Democracy begins at home, chides billionaire philanthropist George Soros

Webcast: “The Bubble of American Supremacy” | 1 hr, 11 mins

BERKELEY – Might does not make right, and therefore the United States has committed a tremendous mistake in using its military supremacy to force democracy on Iraq. That was the blunt critique of the Bush Administration that billionaire financier and munificent philanthropist George Soros delivered to a packed audience at UC Berkeley last night.

America vs. Human Rights

“The United States has long regarded itself as a beacon of human rights, as evidenced by an enlightened constitution, judicial independence, and a civil society grounded in strong traditions of free speech and press freedom. But the reality is more complex; for decades, civil rights and civil liberties groups have exposed constitutional violations and challenged abusive policies and practices. In recent years, as well, international human rights monitors have documented serious gaps in U.S. protections of the human rights of vulnerable groups. Both federal and state governments have nonetheless resisted applying to the U.S. the standards that, rightly, the U.S. applies elsewhere.”
Human Rights Watch

The Hungarian-born Soros, whose personal experience with fascist and totalitarian regimes has informed his decades-long approach to promoting open societies around the world, has now turned his attention on his own adopted democracy. America’s recent foreign policy justifying preemptive strikes — but only those by America — has undermined the legitimacy of U.S. supremacy, Soros said, while the branding of American protesters as unpatriotic undermines the foundations of our democracy. He warned that unless President George W. Bush is defeated this November and the Bush doctrine is abandoned, America is doomed to lose its place in the world — and the world its best hope for becoming a global open society.

Soros spoke at the invitation of the Goldman Forum on the Press and Foreign Affairs, a continuing series of conversations about U.S. power hosted by UC Berkeley’s Graduate School of Journalism. Titled “The Bubble of American Supremacy” in reference to Soros’s latest book of the same name, the event was cosponsored by the office of the Chancellor, the Commonwealth Club (which recorded the talk for a March 5 broadcast on public radio), and the World Affairs Council.

Chancellor Robert M. Berdahl presents Soros with the Chancellor’s Distinguished Honor Award for “his dedication to creating a better world.”

Before Soros’s discussion with Journalism Dean Orville Schell began, UC Berkeley Chancellor Robert M. Berdahl presented Soros with the Chancellor’s Distinguished Honor Award. The award recognized Soros’s “tireless efforts as a philanthropist,” in particular through his Open Society Institute and other organizations that support projects in areas such as education, public health, and civil-society development.

That far-reaching humanitarian dedication lends Soros’s critique of America’s actions in Iraq a powerful weight. As Soros said later, he is in the business of fostering democracy, and the Bush Administration is “destroying my business.”

Growing up as someone else

To understand why Soros takes this so personally, one must know a bit about his life. Born in Budapest in 1930, Soros and his family survived the Nazi occupation of Hungary by using false papers to pass as Gentiles.

The family’s travails did not end with World War II; Hungary under Communist Russia proved to be almost as toxic. Soros left Budapest in 1947 for England and the London School of Economics, where he studied under the philosopher Karl Popper, whose book “The Open Society and Its Enemies” became the bible for Soros’s professional and philanthropic thinking.

He moved to the United States in 1956 and after a stint at a handbag factory, “fell into” investing. He eventually formed the Quantum Group of Funds, the legendary hedge fund that he still advises, and Soros Fund Management. “I chose the West because I sought freedom, but to be frank I came to America to make money,” he told Schell. He was, as it turned out, very — very — good at it. Someone who had invested $100,000 in 1969 with Quantum would have had a nest egg of $353 million at the end of 1997.

But back in 1979, when Soros’s first company was worth $100 million and his personal fortune a mere $20 million, making money — primarily through currency speculation — had become “a tremendous strain, very risky, very strenuous,” as he recalled. At one point he thought he was having a heart attack, and thought only “What a shame, to die making money.” Instead he set up his first foundation, which provided funds to help black students attend the University of Cape Town in apartheid South Africa.

