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 You are in: Bureaus/Offices Reporting Directly to the Secretary > Policy Planning Staff > Secretary's Open Forum > Proceedings > 2003

America in the Global Community: Building Long-Term Security

George Soros, International Philanthropist, Financier, Author, Sage. Founder of the "Open Society Fund."
Presentation at the Secretary's Open Forum, Washington, DC
September 16, 2003

Opening Remarks and Introduction

The views and opinions expressed in this presentation are those of the speaker and do not necessarily reflect Administration views of policy.

MR. SOROS:  Thank you. First of all, I'd like to express my appreciation for being invited to address you. "Open Forum" sounds like "open society"--it's something that I really appreciate, and I want to support. I think that a discussion about America's role in the world is very much needed, and I hope to contribute to that.

I recently finished my next book called The Bubble of American Supremacy. It basically has two parts. One is a constructive view, vision, for America's role, and the other is a critique of the Bush Administration. I shall focus on first part in this discussion. I think I'll do the other part elsewhere. [Laughter.]

What we are confronted with as a result of globalization is an increased interdependence, because we now have global markets, particularly global financial markets that make our economies increasingly interdependent. But the political arrangements that prevail currently are still based on the sovereignty of the states. And that creates a disparity. It is very agreeable for making markets sort of less dependent on the interference from the states, but there are many--but markets are basically designed only to assure the provision of private goods--free exchange of private goods. There are needs for global goods--public goods like maintaining peace, protecting the environment, maintaining the market mechanism itself, which cannot be left to the markets.

Now within this global capitalist system, the United States occupies a dominant position, and I don't need to go into the details of it- of how dominant it is, both militarily, economically, financially, and even culturally. Now this dominant position, I think--and I would argue--imposes the unique responsibility on the United States, because we can't do anything we want. We can't impose our will on the world, as we are currently learning about, at our great expense. But actually very little can be done in the way of international cooperation without the leadership of the United States, or at least its participation. So this is this unique responsibility that I think the United States has to live up to.

Now the globalization and this political arrangement which is still based on sovereignty of states, creates some real difficulties, and they are basically of two kinds. One, it's very difficult to interfere in the internal affairs of sovereign states, and the second is it's very difficult to have international arrangements, international law, and very difficult to get international institutions to function well. I think this is really the great unsolved problem of our current world order. How do you--and on what basis do you intervene, do you interfere in the internal affairs of other countries? Because clearly given our increased interdependence, what goes on inside countries is of vital interest to us and to all the other members of the international community. After September 11, I have the need to make this point, that Bin Laden could have a base in Afghanistan, and so on.

So what do we do about the likes of Saddam? We can't invade every country. There has to be some mechanism for improving internal conditions in other countries. My friend Jeffrey Sachs says there are two major causes for poverty in the world: bad location and bad government. Now there is very little you can do about bad location, but you can do something about bad government. And that I think has to be an objective of the international community.

Now what to do about it? How to interfere? I think the first major point is to offer affirmative, positive intervention, because if you bring aid, support, reinforcement for countries moving toward democracy, open society, that does not interfere with their sovereignty, because they can take it or leave it, and there is not enough of that kind of intervention in the world today. And foreign aid generally as it is currently provided suffers from many deficiencies. I would just briefly mention five.

  • One is that most of the aid is given to serve the interests of the donors and not the recipients. I think that is where my foundations have managed to overcome that, because we have in each country a board of the citizens of that country who decide what that country needs, so it is not serving my interests; it's serving their interests. And that's why I think it works better than the official foreign aid.
  • [Second], there is a--most of the aid is intergovernmental, and that actually is very often counterproductive. At a time when we are fostering greater reliance on the market mechanisms, it goes directly against the grain to have intergovernmental assistance, and very often intergovernmental assistance serves to sustain corrupt or repressive regimes.
  • Third, there is a lack of--very often a lack of capacity to absorb aid;
  • Fourth, there is a lack of cooperation and coordination in providing that aid; and
  • Finally, most of the aid is bureaucratic in this character, and bureaucracies try to avoid risk, whereas this kind of intervention is actually extremely risky and entrepreneurial. Now there have been some attempts--for instance, the U.S. has established enterprise funds that have worked rather well. And I think that the Millennium Challenge Fund that is currently being established is in many ways a very positive development. I think it is the result of a new paradigm about what foreign aid should be like, and I am very much engaged in trying to make it work well.

