SOROS MONEY AND THE OPEN SOCIETY

Adam Larson
Caustic Logic/Guerillas Without Guns
Poated 3/2/07

Even more outside the government, billionaire financier George Soros is an indispensable private source of support to utopian ideas like Gene Sharp’s. Born 1930 in Hungary as Giorgy Schwartz, his father changed the family name to avoid revealing their Jewish identity to the Nazi occupiers. The name Soros has a double meaning; Hungarian for “designated successor” and also “will soar” in the short-lived international language Esperanto. The elder Schwartz was fluent in both languages and knew exactly what a Messianic name he had chosen for his son. [1] young George lived through the Nazi takeover but was old enough to leave the country once the Communists took over. He slipped out and moved to London to study economics and quickly went into business, predicting and exploiting currency fluctuations (“the weaknesses of capitalism,” he explains) to his own benefit. [2] In 1956 he moved to New York and in 1973 established Soros Fund Management, which ranked as the world's largest hedge fund by the 1990s. [3] With remarkable investment returns, by 2000 the firm had made him one of the richest men in the world at a personal worth fluctuating around $7 billion.

Soros is not universally admired; he has been called ‘the man who broke the Bank of England’ for his bet against the British pound in 1992, Malaysian authorities accuse him of bringing down their currency during Asia's 1997 financial crisis, and French authorities have fined him millions for insider trading. [4] He has also praised Europe’s unified currency, the Euro, and repeatedly banked against the US dollar while predicting the general collapse of the world economy. The Asian financial crisis followed by a similar monetary collapse in Latin American presented a threat of a “disintegration of the world capitalist system,” Soros warned the US Congress in September 1998. [5]

George Soros, billionaire speculator and freelance freedom financier

As he made his fortunes on Wall Street and increasingly in the financial centers of Europe, the politics of Eurasia were never far from Soros’ mind. In the 1980s he offered support for the Solidarity labor movement in Poland as well as Czech activists and opposition leader Vaclav Havel. In 1993 Soros established The Open Society Institute (OSI), a grant-making foundation to promote the usual – democracy, human rights, etc., with special emphasis on openness to new ideas and the “free expression of critical thought” as the wellsprings of a democratic “open society.” [6]

Through OSI and other foundations he has either started or joined, Soros has financed efforts towards “open societies” in more than 50 countries around the world, donating in the neighborhood of $450 million each year. [7] Since he began his crusade, Soros has given away more than four billion dollars, which makes him an international philanthropist on the world-shaping scale of Carnegie and Rockefeller, and has been nominated for the Nobel Peace Prize for his pains. [8] From a geopolitical perspective, his works are in line with U.S. policy; Jonathan Mowat writes that Soro’s donations “always dovetail with those of the NED.” [9] In fact he is a member and former Director of the CFR, the authors of the American end of the Anglo-American world strategy. Indeed the fiercest denunciations of Soros’ crusades have been lobbed by nationalists and deposed leaders at the short end of his financial stick.

But Soros has also been targeted by the American right, notably the National Rifle Association, for alleged one-world order tendencies and promoting disarmament of all citizens in a gun-free world, and by DAMADD (Dads And Moms Against Drug Dealers) as a “villainthropist” financier of the global drug trade. [10] He is indeed a supporter of liberal causes, once called “the Daddy Warbucks of drug legalization” in 1996 after dropping money to support two state ballot initiatives legalizing medicinal marijuana. [11] In domestic politics, Soros is generally more keen on Democrats, and had been a regular but modest donor.

But he also has links with certain Republicans, like the Bush family. Soros had been a partner in the Carlyle Group with George Bush sr. and, until late 2001 anyway, members of the bin Laden family. [12] He had also owned nearly a third of Harken Energy in 1986 when the company purchased (bailed out) Spectrum7, a failing Texas oil company that had been run into the ground partly by George W. Bush, then the vice president’s son. The Nation’s Washington correspondent David Corn asked Soros why in 2002. “I didn't know him,” Soros was reported to explain. “He was supposed to bring in the Gulf connection. But it didn't come to anything. We were buying political influence. That was it. He was not much of a businessman.” [13]

Nor would he be much of a President in Soros’ eyes. The billionaire crusader has since turned to purchasing influence not through but against his old business partner, targeting the president for regime change like some third world dictator. “Bush feels that on September 11th he was anointed by God,” Soros once said. “He's leading the U.S. and the world toward a vicious circle of escalating violence.” [14] There was an ominous familiarity to childhood memories; the post-9/11 statements of Bush functionaries like Attorney General Ashcroft “reminded me of Germany, under the Nazis. […] It was the same kind of propaganda about how ‘We are endangered’ and ‘We have to be united.’” [15] As Germany was under Hitler, “America, under Bush, is a danger to the world,” he warned. Soros has called Cheney and the other the neoconservatives surrounding the president “a bunch of extremists guided by a crude form of social Darwinism.” [16]

