#10 - JRL 7225
June 16, 2003
Saying Goodbye to Soros
The billionaire philanthropist’s decision to pull out of Russia shouldn’t shock anyone. What is more surprising is how long he stayed. Editor's note: This week's Our Take is a TOL guest editorial by Michael T. Kaufman, the author of Soros, the Life and Times of a Messianic Billionaire and a long-time correspondent and editor for the New York Times.
While many Russians are no doubt lamenting George Soros’ decision to close down his Moscow-based foundation after 15 years and asking themselves why the Hungarian-born American philanthropist has now chosen to withdraw from their country, a much more intriguing question is why he committed himself and so much of his money to Russia in the first place--and why he stayed so long in the face of early repeated failures, enormous frustrations, and much finagling by people he trusted.
In 1986, when Soros first reached out to Andrei Sakharov, asking him to head the foundation that Soros planned to open in Moscow, the physicist and human rights campaigner turned him down, telling Soros he was too innocent and warning him, “You will end up lining the coffers of the KGB.” By that time, Soros had already established his first Open Society foundation in Hungary, scoring impressive advances there by eroding the ruling party’s monopolies over art, culture, and education. However, in China, the site of his second bold philanthropic initiative, his foundation became embroiled in national politics. Soros quickly shut down the operation, realizing that instead of taking advantage of Chinese leaders, they were taking advantage of him.
He was hardly naive when he started up in Moscow. Realizing that the ruling party and the Soviet state were heading for collapse, he stood ready to take remarkable risks, relying on a mixture of idealistic dissidents and cunning opportunists who flaunted their connections to the old nomenklatura and emerging power brokers. This is how he recalled his thinking 10 years later in 1997:
“My hope was that the foundation would spearhead the transition from a closed to an open society. As it happened, the foundation itself got caught up in the process of transition, and instead of leading the process, we went through the same difficulties as the rest of society. We started out as a Soviet organization. The people working for the foundation could not shed their Soviet upbringing. The result was that the foundation functioned as a closed society for the promotion of open society. To break this pattern I had to organize a putsch. Unfortunately, the man who organized our own putsch turned out worse than the people he replaced and disobeyed my instructions. So I had to organize another putsch to get rid of him.”
In this recollection, Soros put a sardonic and humorous gloss on the experience, but at the time, there was little that would strike anyone as funny. At one point, a fishing fleet operating off Nigeria was using the foundation’s name, credit, and by some accounts, its money. Another scheme originating within the foundation involved the purchase of 110 thoroughbred racehorses and their sale in Italy. Several onetime directors of the foundation established a major department store. Cars meant for foundation use ended up as private property, and a bank where the foundation kept its reserves neglected to credit monthly interest payments of as much as a million dollars a month.
Twice Soros initiated audits by an American accounting firm but suspended them, presumably because any disclosure of how he was being cheated might force his hand to leave. Meanwhile, the KGB sought to discredit Soros and his foundation with newspaper campaigns and reports sent to Soviet leader Mikhail Gorbachev.
Soros swallowed the losses and the indignities, and--in contrast to his experiences in China--he stayed, steadily raising the level of his contributions to more than a billion dollars. Russia became the costliest component of his worldwide philanthropic network. The scale and impact of the foundation’s programs there were unprecedented by any philanthropist, and in Russia and the other components of the former Soviet Union, they were unmatched by any group or foreign government.
Among the more ambitious successes was his allocation of more than $100 million dollars to support Soviet science when the country had no money to maintain laboratories or pay scientists’ salaries. Soros also committed close to another $100 million to reform the teaching of humanities and social sciences, introducing non-Marxist materials and textbooks that had previously been banned, reforming teacher training, and maintaining libraries. Another $100 million was used to wire all 33 regional universities to the Internet. Programs were established to promote independent media and to retrain midlevel military officers for new lives as private entrepreneurs. In another huge Soros project, more millions were spent to combat the virulent strain of drug-resistant tuberculosis spreading in Russian prisons.
There were, of course, many thousands of smaller grants. Soros himself became as well-known in Russia as any foreigner. In some places, such as universities, Russians have turned his name into a verb, “sorosovat,” which has come to mean seeking grants from any quarter. Three years ago, the foundation had more than 1,000 full-time employees and maintained offices in 156 Russian cities and towns.
Ekaterina Genieva, the iron-willed director, noted that at any given time, there were “5 million people directly benefiting from our programs and grants.”
Soros has been steadily warning that the foundation’s work would soon be coming to an end. From the beginning, he had seen it as a transitional institution that could take advantage of the historical moment. Philosophically, he has always appreciated the role of dynamic changes. After all, he named his great money-making hedge fund after the quantum theory. He has also often decried the unchecked growth of bureaucracy, recognizing entropy as inevitable. He wants to leave the field of play before either sets in.
In the particular case of Russia, he has explained that it now can and should look after itself, offering up other interests and challenges in Asia, Africa, and the United States. These all seem convincing reasons for leaving.
But why did he stay so long, particularly when things were going badly? Once he noted that “those who are puzzled by [my involvement with Russia] and question my motives are right to do so.” He went on to acknowledge that he too has found it puzzling and added that part of his interest in the country dates back to the stories his father told him about his own experiences in Russia during the five years he spent there as a prisoner of war in World War I.
Another motive, he explained, stemmed from the pride he had in his analytical skills, recognizing that the collapse of communism opened a fruitful window of opportunity for socially useful contributions. This view has been bolstered by old friends who pointed out how Soros long felt humiliated by having been openly laughed at by a British official when in 1988, in a speech in Potsdam, he had urged massive Western aid for Russia on a scale similar to the Marshall Plan. If junior ministers from Whitehall sneered and George Bush and Margaret Thatcher paid no attention to him, the friends noted, Soros was impelled to do it himself. And though he did not really start his own Marshall Plan, he came about as close as any one man could.
All of these explanations for Soros’ remarkable involvement have some validity, but the most insightful may have been the words of Istvan Rev, a Hungarian historian who has worked closely with Soros. He said that what had attracted the philanthropist to Russia were the same things that had attracted Napoleon: “its vastness, its historical challenge, its backwardness, its perpetually unfulfilled promise.”
It should be noted that of the two, Soros stayed much, much longer--and despite War and Peace, his impact on the country has probably been much greater.
Michael T. Kaufman is the author of Soros, the Life and Times of a Messianic Billionaire, (Knopf, New York, 2001). He is also the founding editor of Transitions in its original form on paper.