It has its limitations, because it's basically confined to a certain class of countries--countries that are already moving in the right direction, who willingly compete to obtain that aid. I am very glad to focus on that. The Millennium Challenge Account focuses on that group, because I think it will be possible to produce positive results and overcome the very negative image that foreign aid currently has and, therefore, that may open the way for increasing the extent to which aid is provided. But it leaves the hard cases out, and this is where I think the major problems lie. That is the problem of negative development, reverse development--countries falling into a black hole of civil strife, repression, failed states. If you look at the--usually when you talk about development you try to--the millennium development goals, they sort of aggregate things. But it's not only a matter of adding things together. You have to take into account the things that are going in the opposite direction. And if you could eliminate the reverse developments, you'd be able to make a much greater contribution to global development than any other way. So this is I think the big issue: What do you do about failed states, corrupt, repressive, or inept regimes?

I would like to propose to you a modification of the concept of sovereignty, because sovereignty is basically somewhat anachronistic. It comes from the Treaty of Westphalia, where you had rulers and subjects, and the rulers controlled their subjects. The Treaty of Westphalia established a principle that the ruler could determine the religion of his subjects. So that's a pretty archaic concept for today's world.

Now then came the French Revolution, and the sovereign was overturned and the people took over the sovereignty, so it became the sovereignty of the people. And that was the basis of the nation-state. But I think this principle needs to be taken just a little further and to make it clear that sovereignty belongs to the people, not to the rulers. If the rulers abuse the trust that is given to them, they are in some ways subject to intervention from the international community. So that's sort of a very broad principle. It has some very practical and useful applications. The first is with regard to foreign aid, because that would justify foreign aid that is not intergovernmental. There are countries where the government does not deserve to be supported, but civil society does. And, again, I think that I can speak from personal experience that that can be a very valuable kind of involvement. And I very much hope that the Millennium Challenge Fund also will be available to civil society--not only become an intergovernmental affair.

But an even more interesting application is in regard to natural resources, because when you look around and you look at the reverse development and conflict trap, the black holes, they are usually connected with countries that have natural resources. It's a very interesting fact that countries rich in natural resources have developed less--have made much less progress--for instance, in Africa--than countries without them. So there is something really wrong there. And I think that one has to accept if you look at the Middle East, that we are talking about, you know, Arabs are not ready for democracy. But when you think of what the international community has been interested in the Middle East--it was oil. And in order to get the oil you need to make it--you need to have a concession. The concession is --comes from the ruler and, therefore, you make a deal with the ruler, and you are not very much concerned whether -- how the ruler treats his subjects. So that I think is the major mechanism of this reverse development.

Now, if you accept the principle of the people's sovereignty, then the situation begins to change, and it is, in fact, happening now, because there is an emerging movement to assure that the revenues from the natural resources actually reach the people to whom it rightfully belongs. I am very proud to have participated in launching a campaign, “Publish What you Pay”--and that is to provide greater transparency about the receipt of revenues. This needs to be complemented by “Publish What You Receive”--the governments need to give an accounting of the monies that they receive. And then the third step--they have to be held accountable for how those monies are used. I am very pleased that the British Government really took this matter in plan, and the G-8 has some pious words on this subject in its last communiqué, and then the British Government organized a conference, Extractive Industries Transparency Initiative, which is exerting pressure on the recipient countries to be more accountable. I see a great scope and hope for this development. It's early days, but clearly the resource companies, a lot of them are very much in support because they feel that they have to respond to public pressure. And a number of governments are. So I think this is where the people's--where the concept of people's sovereignty can really make a great deal of difference. I regret to say that the United States has not been in the forefront of this movement, the oil companies have not been very forthcoming, and the U.S. Government has not been very much in the leadership there. Actually, there was a declaration--U.S. oil companies also signed it, and I think it's very important now to make sure that it isn't just a piece of paper, as very often these things are. And that is where I think the civil society will play a role.

