George Soros (Soros Fund Management Founder) – Charlie Rose Interview (1994)

Chapters

Abstract

Missed Opportunities in Eastern Europe and Russia: A Conversation with George Soros

George Soros, a renowned financier and philanthropist, offers an incisive perspective on the West’s missed opportunities in Eastern Europe and Russia post-communism. His critique encompasses the US’s failure to capitalize on this historical juncture, emphasizing the need for policies promoting open societies and economic growth. Soros critiques the Bush and Clinton administrations for their lackluster response to the region’s transformation and highlights the emergence of a new, albeit challenging, system in Russia. Moreover, he addresses the influence of global markets, the necessity of international financial regulation, and the evolution of his public persona, including his participation in the sterling crisis and views on the US economy.

Missed Opportunities in Eastern Europe and Russia

After the fall of communism, Soros argues that the United States missed a historic chance to influence Eastern Europe and the former Soviet Union. This oversight, attributed to a lack of imagination and understanding, resulted in a geopolitical and economic vacuum. Soros champions the need for a foreign policy that fosters open societies in these regions, believing it crucial for global security and history’s trajectory.

The Missed Opportunity in Eastern Europe:

Soros emphasizes the missed opportunity in Eastern Europe after the collapse of the Soviet Union, due to a lack of imagination and understanding of the revolution. He regrets the failure to seize this historic chance to shape the course of events and promote freedom.

The Dangers of Closed Societies:

Soros warns against the resurgence of closed societies, where the state dominates, parties control the state, and rule of law is absent. He sees nationalism and ethnic identity as significant threats to freedom and open markets.

Importance of Open Societies and Economic Growth

Soros advocates for a foreign policy centered on open societies and economic prosperity. He criticizes the Partnership for Peace initiative as insufficient and proposes a “Partnership for Prosperity” to foster economic progress in Eastern Europe and Russia. Soros also highlights the potential for investment in these regions, albeit with caution due to complex political and economic environments.

Challenges to Free Markets and Prosperity:

Soros stresses the importance of law and order, well-defined borders, and security for the success of free markets and prosperity. He cites Yugoslavia’s rapid economic decline as an example of how easily progress can be reversed when stability is undermined.

Economic Strength and Global Leadership: A Critical Perspective

Soros acknowledges the current economic strength and resilience but expresses concern about potential inflation and the impact of currency depreciation. He commends President Clinton’s efforts to reduce the budget deficit but criticizes the U.S. government’s handling of global leadership. Soros believes the U.S. is not highly respected internationally despite its superpower status, drawing parallels between the current situation and the appeasement policies of the Munich Agreement. He emphasizes the failure of open societies and democracies in addressing global crises.

Consequences of Inaction:

Soros warns against the consequences of inaction in the face of aggression and ethnic cleansing, seeing the lack of response to such actions as an invitation for further conflict. He highlights the instability and spread of violence resulting from a failure to act.

Somalia and Rwanda:

Soros criticizes the U.S. intervention in Somalia, calling it a technical mistake, and then the lack of intervention in Rwanda, where hundreds of thousands were killed. He emphasizes the need for timely and effective leadership to prevent such tragedies.

The Importance of Wisdom and Leadership:

Soros stresses the importance of wisdom, judgment, and leadership in addressing global challenges, acknowledging the difficulty of these qualities but emphasizing their necessity. He advocates for early intervention to nip problems in the bud, particularly in regions like Macedonia.

George Soros’s Investment Philosophy and Global Market Influence

Soros, while enthusiastic about Eastern Europe’s potential, warns of the risks in Russian investments. He underscores the diminished power of national governments due to the internationalization of financial markets, calling for international regulation and the proactive role of central banks. Soros also clarifies his own influence in the market, dismissing the notion that his actions alone can move markets.

Global Markets and the Balance of Power:

Soros observes a decline in the power of national governments due to the increasing interconnectedness of financial markets. He highlights that strict regulations by individual governments can lead to capital outflows, necessitating international regulation.

The Need for International Regulation of Financial Markets:

Soros stresses the inherent instability of financial markets and the need for regulation and supervision. He points to the Bank of International Settlement (BIS) standards as an example of successful international regulation in the banking industry.

Regulation Lagging Behind Market Developments:

Soros acknowledges that regulation often lags behind market developments due to the mobility of capital and the challenges of coordinating international regulations. He emphasizes the importance of international cooperation to effectively regulate financial markets.

Soros’s Personal and Public Evolution

Acknowledging his self-centered nature, Soros reflects on his transition from a private individual to a public figure following his involvement in the sterling crisis. This transformation brought him both scrutiny and a platform to influence global financial and political discussions. He speaks candidly about his trading activities and the speculations surrounding them.

Public Persona Shift:

Soros gained significant public attention due to his role in the sterling crisis, which led to Britain leaving the European exchange rate mechanism. This event transformed his public persona into a “mysterious figure” capable of influencing markets.

Myth and Reality:

Soros acknowledges the disparity between the public myth about his influence and the reality of his actions. He cannot correct this myth and must accept and live with it.

Positive and Negative Aspects of Recognition:

Soros’s public recognition allows him to be heard on various topics, including open society and democracy. However, he feels constrained to refrain from discussing exchange rates to avoid destabilizing the market.

Conclusion

George Soros’s insights reveal a complex interplay of geopolitical, economic, and personal dynamics in the post-communist landscape of Eastern Europe and Russia. His critique of Western policy, combined with his reflections on market dynamics and philanthropic efforts, underscores the multifaceted challenges and opportunities in shaping the region’s future.

Notes by: MythicNeutron