[Congressional Record Volume 140, Number 105 (Wednesday, August 3, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: August 3, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
GEORGE SOROS' INSIGHT ON THE PROMISES AND PITFALLS OF BUILDING OPEN
SOCIETIES
______
HON. TOM LANTOS
of california
in the house of representatives
Tuesday, August 2, 1994
Mr. LANTOS. Mr. Speaker, it is quite commonplace to observe today
that the initial euphoria after the fall of the Communist regimes in
Eastern Europe and the former Soviet Union has given way to widespread
alienation, suspicion, and disenchantment as the peoples of these
regions continue to see their expectations for a better material life
unfulfilled, while crime, corruption, and unemployment mount daily.
While there appears to be little reason to fear a return to the
totalitarian regimes of the past, there is no certainty that stable
democratic, market-oriented regimes will develop either.
Instead, some scholars, like Philippe Schmitter at Stanford, have
noted the possibility of ad hoc democracies that muddle through but
never really take root and gain legitimacy. They continue almost by
default, but as time goes by they are beset by an ever increasing
number of internal and sometime external threats to their survival.
Obviously, that situation provides fertile ground for extremists who
seek to advance their narrow, sectarian interests at the cost of the
general good. They are more than happy to attack the institutions of
pluralistic society, why they perceive as inimical to their goals. Of
course, it has happened before in that part of the world and could
happen again if these peoples are not vigilant in promoting and
protecting their newly won liberties, and if they do not receive much
greater material support from the West.
My good friend, George Soros, explained the problems and pitfalls and
possibilities most eloquently in a statement he made yesterday at a
hearing of the Subcommittee on International Security, International
Organizations and Human Rights, which I have the honor to chair. George
Soros does not paint an optimistic picture, and unfortunately I share
his concerns.
Gerge Soros needs no introduction here in the Congress, but I will do
it anyway. Not since John Maynard Keynes have we had an individual like
George Soros who combines both great practical financial acumen and an
intellectual understanding of the subtleties of international affairs.
It is an intellectually stimulating treat to spend and hour with George
to discuss these issues.
George Soros, who has born in Hungary and has extensive experience in
the former Soviet Union and Central and Eastern Europe, is president of
Soros Fund Management and Chief Investment Advisor to Quantum Fund,
N.V., a $12 billion international investment fund, which is generally
recognized as having had the best performance record in the world
during its 25-year history.
In addition to his business interests, Mr. Soros founded the Open
Society Fund in 1979, and he has established a network of foundations
operating in 24 countries throughout Central and Eastern Europe and the
former Soviet Union, as well as South Africa and the United States.
These foundations are focused on helping to build open and democratic
societies. The Soros foundations have contributed some $300 million to
assist the new Republics of the former Soviet Union and the countries
of Central and Eastern Europe in their transition to democracy. I wish,
Mr. Speaker, that other governments including our own were as generous.
In his appearance before our subcommittee yesterday, George Soros
gave a particularly insightful and thoughtful presentation regarding
the problems of building open, pluralistic, and democratic societies
since the fall of the Soviet Union. Mr. Speaker, it will be several
weeks before the full transcript of that committee hearing will be
available to Members of Congress. I ask that Mr. Soros' prepared
statement from that hearing be placed in the Record, and I ask that my
colleagues give it serious and careful attention.
Testimony of George Soros
I welcome this opportunity to testify before your committee
on the dangers of the post-communist world. I feel reasonably
well qualified to speak on the subject and I have a great
deal to say--perhaps too much for this hearing.
I have devoted much of my time, energy, and money to
Central and Eastern Europe and the former Soviet Union in the
last five years because I believed that the collapse of the
Soviet system was a historic, revolutionary event and that
the outcome would shape the course of history.