Today, according to Forbes, Soros is worth some $7 billion, and his foundations span the globe, disbursing $475 million a year. The Open Society Institute (OSI), the nonprofit he founded to manage that network of foundations, has a staggering list of programs it supports in more than 50 countries, primarily in Central and Eastern Europe and the former Soviet Union but also in Africa, Latin America, Asia, and the United States. As Soros says, he is in the business of promoting democracy. The myriad initiatives under the OSI’s umbrella attempt to shape government policy and support education, media, public health, and human and women’s rights, as well as social, legal, and economic reform. A few examples: before the Internet existed to promote free expression, Soros airlifted 1,000 photocopiers into Hungary to increase dissemination of ideas; for war-torn Sarajevo, he helped create a rudimentary water system that saved lives by allowing residents to avoid sniper-monitored public wells. And in Russia alone, he has spent more than a billion dollars since 1987.

Collectively, Soros’s work is dedicated to building and maintaining the infrastructure and institutions described by Karl Popper and his open society. An “open society,” as defined by OSI, protects human rights, guarantees impartial justice, helps people make the most of their talents, and makes public decisions through a democratic process in which everyone can participate and question. The OSI’s mission is to promote these values in emerging democracies around the world — as well as in the United States. “Although the U.S. aspires to the ideal of an open society, in many respects we fall short and in others we are losing ground,” says OSI’s annual report.

Everything changed after 9/11

That is Soros’s most damning criticism of the Bush Administration, one that he has leveled repeatedly in opinion pieces published in the Atlantic Monthly, the Financial Times, the American Prospect; in “The Bubble of American Supremacy,” published in January 2004; and on stage at UC Berkeley’s Zellerbach Hall.

Soros argued that President Bush and his small group of neoconservative advisers used the terrorist attacks of September 11 to advance a new definition of America’s position in the world, the Bush doctrine. The Bush doctrine, said Soros, rests on two pillars: that the United States must do everything in its power to maintain its unquestioned military supremacy, and that it alone has the right to preemptive action. Soros said combining these two ideas creates two classes of sovereignty for nations — “the sovereignty of the United States, which takes precedence over international treaties and obligations, and the sovereignty of all other states, which is subject to the Bush doctrine. This is reminiscent of George Orwell’s ‘Animal Farm‘: All animals are equal, but some are more equal than others.”

According to Soros, there is a contradiction between the Bush Administration’s articulated concepts of freedom and democracy, and the true principles of open society. Raised under Nazi and Communist repression, he says that perhaps he is more sensitive than other Americans to what is implied by Bush’s comment that “those who are not supporting the Iraq war are with the terrorists” or Attorney General John Ashcroft’s statement that those who oppose the Patriot Act are giving aid and comfort to terrorists.

“I get nervous, because it reminds me of this kind of ‘Either you are with us or you are against us’ mentality [that means] you’ve got to suspend your critical faculties,” Soros said. “That’s a threat to an open society, because an open society depends on open discussion and a critical attitude.”

The Bush administration, by acting unilaterally in Iraq — without either the support of the United Nations or a substantial coalition of democratic supporters — announced to the world that “international relations are relations of power and no law; that international law really serves to legitimize whatever power has accomplished,” Soros explained. “That I think is tremendously dangerous, because in fact we are very powerful. This is a self-fulfilling prophecy. If the most powerful nation on earth is guided by this principle, that is the principle that’s going to prevail. And then we are really going back to a less civilized world.”

Might doesn’t make right, and rightness aside, he argued, “power doesn’t give legitimacy. And without legitimacy you can’t lead.” He referred to Robert Kagan, the well-known exponent of American supremacy, who has now written a postscript to his seminal book, “The Paradise of Power,” emphasizing the crisis of legitimacy. “You can’t have an empire that people don’t buy into,” chided Soros. “If you want to be the dominant power, you must get enough supporters who accept your dominance, or else you’re going to lose it.”

Reversal of fortune

The end of American supremacy, undone by terrorism and a world angered at its high-handedness, is not a foregone conclusion, Soros believes. Rather than forcing democracy on other sovereign states using our military might, America should offer it through more of a carrot-and-stick approach, using “soft power” such as that employed by his Open Society Institute, as well as relying on help and support from other nations to increase the offering’s legitimacy.

