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Wednesday, August 25, 2004 - Page updated at 12:25 A.M.

Close-up
Billionaire Soros enters politics ... without running for office

By Danna Harman
The Christian Science Monitor

MICHEL EULER / AP, 2001
In his book "The Bubble of American Supremacy," George Soros argues that the United States is "betraying the principles it traditionally has stood for."
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One of the first jobs he found when he arrived in London from Budapest in 1947, practically penniless and speaking little English, was as a traveling salesman. The young George Soros would try to sell knickknacks to tobacconists — unsuccessfully, as he recalls. His girlfriend left him because he seemed to have no future. He missed his parents. It rained incessantly.

Then America beckoned. It was a kind of place, he thought, where he might feel at home. Basically, he says, with characteristic bluntness, "I came to make money."

And make money he did. Soros reached the United States in 1956, self-assured and hungry for success. In time, mainly through currency speculation, he amassed a personal fortune worth $7 billion, making him the 28th richest person in the United States, according to Forbes magazine. In 1992, believing the British pound was overvalued, he famously bet against it, making $1 billion in one day. Last year Soros was the most successful hedge-fund investor in the United States, earning $750 million.

That kind of capital translates, of course, into significant social sway. And billionaires have long used the weight of their money to effect change, through philanthropy and, yes, politics. But perhaps none has set so overt a political agenda as Soros has this year.

Target: Bush

The man who in 2000 reportedly gave $122,000 to political candidates — mostly, but not exclusively, Democrats — has become consumed with getting President Bush and his administration voted out of office. To do so, he has traversed the country in the past year, standing up at small town-hall meetings, rallies and benefits.

And he is putting his millions where his mouth is, pouring $12.6 million to date into a handful of so-called 527 organizations (the number refers to the provision of the relevant tax code) advancing the case against Bush.

What Soros has accomplished in terms of influencing the electorate may not yet be quantifiable, says Kelly Patterson, director of the Center for the Study of Elections and Democracy at Brigham Young University. But the timing of his strategy — along with the current presidential-campaign slugfest over the role of 527s in negative ads — opens a window on the role of wealthy political donors.

The role of 527s

The redirecting of the large, unregulated contributions known as "soft money" into the 527s in the wake of the campaign-finance reforms hammered out since the last presidential election has had some significant, probably unintended, effects, says Patterson. Donors are becoming arguably less accountable than ever before and, at the same time, more influential, says Patterson.

Soros' old friend Mark Malloch Brown, now director of the United Nations Development Program, says he's hard-pressed to think of a nongovernmental figure in the United States today — "except maybe Oprah," he jokes — who has as much power or influence overseas as does Soros.
 
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Still, with his bushy gray hair, his slow, Hungarian-accented speech, his camera-shy wife and five kids, and his lack of interest in a flashy lifestyle, Soros is the kind of billionaire who always stays just outside the spotlight's glare. He was, at least, until his newest project got off the ground.

Soros supported Howard Dean in the early days and now endorses John Kerry, albeit tepidly: "I am advocating a certain role for the U.S. in the world, not necessarily the one Senator Kerry takes," he says.

But the majority of his millions of dollars in contributions has gone toward supporting various left-leaning 527 groups, such as America Coming Together (ACT) or MoveOn.org, which are getting out the vote, putting out advertising and framing the alternative message to Bush's.

A childhood in flux

Soros, born in Hungary in 1930, came from a well-off Jewish family. His father, Tivadar, who escaped from a Siberian prison camp during World War I, trained as an attorney and spent his days administering the family's properties (his wife, Erzebet Szucz, was the daughter of a prosperous shopkeeper).

The elder Soros was soberly prescient about the dangers to his family and changed the family name from Schwartz to Soros in 1936 to protect against encroaching Nazi policies.

After the Nazi invasion of Hungary in 1944, Tivadar Soros procured false papers for each family member. George was listed as the godson of a gentile bureaucrat. The family split up and went into hiding.