As the 2004 election approached, he compiled his concerns into a book, The Bubble of American Supremacy: Correcting the Misuse of American Power. In it, he argued for a collective approach to security and increased foreign aid, an investment in a more peaceful world where Western interests could be achieved without gross violence or destabilizing nationalism. “It would be too immodest for a private person to set himself up against the president,” he said of his book’s argument. “But it is, in fact the Soros Doctrine.” [17]

A central tenet of this was the removal of Bush and his cronies from power. Defeating Bush in 2004 was “a matter of life and death” for Soros and “the central focus of my life.” He built on this theme, delivered lectures to this effect, and as the election and a chance to drive Bush and Cheney from office loomed he set to dishing out money. Soros' generous support for “527” voter-mobilization groups like the anti-Bush “Move On” organization became a focus of criticism; the Republican National Committee lashed back that “George Soros has purchased the Democratic Party.” [18] By November 2003 he had committed $15.5 million to groups dedicated to ousting Bush, much more than he had donated to Democratic elections before. His total by Election Day was reportedly $23.5 million, and he pledged “if necessary, I would give more money.” [19] When asked if he would trade his entire fortune to defeat Bush, he responded “if someone guaranteed it.” [20] But Soros had nothing on Diebold and Jeb’s Florida as far as shaping the election and he knew it - so he still has most of his fortune and lives to fight another day. And again, Europe was never far from his mind – his handiwork plays a crucial role in the events of the following chapters.

Next: Some Notes on Timing And Consent

Sources:
[1] “George Soros.” Wikipedia. Last Updated December 10 2006. http://en.wikipedia.org/wiki/Soroshttp://en.wikipedia.org/wiki/Soros
[2], [3], [4] Boselovic, Len. “Billionaire raps Bush on tour: Hedge-fund chief woos GOP moderates.” Pittsburgh Post-Gazette. October 6 2004. http://www.post-gazette.com/pg/04280/391035.stm
[5] Vann, Bill. “Latin America's crisis spells social upheavals.” World Socialist Website. September 18 1998.
http://www.wsws.org/news/1998/sep1998/lat-s18.shtml

BLEEDING RUSSIA: A DARK DECADE

OLIGARCHS, COLLAPSE, BAILOUT... THEN REVIVAL
Adam Larson
Caustic Logic / Guerillas Without Guns
Re-posted 2/17/07

For Washington and London, the ability to start making these pipeline power plays was both an effect and hopefully a further cause of Russia’s diminished regional power. Behind this seems to be a campaign to drag the Eurasian giant into the Euro-Atlantic Community kicking and foaming at the mouth if need be, an aim laid out well by Brzezinski in 1997: “Russia’s only real geostrategic option – the option that could give Russia a realistic international role and also maximize the opportunity of transforming and socially modernizing itself - is […] the transatlantic Europe of the enlarging EU and NATO.” Russia should follow this lead, Brzezinski warned, if it wanted to avoid “a dangerous geopolitical isolation.” [1]

But the exact terms of integration remained unclear; Russians somehow took Washington’s talk around 1992-93 of a “mature strategic partnership” as a revival of Gorbachev’s “new world order” scenario, a more-or-less co-equal global alliance of mutually existing great powers. Fawning praise, false promises, and the opening of economies ensued in a long and nearly snuggly phase that allowed what Brzezinski summed up as the Russian street’s expectation of “a global condominium.” Zbig noted in retrospect:

“The problem with this approach was that it was devoid of either international or domestic realism. While the concept of a “mature strategic partnership” was flattering, it was also deceptive. America was neither inclined to share global power with Russia nor could it, even if it had wanted to. […] once differences inevitably started to surface, the disproportion in political power, financial clout, technological innovation and cultural appeal made the “mature strategic partnership” seem hollow – and it struck an increasing number of Russians as deliberately designed to deceive Russia.” [2]

So it was not America’s fault, but the fact that Russia was simply not up to the role. But the 1990s did see economic liberalization in Yeltsin’s Russia, with the widespread privatization of the previously state-run enterprises and moves towards a full market economy, openness to foreign investment, and general integration with the Western system. The major enterprises were taken over by a new generation of Russian capitalist pioneers and black-marketeers known as “the Oligarchs.” First introduced to the scene by Gorbachev in the late 1980s under his perestroika campaign, President Yeltsin supported this process and provided the Oligarchs with rich pickings, and the very small group soon acquired vast interests in all sectors of the economy. But in the end analysis, everyone agrees that the oligarchs did not rescue the Russian economy but rather bled it dry. Journalist Ann Williamson, author of How America Built the New Russian Oligarchy, explained to the House Committee on Banking in her September 1999 testimony:

“Directors stashed profits abroad, withheld employees’ wages, and after cash famine set in, used those wages, confiscated profits and state subsidies to ‘buy’ the workers’ shares from them. The really good stuff – oil companies, metal plants, telecoms – was distributed to essentially seven individuals, ‘the oligarchs,’ on insider auctions whose results were guaranteed beforehand. Once effective control was established, directors - uncertain themselves of the durability of their claim to newly acquired property - chose to asset strip with impunity instead of developing their new holdings.” [3]

Profits thus gained were laundered and deposited safely in Western bank accounts outside of Russia’s reach, with the depositors sometimes following their money out the door. Passed off as the result of mismanagement and shortsighted greed, the draining of Russia’s treasury is usually termed as “capital flight,” a rather passive sounding process. But investigator Michael Ruppert sees geopolitics at work in this “scheme to loot Russia’s wealth and park it in the west.” Once they were granted positions of economic power, Ruppert maintained in his 2004 book Crossing the Rubicon that “the Empire loved the oligarchs because they were simple and could be easily controlled with money.” [4]

Ruppert also noted how the “assistance” program to usher Russia into capitalism took off under the Clinton administration in 1993. A team headed by vice president Al Gore worked in concert with Goldman Sachs, Harvard’s Institute for International Development, the IMF, and the World Bank. This team, as Ruppert summarized, “worked in partnership with the government of Boris Yeltsin to re-make the Russian economy. What happened was that Russia, in the words of Yeltsin himself, became a “mafiocracy” and was looted of more than 500 billion in assets, and its ability to support a world-class military establishment smashed.” [5] What a convenient turn of events against this recently identified potential rival.

Yeltsin had initially renounced all claim to former Soviet glory and empire: “Russia does not aspire to become the center of some sort of new empire […] history has taught us that a people that rules over others cannot be fortunate.” [6] But by 1997 as Brzezinski wrote his book, new ideas about Russia’s role were starting to gel in Moscow that showed signs of renewed ambition. Straddling the boundary between Europe and Asia, the idea of a special “Eurasianism” took hold; as Yeltsin’s former Vice President Aleksandr Rustkoi explained “Russia represents the only bridge between Asia and Europe. Whoever becomes the master of this space will become the master of the world.” [7] Foreign Minister Andrei Kozyrev said at around this time Russia “must preserve its military presence in regions that have been in its sphere of interests for centuries.” [8]

But not much was possible with the economy still in a weak transitional state. The first slight economic recovery began in 1997, but this was cut short by the Asian financial crisis that hit its markets late in the year. The nation toughed out the financial burden through the first half of 1998, but things got edgy as the money dried up. In May a campaign of pensioner’s strikes was joined by miner’s strikes and others – the people took matters into their own hands, blocking railway lines to demand unpaid back wages. Communist leader Gennady Zyuganov led the growing calls for Yeltsin and his newly-appointed PM Sergei Kiryenko to resign. [9]

Perhaps in desperation, Russia finally turned to the West and sought an IMF bailout, what Ruppert calls “the kiss of death for any country.” [10] The IMF reported it was strapped, and “entering a region in terms of our financing where we are in grave difficulties.” [11] Washington feared the alternative – a Russian devaluation of the ruble (their equivalent of the dollar), leading to an international financial chain reaction. [12] On July 20, the IMF Executive Board approved its portion ($11.2 billion) of a $22.6 billion international bailout. This emergency package was intended to help Russia maintain the value of the ruble while the government implemented reforms necessary to create long-term stability.

Muscovites line up to get their money out of the bank before the economy crashes, 1998

On August 14, president Yeltsin assured the west that the loan had worked, stating clearly that the ruble would not be devalued. But a bare three days later, PM Kiriyenko announced that the government would devalue the ruble after all, by a stunning 34 percent, and declared a 90-day foreign debt moratorium. The bottom dropped from beneath the Russian economy that very day, leading to a total collapse comparable to the crash that hit America’s markets in 1929.