So to sum up what I think can be done in the way of constructive intervention, I'd like to sort of propose the Soros doctrine of constructive, affirmative intervention, in contrast to the Bush doctrine of preemptive action of a military nature. I think you will have a meeting shortly on the Bush doctrine. I'll be very happy to express my views on that.

The second major problem area is the international institutions--how to make them work, given this principle of sovereignty. And while it's clear that we need to strengthen those institutions, we also have to recognize their inherent weaknesses. I would mention particularly the United Nations, which is so important. But one has to recognize that the preamble of the United Nations is based in terms of "we the people," but the Charter itself is in terms of sovereign states, and sovereign states, you know, have interests but no principles. They always have to feel obliged to give their national interests, or their perceived national interests, precedence over the common interest. And that is the great weakness of the United Nations and of most international institutions. I don't think one can avoid it. This is the way the world is currently constituted. One has to recognize it. And, therefore, one has to recognize that you can't always act only in the context of international institutions, which are dominated by the national interests of sovereign states. Whenever possible, one should. But it may not always be possible. So, for instance, in the case of Kosovo I was very much in favor of our intervention. In the case of Bosnia, I was very much in favor, and it was not in the case of Kosovo the United Nations but NATO. And in the case of a European situation, I think NATO was sufficient to give the intervention legitimacy. In a situation like Iraq you would need a broader constituency, and in other parts of the world also.

So I think you need cooperation among countries that are devoted to fostering the development of open societies or democracies. And we have the makings of it in the Warsaw Declaration that was actually fostered by the United States. It's a little known declaration--I am sure you are familiar with it. But few people outside this building are. In fact, the only reason that it was mentioned in the newspapers was because France refused to sign it because it was sponsored by the United States. This was the only reason why it got any attention at all.

But yet, as a principle--the principles outlined in that declaration are, in fact, the principles that ought to be developed. And that is that it is in the interest of democracies to foster the development of democracies all over the world. I think that international institutions, like the United Nations, would function better if there were a caucus of democracies that voted as a group and, for instance, would not allow just the geographic rotation, which might put Libya to be the head of the Human Rights Commission but only allow members of that caucus to be elected. It would be a reform that is well doable within the present Charter, because, of course, the Charter can never be changed. In fact, any kind of institutional reform is extremely difficult because the countries will not sacrifice their national interests for the common interests. But that kind of cooperation could be effective. And it could also be effective in the regional organizations. So I think that is a way in which international cooperation could be strengthened.

I think it would be very useful to have a caucus of developing democracies, because right now you have the Group of 77, but that includes Cuba and some other countries that cannot possibly qualify as democracies--so that they would have to have separate voices. And that's also happening. We just had the developing democracies make their voices heard in Cancun, and it resulted in the collapse of the talks. So whether that can be considered progress is another question. But at least you have the beginnings of developing democracies coming together and having their voices heard.

So this--I think development and security are interrelated. Our security depends on helping other countries develop both economically and politically into open societies. Clearly, the issues of dealing with terrorism, dealing with the proliferation of weapons of mass destruction, requires the cooperation of countries that recognize that it is in their interests to foster the development of open societies throughout the world. So that is my constructive proposal, that this is the role that the United States ought to take on. It cannot be the sole objective of foreign policy, because there are always conflicting interests, but it clearly should rank much, much higher than it currently does. Thank you. [Applause.]

MR. KEPPLER: Mr. Soros generously has agreed to give us some time to take some of your questions. Since there's a large number of people here, I'd like to ask a couple of favors. When you ask your question, if you are sitting in front of a microphone, press the button. Otherwise, if you could possibly go to the microphones, we have in the back there -- and the reason is we would like to include this in the tape of the program. And I would also ask you to limit your questions in length, so that other people can ask their questions.

I'm going to take the privilege of being chairman to ask one of the first questions. You advocate clearly a policy of constructive intervention versus the Bush doctrine, which moves away from deterrence and containment to a policy of preemption. And, today, when we live in a world with nuclear weapons, where guessing wrong is catastrophic and there's no going back, at what point would you recommend constructive intervention before an actual attack would occur?