I have established a network of foundations whose aim is to
help and promote the transition from a closed to an open
society. Actually, I set up the foundation in 1979 and
started the first local operation in my native Hungary in
1984, but my involvement increased as the collapse of the
Soviet system accelerated. There are now foundations
operating in 23 different countries and my annual
contributions have risen from three million dollars in 1979
to 300 million dollars in 1993--but the amount of dollars
spent is not the best indication of the efficacy of the
operation because some of the best projects take the least
money.
At the time I became involved, communist dogma had given
rise to a closed society in which the state was dominated by
the party and society was dominated by the state. The
individual was at the mercy of the party-state apparatus.
Communist dogma was false exactly because it was a dogma
that claimed to incorporate the ultimate truth. It could be
enforced only by doing a great deal of violence to reality
and, even then, it could not be sustained indefinitely. The
gap between dogma and reality became ever more evident--the
sway of dogma over people's minds ever more tenuous--until,
eventually, the regime collapsed in a rapidly accelerating
fashion that amounted to a revolution.
There was a moment of euphoria, in 1989, when people felt
liberated from an oppressive regime and that moment could
have been used to set into motion the transition to an open
society. That was the opportunity I saw which induced me to
throw all my energies into the process. But I must now admit
that the moment has passed and the opportunity has been
missed.
The breakdown of a closed society does not automatically
lead to an open society, because open society is a more
advanced, more sophisticated form of organization that a
closed one. Freedom is not merely the absence of repression.
A society in which people are free requires institutions
which protect freedom and, above all, it requires people who
believe in those institutions. The institutions themselves
need to be much more sophisticated because they must allow
for the expression of different view and interests, whereas a
closed society recognizes only one point of view, the ruling
one. In short, the transition from a closed to an open
society is a step forward and upward and it cannot be
accomplished in one leap without a helping hand from the
outside. That was my motivation for getting so involved. But
the open societies of the free world were not similarly
motivated. There was a lot of good will toward Eastern Europe
at the time, but somehow it was not translated into effective
action. Government policy, both in Europe and in the
United States, were characterized by a singular lack of
comprehension and lack of vision.
Compare the reaction to the collapse of the Soviet empire
with the collapse of the Nazi empire. Then, the United States
still had the vision, and the generosity, to engage in the
Marshall Plan, and the Marshall Plan worked wonders. It did
not merely provide assistance, it provided a framework for
the countries of Europe to cooperate. It did not merely send
technical experts to impart their wisdom, it brought large
numbers of Europeans to the United States and allowed them to
form their own agenda. We seem to have forgotten all these
positive experiences. By the time the Soviet empire
collapsed, there was no political support for any kind of
large-scale assistance and the Marshall Plan had become a
dirty word.
In the absence of Western leadership, the collapse of the
Soviet system did not lead to the emergence of open
societies. Moreover, there can be no assurance that what was
not accomplished in the heat of the revolutionary moment
would be attained by a slower, more laborious process. On the
contrary, insofar as a pattern is emerging, it is pointing in
the opposite direction.
The breakdown of a closed society based on the universal
dogma of communism has led to a widespread rejection of all
universal ideas, and the countries which used to constitute
the Soviet empire are trying to find an organizing principle
in their own particular history. There are, of course,
exceptions to the rule. But the dominant theme which seems to
be merging is national or ethnic identity rather than any
universal concept such as democracy or human rights or the
rule of law or open society.
This creates a very dangerous situation because national
grievances can be exploited to form more or less closed
societies, and that is a recipe for conflict. In order to
mobilize society behind the state, you need an enemy and, if
you do not have one, you have to invent one. That is what
Hitler did when he identified Jews as the enemies of the
German Volk, and he has many imitators in the post-communist
world. Unfortunately, there is no shortage of grievances,
because communist regimes used to suppress all national or
ethnic aspirations which did not suit their purposes.