Mass unemployment and a sharp fall in living standards for most of the population ensued. Unemployment, hunger, homelessness, and related social problems wracked the region in late 1998. CNN billed “Russia’s year of agony” as one of the top ten stories of the year, and it also spread into neighboring countries like Ukraine, Belarus and Moldova, that remained tangled with their neighbor’s economy. Many in Washington were furious; Ariel Cohen and Brett Schaefer of the Heritage Foundation noted “it is now painfully clear […] that the massive bailout failed in both of its missions: The ruble was devalued, and reforms are not likely to be implemented.” Cohen and Schaefer blamed Russia for failing to reform its economy and the IMF for consistently loaning to them anyway, calling on Congress to cut off funding to the fund. [13]

The crisis did not last too long though on the Russian end; by whatever connection, it was only after the loan and the devaluation of the ruble and the debt default that Russia’s economy began improving on the back of strong gas exports in 1999. The weak ruble made imports expensive and boosted local production, creating greater self-reliance or “autarky,” the opposite of the economic “dependency model” behind the western system. Russia entered a phase of rapid economic expansion, the GDP growing by an average of 6.7% annually in 1999-2005 on the back of higher oil prices, a weaker ruble, and increasing industrial output. It has gone from bankruptcy to large foreign reserves, and by 2001 Russia was seen as a major rising player on the world scene for the first time in nearly a decade. In retrospect the IMF episode almost looks like a grand kiss-off to the West: “Thanks for the so-called assistance, comrades, but we’ll just recover what we can and manage it ourselves from there...”

Behind the official reasons for the 1998 bailout there had been deeper fears than the value of the ruble. The youngest and richest among the economy draining Russian Oligarchs is Roman Abramovich, in 2006 Russia’s richest man and the 11th richest person in the world, worth $18.2 billion. [14] Abramovich is a proud Jew and supporter of Israel, and he’s not alone; the top tier of Oligarchs were primarily Jews, a fact that contributed negatively to a trend all too familiar from the history books: a nation in crisis after losing a major struggle, feeling betrayed by the West and turning to renewed nationalist glory and – at least in certain cases - increased suspicion of the Jews among them. The specific anti-Semitism has of course become highly unpopular since the Holocaust, and precise charges have remained muted – but overall a repeat of Germany circa 1932 seemed a danger; the British free trade magazine The Economist ran a story on July 15 warning that an abrupt devaluation:

“could spell doom for the banking system, bring down the Kiriyenko government and, as one American diplomat put it, ‘signal the end of liberal Russia.’ […] Might the deadly mixture of economic chaos, public anger and sense of national humiliation that fuelled fascism in Weimar Germany flare up in Russia now? […] Such fears appear to have been taken seriously enough in Washington for the US administration to deem the situation in Russia to be a global strategic threat."[15]

Five days after this story ran the package was approved, but on this front as well the bailout seems to have had little effect. Prime Minister Kiriyenko was sacked in August. Yeltsin tried to bring back his predecessor Viktor Chernomyrdin, but in September compromised on Yevgeniy Primakov. In May 1999 Yeltsin sacked Primakov, replacing him with Sergey Stepashin, who served until August when Yeltsin replaced him with rising star Vladimir Putin. Putin was thus the fifth PM in eighteen particularly rough months, and as a relative unknown, seemed an expendable who likewise would be sacked in due time. But he found a lever that allowed him to stay on, and by the estimates of a growing body of opinion, the feared fascist regime came to power in Moscow despite the best efforts of the internationalists.

Next: Terror of 9/99, Putin Ascendant

Sources:
[1] Brzezinski p. 118.
[2] Brz 100-101
[3] Williamson, Anne. “The Rape of Russia.” Testimony before Committee on Banking and financial Services, US House of Representatives. September 21 1999. http://www.russians.org/williamson_testimony.htm
[4] Ruppert - Crossing the Rubicon - easily controlled with money
[5] Ruppert page 88
[6] Brzezinski p 99.
[7] BRZ 109.
[8] Brz 107
[9] “Russian Trains: New Kiriyenko government faces first major test.” CNN. May 20, 1998. http://cnn.hu/WORLD/europe/9805/20/russia.govt.crisis/
[10] Ruppert – kiss of death
[11], [12] IMF protected US banks in Russian bailout. By Nick Beams. 21 July 1998. World Socialist Web Site. http://www.wsws.org/news/1998/july1998/rus-j21.shtml
[13] "The IMF's $22.6 Billion Failure in Russia." Ariel Cohen, Ph.D., and Brett D. Schaefer. Heritage Foundation Executive Memorandum #548. http://www.heritage.org/Research/RussiaandEurasia/em548.cfm
[14] http://en.wikipedia.org/wiki/Roman_Abramovich
[15] IMF protected US banks in Russian bailout. By Nick Beams. 21 July 1998. World Socialist Web Site. http://www.wsws.org/news/1998/july1998/rus-j21.shtml