MR. SOROS: Well, I think that this kind of constructive prevention cannot start early enough, and the earlier it starts the more effective it is and the less painful it is, and the less it requires a military kind of pressure. If you take the Balkans-- the collapse of Yugoslavia-- if the international community had taken exception to Milosevic abolishing the autonomy of Kosovo, it would not have required any kind of intervention, and it would have been the end of Milosevic’s political career, and things would have developed in a different direction. And if you take the Baltic states where you had some of the same ingredients as you had in the Balkans of basically that being ethnic suppression of the identity of the Baltic states by large population movements, and the countries felt very much in danger, so they were very reluctant to give citizenship to nonnationals in countries like Latvia and Estonia. International pressure that forced those countries--didn't force them, but induced them to deal with that issue gradually avoided any kind of real conflict. So you haven't heard of the Baltic crisis. So crisis prevention has to start by generally promoting democratic open societies.

MR. KEPPLER: The gentleman at the microphone.

Q: Yes, I wanted to ask if given your financial success there was ever any conflict between your financial aspirations and your moral philanthropic concerns. So was there ever a question of business versus ethics or morality?

MR. SOROS:  Well, I make a clear distinction between playing by the rules and trying to change the rules. I always play by the rules, and that is basically financial markets are amoral--not immoral. They are amoral. Morality doesn't enter into it. However, you cannot live without morality. That's why you need a political process. That's why you can't leave everything to the markets. And then you have an obligation as a citizen to improve the rules by which you live. And there you have a conflict, because very often the rules that are good for society are not necessarily good for you as a market participant. And that's where I think that you actually got to put the public interest ahead of your private interests.

Q: Yes, Mr. Soros, do you think the international community would have difficulty in arriving at a consensus of what constituted a democratic state?

MR. SOROS: Actually there was a declaration, a fairly good definition, but, of course, there are many more signatories of the Warsaw Declaration then there are democracies. So it would be one of the important aspects of this community of democracies that it will be somewhat more discriminating in deciding who qualifies. And I would envisage having maybe two classes, fully qualified democracies and candidates--countries that promise to move toward democracy but don't qualify. They should also be accepted as aspiring members of such a community.

Q: Just to follow up: Would they be self-selected?

MR. SOROS: Pardon?

Q: Would they be self-selecting? In other words, would the, quote "democracies" that are recognized, like the United States, for instance, Great Britain and others, step forward--


Q: and essentially select themselves and say: We are the model of a democratic state, and we are accepting applications? Or would it be a global simultaneous--whoever wants to step up to declare they are a democracy will do so?

MR. SOROS: No, I think it is in the nature of a club, so the club is deciding on the membership of the club.

Q: Thank you.

Q: Our institute focuses on investors who are developing emerging energy technologies that are clean and fuel-less. And my question is your comment specifically about natural resources limiting development of countries seems to be perhaps in opposition to the concept that as these emerging energy technologies work their way into the market worldwide and supplant the dependency on fossil fuels, wouldn't you agree that that would aid development worldwide?

MR. SOROS: Yes, it would. But I don't think--I wasn't--first of all, I wasn't only talking about oil. It's the most obvious thing. But you know natural resources may be gold or nickel or whatever, or it can even be a cash crop that can then be exploited by the rulers who then, you know, get the support from the buyers and the financial resources to suppress their people. So I don't think that development of alternative energies in itself would solve that problem. It's a desirable thing, but it's not an answer to that problem.

Q: You still have the corruption problem. Thank you.

Q: May I say I have been coming to Open Forums since Dean Rusk was the Secretary, and you've presented, sir, one of the most useful panoramas of what we might be doing. When you try to pivot the attention of the world to the individual, you come, as the self-psychologist would say, to a series of belief systems, one of which is the religious belief system most people have. And you have sort of proposed not a frontal attack on belief systems, nor even a backdoor approach, but sort of a sidedoor approach to the polity of people together. But at the individual level would you have any suggestions for getting into this new world?