That is what Soros would have liked to see in Iraq. One of the central issues that he grapples with in his new book is how to deal with failed states and oppressive tyrants like Saddam Hussein. Soros believes that in an open society, rulers who abuse their people must be dealt with — either through the United Nations, or where the United Nations fails to act, through coalitions of like-minded democracies. “In the case of Iraq, if South Africa and Brazil and India other democratic countries had supported intervention, it could have been justified,” he said. However, though Saddam had engaged in genocide, there had been no trigger since his 1985 mass killing of the Kurds, and thus there was no justification for immediate invasion. That, he explained, was why international support had never materialized.

Soros acknowledged that the Bush Administration has softened its defiantly unilateralist approach to Iraq recently, by enlisting the help of the United Nations in drafting a constitution and formulating a government — but attributed the switch to “the looming elections and the need to … reduce the body bags.” And if Bush is reelected in November, the unreal “bubble of American supremacy,” which Soros has compared to the distorted misconceptions that fuel financial bubbles, will continue to inflate. And as demonstrated by the recent Internet bubble, such bubbles always self-correct. The consequences of the bursting of the bubble of American supremacy will be dire, but the alternatives — “hostility and resentment toward the United States throughout the world,” as Soros sees it — are far worse.

That is why Soros has made unseating Bush his “project for this year.” He has donated $15 million to 527 organizations — those not regulated by the Campaign Finance reform bill — such as America Coming Together, a voter registration effort, and MoveOn.org‘s Voter Fund. He has tirelessly exhorted other rich Democrats to do the same, but since such organizations do not offer influence or access — unlike the Political Action Committees and special-interest groups the reforms were aimed at regulating — he remains the most visible such donor.

A $7 billion bet

In a now-famous interview with the Washington Post, from which Schell quoted, Soros was asked whether he would trade his $7 billion fortune to get Bush out of office. Soros hesitated, opening and closing his mouth. Finally, he told The Post, “If someone guaranteed it.” That got the biggest round of applause from Zellerbach Hall, even as Soros chuckled that “I have to confess I got a little bit carried away” in that interview.

After responding to several written questions from the audience — such as what the Euro and the U.S. dollar will be worth in five years (“I know but I am not going to tell you,” said Soros) and what his hobbies are (tennis, reading, conversation) — Soros met with reporters backstage at Zellerbach Hall. There, the discussion focused on narrower political and financial issues. Asked whether the Bush Administration was truly aware of the long-term consequences of the mounting U.S. deficit, Soros echoed economist Paul Krugman’s “starve the beast” deficit theory when he said, “I think that the game plan is to create a deficit that then needs to be cut, and that can justify cutting services. One way to cut the social benefits is first to create a deficit and then try to reduce it — without reversing the tax cuts.”

The world’s 54th richest person believes that the U.S. needs “to create jobs to offset the jobs that are going abroad, and I think that the tax cuts are no way to do it. By restoring the taxation of the rich, people over $300,000 of income, you could reduce the deficit, and that could give you more room for engaging in programs that create jobs.”

Soros said he was “delighted” with the likely nomination of Senator John Kerry as the Democratic Presidential nominee. “A war hero whose formative experiences were in the Vietnam War, who as a result will engage in the use of military force only as a last resort, stacks up very well against a warmonger president who has avoided the personal experience of participating in a war.”

Kerry, of course, will be doing battle with the mammoth war chest of more than $150 million that the Bush campaign has accumulated. When asked how important that financial advantage would be in the coming election, Soros said, “It would be practically decisive if there weren’t some countervailing force to stand up to this media onslaught.”

He smiled, a devilish yet determined grin: “And that’s why I’ve taken the actions that I’ve taken.”

More information:

• “America’s Global Role: Why the Fight for a Worldwide Open Society Begins at Home” by George Soros, The American Prospect, May 27, 2003

• “The Bubble of American Supremacy,” by George Soros, The Atlantic Monthly, December 2003

Open Society Institute’s website

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