UKRAINE’S FATE AND THE BRZEZINSKIS FLANKING IT

A FAMILY PROJECT
Adam Larson
Caustic Logic / Guerillas Without guns
posted 2/17/07
last edited: 2/27/07

In the context of a great game with Russia, the emphasis on Ukraine is understandable - it had been the 2nd most powerful Republic in the USSR and its agricultural heartland. It is the birthplace of the Kievan Rus, the original Slavic culture that Russians trace their own culture back to. It is home to about 10 million ethnic Russians, roughly 20 percent of the entire population there, shares hundreds of miles of common border with Russia, and provides a historically useful buffer space from European invasions, which seem to occur every so often. It has absorbed Napoleonic and Nazi assaults, massive famine, and the Chernobyl disaster and continues to be one of Russia’s biggest trading partners and the place most Russian gas pipelines to Europe run through. Clearly, Ukraine as a geopolitical prize is epic; it’s the biggest thing one can take from Russia besides Russia itself. It seems a stretch to even attempt such a move, but apparently the successes of Belgrade and Tbilisi had left some people feeling very cocky.

American designs on securing Ukraine in the Western camp go back at least to 1997, when Zbigniew Brzezinski, in his book The Grand Chessboard, described Ukraine as one of five key “geopolitical pivots” for control of Eurasia (the others being Azerbaijan, Iran, Turkey, and South Korea). Furthermore, the CFR heavyweight pointed to Ukraine as the final target in extending the “democratic bridgehead” - the contiguous chain of pro-West Democracies like France and Poland - across Europe and right to Russia’s doorstep. An article in Foreign Relations (the official publication of the CFR) explained that this was targeted against Russia: “[T]he heart of the book is the ambitious strategy it prescribes for extending the Euro-Atlantic community eastward to Ukraine and lending vigorous support to the newly independent republics of Central Asia and the Caucasus, part and parcel of what might be termed a strategy of “tough love” for the Russians” Even the magazine noted a bit too much tough in the love: “Brzezinski's test of what constitutes legitimate Russian interests is so stringent that even a democratic Russia is likely to fail it.”

And this tough love ran in the family, with Brzezinski’s son Ian having been an advisor to the newly-independent Ukrainian parliament (director of international security policy at the Council of Advisers) from 1993-94, while also serving as Executive Director of the CSIS American-Ukrainian Advisory Committee. Note that Brzezinski’s tenure ended in the same year Kuchma came to power and turned the country east. Ian has since then continued lobbying from the outside to bring Ukraine into the EU-NATO fold. “Ukraine should be a central component of the West's strategy for Europe.” the younger Brzezinski explained to congress in 1999. But before the adoption could be completed:

“Ukraine will have to make, on its own, the difficult internal decisions necessary to overcome its economic stagnation, its rampant corruption, and its polarized politics. […] After a decade of billions of dollars of Western assistance, the initiative must now come foremost from a Ukraine characterized by aggressive reform.”

Ian was appointed shortly after 9/11 to be the Pentagon’s representative to its European NATO partners and a pivotal part of the decision of who will join next. But his hopes of internal reform started to seem less likely as 2004 dawned with President Kuchma and the PM set to take his place disinterested in such changes and steadily gravitating to the East and Moscow’s sphere.

This is where Viktor Yushchenko, Pora!, dioxin, and the Orange Revolution come in.
After coming to power in Kiev, Yuschchenko played well to Western audiences from day one. When he made his first visit to Washington in early April 2005, he gave a rousing speech to the assembled Congress, receiving a standing ovation as the hero of the Orange Revolution, a white Nelson Mandela who had suffered poisoning, not prison. It is relatively rare, and usually considered a high honor, for a foreign leader to be invited to address a joint session of Congress. CNN ran live coverage, and was sure to have Mark Brzezinski - Ian’s brother – present for analysis. The onetime director for Russian and Eurasian Affairs for the National Security Council and foreign policy advisor to the John Kerry presidential campaign was hopeful that Yushchenko could “show the Ukrainian people that he can not only talk the talk, but walk the walk in terms of essential transformations within Ukraine.”

On a working visit to Poland at the end of August, a still faintly scarred Yushchenko had a photo taken with Ian and Mark’s father, the exalted Zbigniew Brzezinski in the land of his birth. They clasped hands and gazed smilingly at each other as NDI’s Madeleine Albright looked on with a grin. The “democratic bridgehead” had been extended as Zbig had prescribed eight years earlier, and he seemed very happy about the whole affair. The decade-running family project had yielded tangible gains, but the situtaion would soon complicate and the smiles would fade.