MR. SOROS: Well, I don't know if you are alluding to our concern about Islam as a threat to our civilization. If you are, I would like to reject it, because I don't believe that was behind your question -- or not?

Q: No, I go a little deeper than that, if I can, and say that the idea--perhaps the idea of God is a troublesome one, and that if we try to rely more on men and less on God we would go further.

MR. SOROS: Yes, but I think that--you know, the open society idea is based on the recognition that nobody has access to the ultimate truth, and, therefore, you cannot reject religion either. In other words, you have to allow people to have their belief systems. We all need to believe in something, whether it is religion or morality. And we actually have to make decisions, recognizing that we may be wrong. It's very difficult. And my answer to that is that we have got to believe that we are right. But just as Karl Popper proposed that in science that scientific laws should be accepted as provisionally true until they are proven to be false--the same way that say our belief system we have to accept and act on, but we have to recognize that we may be wrong and be ready to revise it. And in that respect, of course, some religions are contrary to an open society, because they refuse to accept that they may be wrong.

Q: That's the opportunity as well as the problem, isn't it?


Q: Thank you, sir.

Q: Mr. Soros, thank you very much for addressing the group today and for your comments. Five hundred sixty-two tribal nations have sovereign identity and government-to-government status with the United States. Now that they have other revenue sources and are now a political and economic player, they are trying to figure their rightful role as citizens of the United States, but also world citizens. And would you be interested in discussing with them their kind of role in an open society?

MR. SOROS: Yes, yes.

MR. KEPPLER: I can put you in touch a little later. Thank you. Yes, please?

Q: Sir, thank you for a very refreshing effort in bringing some creative thinking, which is very much—[inaudible]--

I would like to follow up on what you said about natural resources. There is one natural resource which is very fundamental to life on this Earth, and which is very unequally distributed, and the lack of which is a fundamental reason for poverty. And I'm talking about water, and we don't have a clue about how to manage water. The decision--the consensus on all the international fora that took place on the subject concluded that it has to be managed globally in order to establish some kind of fair distribution, but we don't know how to do it. This is one of my major--I spent 30 years of my life in the United Nations.

But the one question I want to ask you is about the role of the United Nations. And when there is conflict in a country--I'm Lebanese--when there is conflict in a country, and when there is a need for intervention, it takes months to gather the kind of UN force to intervene.

My question to you is that now that you are talking creative thinking, why not think of NATO as the military arm of the United Nations, but also as the institution which would be responsible for training regional armies which would not only be pure military, but which also receives some training in nation-building? Could you please tell us what this idea would mean to you?

MR. SOROS: I think that NATO is a very useful and important institution, and, of course, increasingly it projects out of theater; in other words, outside the countries that belong to NATO. But in Afghanistan it has taken over. I think we have to be very careful about the legitimacy of NATO in -- let's say in an African setting, because it is after all you know an association of the mature democracies that developed the world. So you do need I think some participation from nondeveloped countries. So NATO can be an important element, but it has its limitations also.

Q: It would train the regional armies--establish and train African--

MR. SOROS: Yes, it can play that role, also. But, for instance, we recently had the issue of Liberia, where the United States has been remiss in participating in a common effort. But in the end it also requires the participation of the African--of ECOWAS. So you do need to develop this cooperation among democracies that are in the nondeveloped world.

Q: What about water?

MR. KEPPLER: We have to save that for another time. We have a limited amount of time. This lady, please.

Q: Thank you very much for coming. I was just curious--we discussed preventive intervention and aid. I was just wondering if you have an opinion on the U.S. role in the Israeli negotiations and whether the U.S. should negotiate with the terrorists in any way.

MR. SOROS: Should negotiate with the terrorists you mean?

Q: In order to not have to fight with them basically.