Although some of the nationalist leaders are former
dissidents, former communists are usually more adept at
exploiting national sentiment because they understand better
how to operate the levers of power. They can forge greater
national consensus than democratic leaders striving for an
open society. Look at Milosevic in Yugoslavia, Tudjman in
Croatia, Meciar in Slovakia, and Kravchuk in Ukraine, and
compare the kind of majorities they could muster at the
height of their popularity with the narrow political base
that pro-Western democratic governments have had to contend
with in countries like Russia, Poland, Bulgaria, or
Macedonia.
In the context, I do not find the recent electoral
victories of former communist parties in countries like
Hungary, Poland or Lithuania disturbing at all. These are
reform communists who want to get away from communism as far
as possible. Their re-emergenee constitutes a welcome
extension of the democratic spectrum. I am particularly
pleased with the outcome of the recent elections in
Hungary. The nationalist line was rejected by the
electorate, and the fact that the Socialist party entered
into a coalition with the Free Democrats on the basis of a
well-conceived and well-articulated reform program augurs
well for the future. In the case of Poland, the changeover
is less fortunate because the radical and painful reforms
and undertaken in 1990 had just begun to bear fruit and
the government had just begun to function properly when it
was defeated. But the course of reform is irreversible and
Poland is probably the most dynamic country in Europe
today, both in terms of its economy and its spirit. The
worst that can happen is that it loses some momentum.
All in all, I see hardly any chance of a reversal to
communism. Communism as a dogma is well and truly dead. The
real danger is the emergence of would-be nationalist
dictators--I call them ``NADIs'' for short. They are playing
in a field that is definitely tilted in their favor. It is
much easier to mobilize society behind a real or imagined
national injury than behind an abstract idea like democracy
or open society. Building the open society is essentially a
contructive process, and it is only too easy to use ethnic
conflict to undermine its foundations.
Take the case of Yugoslavia, a relatively prosperous
country which had been open to the West for twenty years and
had developed the intellectual resources which are needed for
an open society. I remember 1990, when monetary reform was
introduced in Yugoslavia and Poland at the same time.
Yugoslavia was much better prepared to carry it out. It had a
group of people who had been trained by the IMF and the World
Bank, and the reform was, in fact, much more successful than
in Poland. That was in May 1990. Then Milosevic raided the
treasury in the course of his electoral campaign and
destroyed monetary stability. That was the end of the attempt
to transform Yugoslavia into an open society.
And now we have an even more striking example: Greece. Here
is a country that is a member of the European Union, of NATO,
fully integrated into the international community. Yet it has
been possible to whip up national sentiment to a frenzy over
the name ``Macedonia.'' A small and weak neighbor to the
north is blown up into a threat to the territorial integrity
of Greece. Admittedly, there is a minority in Macedonia which
harbors irredentist dreams based on ethnic injuries suffered
in the past. But the government of Macedonia is genuinely
devoted to the creation of a multi-ethnic, democratic state.
It is ready to make every concession short of giving up its
own identity. But Greek public opinion resonates to the
Macedonian extremists, not to the Macedonian government, and
the issue has been exploited for domestic political purposes
in Greece.
In the meantime, the Macedonian economy, already severely
damaged by the sanctions against Serbia, is collapsing under
the weight of the Greek embargo. The railroad connections
runs north and south, and Macedonia is cut off on both sides.
As a result heavy industry, which relies on rail
transportation, has been brought to a standstill. The
economic crisis is endangered political stability. The multi-
ethnic, democratic coalition is threatened by extremists on
both the Slavic-Macedonian and the Albanian sides. It may
easily fall apart in the next elections and, if Macedonia
falls apart, we have a third Balkan war.
As you can see, there is plenty to worry about in Eastern
Europe. When I embarked on my project, I was planning on a
short-term campaign to seize the revolutionary moment and to
provide an example that would be followed by the more slowly
moving, more cumbersome institutions of our open societies.
But I was sadly mistaken. Now I must think in biblical
terms--forty years in the wilderness. The battle for pen
society is not lost, as the examples of Poland and Hungary
demonstrate, but it will take a long time and a lot of help
from the outside and that is what I am worried about.