In 1947, at 17, George Soros went to England. The parents stayed behind and endured the communist years before eventually reuniting with their children in the United States.

George Soros began to dabble in currency trading on the black market at 15. But making money was never his only interest. Along the way to the Forbes "richest" list, he also took many side trips into the world of philosophy, working overtime to spread his pet theory of "open societies."

An advocate of divergence

It was a philosophy picked up during his years at the London School of Economics when studying with philosopher Karl Popper and adapted by Soros over the years to explain everything from financial markets to international relations. At its core, it is a belief that divergent views and interests are necessary and should be encouraged within societies.

With his foundation the Open Society Institute (OSI), he has given away close to $5 billion to promote open societies across the globe. He backed the Solidarity movement in communist Poland and the dissidents in the Czech Republic. He supported after-school programs in New York City, helped black students attend college in apartheid South Africa, founded a University in Budapest and brought textbooks to Russia.

Soros is not the largest contributor to 527s. That distinction goes to his friend Peter Lewis, former head of the insurance firm Progressive Corp., who has handed over $14 million. And in real terms, the financial contributions Soros has made pale in comparison to the overall billions being spent on the elections. They don't even compare with what he has spent on some of his other endeavors.

"Thirteen million?" says one Soros staffer, with a laugh. "He has thrown a lot more money at other problems. ... He would give that out as a small loan to any Balkan state that needed it."

Bolstering the Democrats

Yet by financing the 527s so heavily — when direct individual donations to presidential candidates have been limited to $2,000 a person — and by being so vocal in his campaign and so strenuous in his efforts to get others to contribute, Soros has become a key player in the Democrats' efforts to match Bush's formidable fund-raising apparatus and a force in shaping the election.

In a briefing paper circulated by Republicans on Capitol Hill last month, Soros was described as the "Daddy Warbucks" of the Democratic Party. The paper sets out — in somewhat oversimplified terms — some of the controversial positions Soros has staked out on a variety of touchy social issues such as euthanasia, gun control, legalizing drugs and abortion.

Taking exception

Criticism comes from other quarters as well. In empowering factions in locked-down societies, Soros has been charged with creating unrest along the way. His foundation has been ousted, for example, from Uzbekistan and Belarus.

Even some of Soros' long-standing liberal allies are none too pleased with the billionaire's big gestures. Over the years, Soros spent $18 million backing campaign-finance reform. When that push culminated in the McCain-Feingold bill of 2002 — which banned soft money — the 527 "loopholes" came under scrutiny.

The novelty of the 527s is that they are, in theory, separate entities from the candidates and the party machines, and as such uncoordinated — and at this point, also unregulated financially.

Reforming the reforms

The Federal Election Commission last week passed new regulations that will affect the 2008 presidential election. Effective Jan. 1, nonparty groups will be able to take only limited donations from individuals if the groups declare that the money will fund the promotion of or opposition to a particular candidate.

But for this election cycle, Soros and others are free to contribute as much as they want to the 527s.

Soros "has gone from being part of the solution to the problem to being part of the problem," charges Fred Wertheimer, president of Democracy 21, a Washington-based organization that promotes changes in campaign finance and which has, over the years, benefited from Soros' grants.

"We just find it unfortunate that Soros and others have chosen to make these huge contributions to influence the presidential elections," says Wertheimer. "In fact, the successful effort to ban soft money was premised on ending the role of individuals doing such things."

None of these criticisms or apparent contradictions seem to faze Soros. The man who has gone head to head with such international tough guys as Aleksandr Lukashenko of Belarus, Serbia's Slobodan Milosevic and Malaysia strongman Mohammad Mahatir is not likely to let talk-show hosts, bloggers, Republican foghorns or even watchdog groups get in his way.

Crusade's roots: Sept. 11

His crusade against what he considers the greatest impediment to an "open society" in his adopted home began, he recalls, right after Sept. 11, 2001, when the president started speaking in terms of "us" and "them" and "with us" or "against us." "These are the things I had heard before in Nazi Germany and Communist Hungary," he says. "I became alarmed at the suppression of critical debate."