MR. SOROS: Well, you know, it's a very big question, because one country's terrorist is another country's liberation army, so I have some very severe, serious concerns about this whole concept of war on terror. I reserve that for my other part—[laughter]--the criticism of the present policies. But I can say this, because this is really quite general, that there is something wrong with waging war on terrorism, because war has to be fought against a known enemy, and that's why our reaction has been distorted, because we have been concentrating on countries that are supposed to be harboring terrorists as opposed to dealing with the threat of terrorism. I think it's been counterproductive, because terrorism is basically a crime. It's a crime against humanity, and it needs to be dealt with as a crime, and it needs police action. And, above all, it needs information. It needs cooperation of the general population to make information available. And by waging war we are actually also creating victims, innocent victims--something that I hadn't heard mentioned. But the fact is our war on terror has created more innocent victims than the terrorists did when they attacked us. Now, we don't think of it in those terms, because they are not us--you know, they are Afghans and Iraqis and so on. But this is the direct result of the war on terrorism. So I think that this whole concept of war on terror is a false metaphor.

Q: I asked about the role of the U.S. and Israel --

MR. KEPPLER: I'm sorry, we have a limited amount of time. We have a lot of people. So we'll have to move on. I'm sorry.

Q: Thank you, Mr. Soros, for your comments and remarks, and thank you to the State Department for making this forum possible.

I wonder if you might be willing to comment on the value of U.S. participation in international treaties such as the CEDAW, elimination of the discrimination against women, or the UN Convention on the Rights of the Child, neither of which we've ratified.

MR. SOROS: Well, I'm happy to say that my foundation is an avid supporter of CEDAW and is supporting a campaign to get the United States to ratify it. And, of course, this is one of the many examples where America has failed to play that role of collective leadership that I would like to see us do.

MR. KEPPLER: The gentleman to my right, please?

Q: Yes, the last question leads me to abandon mine, or temporarily come back to it, because of your answer, which I just don't understand. Maybe the word "war" is the thing that offends you, but you have to fight, it seems to me, against terrorism and you have to fight against the terrorists.

Now, I contest the idea. I don't think you can--you have the statistics to show that more civilians are killed than terrorists. I would challenge that. But it comes back to the question I was originally going to ask, and that is about the idea that all religions have to be given their due because they might all be right. But when there is an extreme part of a religion, then it seems to me that you have to change your doctrine and say that you are going to fight against that part of the religion which is against humanity and is immoral. And I didn't get that in what I heard from you.

MR. SOROS: I'm glad you raised some opposition, and I would say that, of course, we have to fight terrorism. But waging war is a certain way of fighting, and I think it's inappropriate, and it's counterproductive. So I--

Q: Do you have a substitute?

MR. SOROS: Yes. I think--yes, I think we should have declared the terrorist attack a crime against humanity, and we ought to be--

Q: And then what?

MR. SOROS: Pardon?

Q: And then what?

MR. SOROS: And then we ought to be trying to track down terrorists wherever they are, and bring them to justice--

Q: I would submit that's precisely what we are doing, Mr. Soros.

MR. SOROS: Pardon?

Q: I would submit that's precisely what we are doing.

MR. SOROS: Is that what we are doing in Iraq?

Q: Absolutely.

MR. SOROS: Is there any evidence of Iraq actually having been responsible--

Q: Yes, yes--

MR. SOROS: --for the attack?

Q: Did you hear Mr. Cheney on Sunday?

MR. SOROS: Pardon? [Laughter.]

MR. KEPPLER: He said, Did you hear Mr. Cheney on Sunday?

MR. SOROS: Yeah, I did hear Mr. Cheney.

Q: You know, I don't want to get too confrontational--

MR. SOROS: --I was really quite amazed.

Q: I wanted to just say that this sort of--you know, the devil is in the details, as we know, and it seems to me that you have got a lot of principles, but I don't see the practical way of getting at these things. You know, we are all for your principles. But let's be practical. Let's solve the problem.

MR. SOROS: Let me give you a practical example, Uzbekistan. There was--there is a terrorist group in Uzbekistan that was very closely allied with al Qaeda, and a lot of them were in Afghanistan, and a lot of them were actually killed in Afghanistan. So largely that group has been decimated. Uzbekistan represses religion to an enormous extent, where people are put in jail for having a beard--thousands of people. Now, there also is an Islamic movement that forswears terrorism and claims to use only peaceful methods. When the terrorist group was decimated, Uzbekistan ought to have allowed that peaceful Islamic movement, legal existence. And the United States, which is an ally of Uzbekistan, ought to have urged Uzbekistan to do so. We didn't, and they didn't. And, therefore, there is no outlet in the form of peaceful expression of your political and religious beliefs, and, therefore, eventually you will have more terrorism coming from Uzbekistan. So this is where our approach is, I think, counterproductive.