I have always been aware of a fatal weakness in the concept
of open society. The weakness is that people living in an
open society do not even recognize that they are living in an
open society, let alone treat open society as a desirable
goal for which it is worth striving and making sacrifices. In
one way, freedom is like the air: people struggle for it only
when they are deprived of it. When it is there, they take if
for granted. But, in another way, freedom is very different;
if you do not care for it, and do not protect it, it has a
tendency to disappear.
If there is any lesson to be learned from the revolutionary
events we have witnessed in Eastern Europe since 1989, it is
that freedom is not merely the absence of repression, and the
collapse of a closed society does not automatically lead to
an open society.
The trouble is that this lesson has not been learned. When
the Soviet empire collapsed, we had no hesitation in
declaring it a victory for the free world. But, equally, we
had no inclination to make any sacrifices for the sake of
establishing free and open societies in that part of the
world. The consequences are now painfully obvious, but we
have not even started to recognize them.
What has gone wrong? I believe our concept of freedom has
changed. In the Second World War, it was promoted into an
idea that we were ready to fight for and to sacrifice for.
And the idea as it was then conceived involved freedom not
only in our own country, but also in the countries which were
the victims of a totalitarian regime. This conception carried
over into the post-war period. It was responsible for the
dismantling of colonial regimes and the forging of an anti-
communist alliance.
But gradually the idea faded and another idea emerged which
explicitly rejected the pursuit of freedom as a valid
objective for foreign policy. that the idea was
``geopolitics'' which maintained that states ought to pursue
their own self-interest as determined by their geopolitical
situation, and moral or ethical considerations have only a
secondary role to play. They can be useful for propaganda
purposes--mobilizing public opinion at home or abroad--but
you can get into a lot of trouble if you actually believe
your own propaganda.
The companion piece to geopolitics in international
relations was the concept of laissez-faire in economics,
which enjoyed a miraculous revival in the 1980s. As you know,
it holds that the unhampered pursuit of self-interest leads
to the best allocation of resources. These have been the two
main concepts which have guided us in our response to the
collapse of the Soviet system and which continue to guide
us today. I find that they are woefully inadequate for the
situation at hand.
As long as we were locked in deadly combat with the Evil
Empire we lived in a stable world order and we had a clear
view of our own place in the world. The world order was
stable because both sides had the capacity to destroy each
other and therefore neither side could risk all-out war. And
we could define ourselves in terms of our enemy: we were the
leaders of the free world. But the stability of the world
order has been destroyed by the internal disintegration of
the Soviet empire and, what is worse, we have lost our sense
of identity. We still want to be a superpower and leader of
the free world but we do not know what these terms mean. We
do not know what the free world stands for and, what is
worse, we don't know whether we should stand for the free
world because we have come to believe that our way of life is
based on the pursuit of self-interest, as exemplified by the
doctrines of geopolitics and laissez-faire.
In some ways the present situation is unprecedented. In the
past, peace and stability have been maintained either by an
imperial power or by a balance of powers or by a combination
of the two. Right now, we do not have either. The United
States does not have the capacity, or the interest, to
dominate the world the way Britain did in the 19th century.
Britain derived enough benefit from free trade to justify
maintaining a fleet in being; but the United States is no
longer the main beneficiary of free trade and it cannot
afford to be the policeman of the world. We must depend on
collective action but we have no clear idea what the
collective interest is.
The result is a dangerous power vacuum. There was some hope
that it would be filled by the United Nations, but the United
Nations is no better than the states that constitute it.
Indeed, it is worse, because the member states generally
pursue their own national self-interest, to the detriment of
the collective interest, and the U.N. is managed by a
bureaucracy that is more interested in its own survival than
in the survival of our civilization. There has been no
instance in history when peace was maintained by an
international institution and there is no reason to believe
that the current situation will be any different.