Just after the attacks, he began writing his latest book, "The Bubble of American Supremacy," published in December 2003, in which he states, "This is not the America I chose as my home" and argues that the United States has fallen into the hands "of a group of extremists whose strong sense of mission is matched only by their false sense of certitude."

The United States, he argues, is "betraying the principles it traditionally has stood for" and becoming dangerous.

Today the main target of his critique is the administration's doctrine of pre-emptive military action coupled with its unilateralist approach. "It reminds me of [George] Orwell's 'Animal Farm': that all animals are created equal but some are more equal than others," he says. "It's atrocious."

Indeed, Soros also differs with Bush on issues ranging from tax cuts to the rich to the rights of immigrants. But what really got him involved was what he saw as a major shift in America's direction.

Crunching the numbers

Before entering the fray, Soros set out to do what he always does before embarking on a new project: He gathered intelligence. He commissioned studies on the finances of the Democrats' campaign, the options for those wanting to contribute and the most effective way to balance the GOP's advantage in fund raising. This is when he turned to the 527s.

Late last summer, he invited several prominent liberals to his Long Island, N.Y., home to hear their plans and decide if and how to support them. Some of these people were leading newly established 527s. Steve Rosenthal, an experienced union activist who had become chief executive officer of ACT, was there. Ellen Malcolm, the ACT president who had worked to get more women into politics, was on hand. President Clinton's last chief of staff, wiry marathon runner John Podesta, came to discuss his fledgling Center for American Progress.

Soros listened and asked questions. By the following Monday he had pledged $5 million to ACT, $4.5 million to the Joint Victory Campaign, $2.5 million to MoveOn.org and $300,000 to the Campaign for America's Future. An additional $3 million went to Podesta's think tank.

"He has never been modest in terms of his targets," adds Soros friend Malloch Brown. Soros has helped launch nongovernmental organizations that challenge governments and spoken out against leaders whose policies, he maintained, harmed citizens.

"He took on the Soviet system and he took on authoritarianism and totalitarianism in Latin America," says Malloch Brown.

And, fans and foes alike say, Soros and his fellow big donors have been effective. The surprise of the 2004 election cycle has been that the Democrats are as flush with cash as the Republicans. Soros was crucial in creating the early momentum and ultimately changing the equation: Today, of the 25 top donors to 527 committees, 22 gave money to Democratic-leaning causes, according to the Center for Responsive Politics.

All this has helped Kerry in many ways. While the Democratic challengers were still fighting for their party's nomination in the primaries, the 527 groups were already in the contested states building up "get out the vote" operations.

In August, while the Kerry campaign has chosen to "go dark" to conserve its resources for the last two months of the battle with Bush, the anti-Bush message has still been on TV screens in the contested states, courtesy of Soros' 527s.

There have always been large donors, says Brigham Young's Patterson, but now, with the candidate prohibited from soliciting or directing the soft money, big donors are playing a larger role. People like Soros, he says, "are able to shape the kind of organizations they are involved in, and so shape the political debate."

Meanwhile, donors to 527s are being less scrutinized, because the candidates are — again, in theory — less beholden to them. "But it's naive to think a candidate would not listen to the large individual donors of those groups at some point," says Patterson.

Keeping a distance

Soros did not attend the Democratic convention in Boston last month. Kerry rarely mentions him, much less meets him, even though they have overlapped more than once in Sun Valley, Idaho, where they have neighboring homes.

"I deliberately kept my distance, because of the nature of the 527s," Soros says of the convention.

"I am not supposed to coordinate with the party, and I also don't want to give the impression that I have gone overboard." The irony, he says, is that the Republicans are using him as something of a bogeyman to scare up more contributions. "I think I may have ended up raising more money for the Republicans," he says.

The way he sees it, he says, is that he has the "privilege" to act on his principles and that is what he is doing. He is fighting, he says, for an "open society" in the world's most transparent and voluble democracy.

Copyright © 2004 The Seattle Times Company

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