MR. KEPPLER: Thank you.

Q: I just disagree. [Laughter.]

Q: I was wondering if you could give us some comments on the cooperation that the governments would need ahead of time in light of the idea of early intervention? In India the Bombay Stock Exchange was blown up way before we even heard of al Qaeda. Secondly, there was Indian airlines, Air India, that was hijacked, and civilians were let go in exchange for the radicals being freed. And, if I may ask, one of those radicals was the people who started 9/11--was one of the architects of 9/11. I was wondering if there were more cooperation between the two countries at that time could we have stopped 9/11 from happening.

MR. KEPPLER: Which two countries, please?

Q: India and the U.S.

MR. SOROS: I don't know if I can comment--make any worthwhile comment on this. I don't know enough about it.

Q: I returned Sunday night from Kishinev, Moldova. I was a guest of the Technical University of Moldova, working with a group of engineering students who are learning entrepreneurship. This project was sponsored by the Soros Foundation in Moldova, for which I am most grateful. Thank you.

This raises the issue of capacity building, which you alluded to as one of the criticisms of current foreign policy. Foreign aid is given to countries without the capacity to be able to absorb it. Could you comment on the role of higher education around the world as a--in its role in development efforts?

MR. SOROS: Higher education?

Q: Yes, higher education.

MR. SOROS: Well, all I can say is that when we were in full swing, one-third of our budget as a foundation went into education, so I think that speaks for itself.

Q: But higher education as a--

MR. SOROS: Higher education--I combine higher education and general education. But higher education obviously plays a very important role, and in a way it's disproportionate in the work of the foundation, because we are particularly interested in creating an elite that would be fostering the ideas of an open society --so the Central European University and a number of other institutions.

In particular I'd like to commend the American University of Central Asia, which is an institution I visited, and which we have endowed jointly with the U.S. Government--the U.S. Government gave two-thirds of the money; we gave one-third. And that is an oasis of free thinking, free speech, in an area that desperately needs it. This is located in Bishkek, and I couldn't tell you how important and how wonderful that institution is.

Q: Thank you.

MR. KEPPLER: I would have to ask you to yield to the gentleman behind--I believe you have already had a turn.

Q: Yes, I did.

MR. KEPPLER: We really have to accommodate the people who haven't. I'm sorry.

Q: In my father's tents, there are many side doors. [Laughter.]

MR. KEPPLER: Thank you.

Q: Thank you. To change the subject a little, you referred at the beginning of your talk to the effect of globalization in promoting the interdependence of highly, at times very highly disparate societies. You also referred to--you distinguished between I think the immorality of the market--

MR. SOROS: Amorality--

Q: Yes, with an "a" -- amorality of the market economy and the call for a system of values, morals, however defined, which would supplement that and work hopefully in consonance with it. I would like to ask you, since I noticed both abroad and back in the United States a lot of apprehension among working people to the structural changes that are occurring in economies throughout the world and a feeling of helplessness, what you see as the future of worker rights and whether it might be necessary to develop new systems to protect them in an epic of what seems to be accelerating economic change.

MR. SOROS: Well, you know, globalization generally and international trade is as I say creates wealth in the sense that the winners could compensate the losers and there would still be something left in addition, so there would be a net gain. However, the winners don't compensate the losers, and that is the source of a lot of tensions, both internally in the United States and globally. And that is why you need to create, let's say, a more level playing field, while in fact the winners do compensate the losers-- to some extent, at least.

Q: Thank you.

MR. KEPPLER: These will be the last three questions.

Q: Mr. Soros, thank you. I have a small question: What should be the next step when constructive engagement fails in the relationships with one country? For example, the government continues to commit human rights violations. That government also continues to be an imminent threat to its neighbors. What do you propose in that situation?

