have chosen not to be identified. Thus, some of the “history” presented here has to await Soro’s confirmation, correction, and/or the fleshing out of detail that is necessary to complete the record. Soros’ financial gains and losses from speculation around the world are very sketchy, often only being revealed by Soros himself in allusions to events rather than any detailed statements, which the SEC would require if his financial transactions were conducted in the USA rather than outside. While I believe that Soros’ business activities have been entirely legal, a question has arisen in France about “insider trading” in 1988 that may soon be resolved at trial. For more on this matter see “French Trial Reportedly Ordered for Soros,” New York Times, 23 Dec. 2000.

⁷ This is $2 million more than the Ford Foundation distributed in 1996 and $243 million more than the Rockefeller Foundation, according to Newsweek, 29 Sept. 1997. See also George Soros and Byron Wien, Soros on Soros: Staying Ahead of the Curve (New York: John Wiley, 1995), 123.

⁸ Connie Bruck, “The World According to Soros,” The New Yorker, 23 Jan. 1995, 59.

¹¹ James Kynge, “Malaysian Premier in Veiled Attack on Soros,” The Financial Times, 23 July 23 1997.

¹⁴ “Brazil: Currency Fears Prompt Plunge, Los Angeles Times, 31 Oct. 1997.

¹⁵ In his Letter to Quantum Group Shareholders, April 28, 2000, Soros wrote: “Markets have become extremely unstable and historical measures of value at risk no longer apply. . . ... My own needs are for a more reliable stream of income to fund my charitable activities. . . . In [reorganizing and changing investment focus,] my objective is to establish an organization that can efficiently administer my funds, and those of other shareholders, even beyond my lifetime.” Reprinted in New York Times, 28 April 2000.

¹⁶ This history of Soros, his views, and his Foundations is taken from oral interviews with him, speeches, books, articles and foundation reports as well as from interviews with Soros Foundation leaders and staff in such places as Romania Hungary, Russia, and New York City. Given Soros' justifiable concern about confidential information being used against the National Foundations, Soros Foundation leaders and staff have chosen not to be identified. Thus, some of the “history” presented here has to await Soro’s confirmation, correction, and/or the fleshing out of detail that is necessary to complete the record.

¹⁹ This and the following discussion is based upon Building Open Societies: Soros Foundations 1994 (New York: OSI, 1994), 15-35.

²¹ Richard Teitelbaum, “What’s Soros Up To Now?” Fortune, 4 Sept. 1995, 94.

²⁴ Effective January 1, 2001, NSFRE has become the “Association of Fundraising Professionals,” as recommended by James W. Wilkie, who advised NSFRE that the “National” concept is no longer useful, especially because of the fact that the Society now has chapters and members around the world. See Association of Fundraising Professionals <www.nsfre.org/index>

³⁰ “The Not-So-Free Eastern European Press,” New York Times, 2 Oct. 1995, Editorial Section.

³² The OMRI Library contains archives Soros centered in Prague to save much of history of Central and Eastern Europe under the former Soviet Union.

³⁶ George Soros, Opening the Soviet System (London, Weidenfeld and Nicolson, 1990), 102.

³⁷ Jeffrey, Williams, "In the Kremlin, [Gates,] a Computer Czar," Los Angeles Times, 11 Oct. 1997.

³⁹ George, Soros “Address to the [Central European University] Budapest Graduation Ceremony,” 15.

⁴² Soros Foundations, Open Society News, electronic ed., (Fall 1994) <www.Soros.org>

⁴⁷ Sylvia Nasar, “So He's Not a Prophet. So He's a Reformer: The World Seems to Work Better than George Soros Thought, but He Still Has Ideas to Fix It,” New York Times, 31 Dec. 2000, Book Review Section, 8. <www.nytimes.com/books/00/12/31/reviews>

⁴⁸ Popper, “The Poverty of Historicism,” Economica (1944/1945). Popper not only prescribes piecemeal reform because it can be better monitored to eliminate mistakes in the small; but he proscribes revolutionary reform because we can neither easily monitor the society-wide ramifications nor reverse leaps of faith. Popper contrasts historical prophecy and scientific prediction, arguing that the prediction of social events is severely limited by the impact on society of unforeseeable new knowledge.

⁴⁹ “Soros Predicts ‘Bouncy, Hard’ Landing for U.S.,” Los Angeles Times, 31 Dec. 2000.

⁵⁰ Barry Newman, ”Soros Gives to Help East Europe Recover Lost Cultural Treasures," New York Times, 22 Mar. 1994.

⁵² “Censorship in the Balkans," New York Times,14 Mar. 1996, Editorial Section.

⁵³ Soros Foundations, Open Society News (Fall 1995/Winter 1996), 9. Ironically publication of this newsletter is centralized in New York City in order to be a neutral voice for the 31 National Foundation that compete with each other for Soros’ funds.

⁵⁵ George Soros “Reflections on Death in America," Open Society News (Winter 1995), 2.

⁵⁶ See, for example, Rachel Zimmerman, “Wrangling Over Abortion intensifies as RU-486 Pill Nears the Market,” Wall Street Journal, 14 Nov. 2000.