What is to be done? I don't have all the answers, but I
have a suggestion which may help. I propose that we should
declare the creation and preservation of open societies as
one of the objectives of foreign policy, and in the case of
the former Soviet sphere we should declare it as the main
objective. I draw a distinction between the former Soviet
sphere and the rest of the world because the Soviet system
has irretrievably broken down; what system takes its place
will have a profound influence on the course of history and
therefore on our own future. In the rest of the world, the
promotion of open societies is one of many competing
objectives, but in the former Soviet sphere it is of
paramount importance. In my opinion even the nuclear issue
ought to be subordinated to it.
When I speak of open society, I mean a form of organization
that can be loosely described as democracy. But the concept
of open society is more comprehensive. It means not only a
democratically elected government but also a society that
is not dominated by the state; that means a strong civil
society and the rule of law. And it is not enough for the
government to be elected by a majority; it must also
respect minorities and minority opinions. In other words,
I propose substituting the framework of open and closed
societies for the old framework of communism versus the
free world. The old framework was highly suspect even when
it was relevant, because anti-communism could be used to
justify actions which were incompatible with the behavior
of an open society. The new framework allows us to define
ourselves in terms of what we stand for rather than in
terms of our enemies. It provides a perspective which is
woefully lacking at present. For one thing, it tells us
that nationalist dictatorships are as much of a threat
today as communism used to be.
How can this perspective be translated into policy
recommendations? First, we need a strong European Union
capable of taking foreign policy decisions. This is missing
today, as the quagmire in Bosnia has so sadly demonstrated.
Second, the European Union needs to become more open,
especially towards the East, and not turn into a fortress
protecting itself against the turmoil outside its walls. The
countries of East Central Europe need the clear prospect of
being able to join the European Union in order to complete
the transition to open societies. They need private
investment more than they need government aid, and the
prospect of membership is the best recipe for attracting
private investment. I believe that the United States and
Germany, if not all the other members of the European Union,
would agree on this point.
Third, NATO--which is essentially an alliance between North
America and Europe--ought to serve as a mainstay of the new
world order. Whether a direct link is needed between NATO and
our Asian allies like Japan and Korea is an open question.
But one thing is certain: NATO cannot fill the power vacuum
that has been created by the collapse of the Soviet empire;
there needs to be an alliance between NATO on the one hand
and Russia and the other successor states on the other. NATO
can be extended to include the Central European states which
are candidates for membership in the European Union but, if
it also included Russia, it would be so diluted as to become
meaningless. That is the origin of the Partnership For Peace
but, in its present form, it does not even begin to fulfill
the function for which it was designed. It is not much more
than an empty gesture. It is a worthy successor of the
vacuous and dilatory policies of the Bush Administration, and
it is perceived as such in Russian. Here is the point where a
fresh perspective could come in useful.
I have argued that Russia and the other successor states
are in need of outside assistance in order to make headway
with their internal transformation. They do not perceive
issues of external security as a threat; rather, they see
them as opportunities to divert attention from their economic
failure and to mobilize political support. In these
circumstances a Partnership For Peace, on its own, is bound
to remain an empty gesture. It needs to be accompanied by a
``Partnership For Prosperity,'' a latter-day version of the
Marshall Plan, to give it substance.
The idea is not a preposterous as we have conditioned
ourselves to believe. It could be financed by the IMF with an
issue of Special Drawing Rights and, if successful, it could
be repaid in full. It would solve the most burning issue of
the region: how to create a common economic space without
total political domination by Russia. In this context, the
recent presidential elections in Ukraine which produced a
president who is genuinely interested in economic reform
offers an opportunity which I hope we shall not miss. A
genuine Partnership For Peace, coupled with a Partnership For
Prosperity, would provide a firm foundation for a new world
order. In its absence, we are going to have world disorder.
Let me end with Macedonia. This is a clear case where an
ounce of prevention can save us tons of troubles. We ought to
make it a matter of priority to come to the aid of this tiny
country with a democratic, multi-ethnic government, which is
on the verge of economic collapse for reasons which are
beyond its control.
____________________