MR. SOROS: I think you have to go on a case-by-case basis. It's not something where you can have general rules. But certainly smart sanctions are smart. In other words, sanctions that acted against the rulers as opposed to a blunt instrument of trade sanctions.

Q: Have they worked?

MR. SOROS: Pardon?

Q: Do they work?

MR. SOROS: I think they do, because the rulers actually like coming to shop in Saks Fifth Avenue, and if they are prevented they actually take notice. [Laughter.] So I think it's just--I would just commend that as an instrument. But it's just one of the many, because there are all kinds of ways in which you can exert pressure, but it does have to be done on a collective basis; in other words, individual actions generally are not effective, because you can turn to someone else. So there is a need for cooperation, which we currently don't recognize.

Q: Thank you.

Q: One of the questions asked was about practical methods of approaching open society, and so I was curious about your critique of debt cancellation as a method.

MR. SOROS: Cancellation of--?

Q: Debt cancellation.

MR. KEPPLER: Debt cancellation.

MR. SOROS: Debt cancellation. Yes, I mean there's been movement in it, and it isn't enough, because basically what you do is you write down the total amount outstanding. But effectively the debt service continues--not greatly changed. And you really need an infusion of additional capital to get a country like let's say Mozambique going. So it's a--it definitely has to be part of a program, but it is not in itself enough.

MR. KEPPLER: I'm sorry, this will have to be the last question.

Q: Mr. Soros, you've talked about applying the Soros doctrine to engaging democracies, aspiring democracies. How would that apply to countries that don't fit those categories, for example pre-war Iraq or North Korea?

MR. SOROS: Well, it clearly doesn't apply. I mean, these are hard-core, repressive regimes that need to be dealt with in other ways. And it's extremely difficult to deal with them, because they are so isolated to start with that applying pressure from the outside doesn't get you very far. But even then-- even there support for nongovernmental civil society can be useful. I'm happy to say that we've got some North Korean students of economics at the Central European University, and I don't think that is in itself a bad thing to have some people in North Korea who know something about economics.

Q: Thank you very much.

MR. KEPPLER: Can you take just one more question, from the lady there? This will definitely be the last question, I'm afraid.

Q: Thank you. Mr. Soros, could you tell us about some of the projects of constructive intervention of the Open Society Institute in eastern Europe and Latin America? Also, I'd like to know if you are considering any projects for the Middle East at this time.

MR. SOROS: Well, I think there are so many that I can't really single them out too easily. I think the projects that I consider the most successful are the ones we have concluded. So, for instance, our support for scientists in Russia I think sort of stands out as something that really made a difference in Russia. And, yes, we are interested in the Middle East, but I think we are approaching the subject somewhat more carefully and cautiously than some others.

Q: I see. Do you work in partnership with other organizations?

MR. SOROS: Yes, yes.

MR. KEPPLER: Mr. Soros, thank you very much for your time. [Applause.]

Just to let you know, Mr. Soros gave us a half-hour more than he agreed to, and I am very appreciative for him taking the time and sharing his wisdom.

I also want to thank the Open Society Institute, and particularly Mr. Amit Pandya who was my interlocutor, and Ms. Joanne Haahr, without whom this program never probably would have gotten off the ground.

I'd like to encourage you to join us again. On October 1 we have William Kristol coming in. He'll be talking about the flip side oif Mr. Soros's active intervention. He'll be talking about the Bush Doctrine.
Then on October 7 we'll be talking about the Free Trade Agreements in the Americas. Our own ambassador and Assistant Secretary of State for Western Hemisphere Affairs, Ambassador Roger Noriega, will chair a panel of the Brazilian ambassador, Ambassador Rubens Barbosa, the Chilean ambassador, Ambassador Bianchi, and the ambassador from El Salvador, Rene Leon. I think on the heels of the failure and the collapse of Cancun, we are hoping at this Open Forum on October 7 to address some of the issues, to find out what our differences are, and see if there is any possibility for reconciliation.

I thank you all for joining us--looking forward to seeing you again. And thank you again, Mr. Soros. [Applause.]

Released on September 24, 2003

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