Media Center



October 3, 2006 - Washington, DC

Thank you very much.

I’m very honored [to be here]. I would like to thank the Secretary General, José Miguel Insulza, and the Committee that decides whom to invite for inviting me. I am very honored, and I will try not to embarrass you. That may be difficult, because I am generally known to be rather outspoken.

I am basically known in Latin America as an investor and as an outspoken critic of the Bush Administration’s policies, but I don’t think that is the appropriate subject to discuss in this audience. So, I would like to focus on the concept of open society, the work of the Open Society Foundation Network, and its relevance to Latin America. I am not an expert on Latin America, so I will only provide one half of the answers. Maybe the audience can provide the other half through their questions and comments on my speech.

The concept of open society was first proposed by a French philosopher, Henri Bergson, in his essay: “Two Sources of Morality and Religion”. It said that one source of morality is traditional, and that is associated with closed societies; and the other is universal, and that is associated with open societies.

The philosopher Karl Popper, very much influenced by fascism and communism, argued in the 1940s that universal ideas can also pose a threat to the concept of open society, if those ideologies claim to be in possession of the ultimate truth. Because the ultimate truth is not attainable by humans, those who claim to be in possession can impose their will only through repressive measures. He proposed the idea of an open society based on the recognition of our imperfect understanding, which requires critical thinking and tolerance for dissenting opinion, freedom of speech, freedom of association—so, in fact, a liberal democracy.

His book made a big impression on me because I grew up in Hungary, and I experienced at first-hand the Nazi and communist regimes. I became a great devotee of this concept of an open society, and actually, Karl Popper’s philosophy helped me to develop my own: the idea of fallibility and reflexivity, which actually stood me in good stead in the financial markets. When I made more money than I needed for my personal needs, I reflected on what it is that I really cared about. It is this concept—a rather abstract concept—of an open society.

I started my philanthropic work first in South Africa, which had all the institutions of an open society, but it was closed and racialized; then I began work in Hungary and Poland; and then, one thing led to another, and I developed a network within the former Soviet Empire. As the Soviet system collapsed in a very revolutionary period, I established foundations in some 26 or so countries. When things calmed down, I concentrated on the problems of globalization, and, in fact, the foundation went global.

Then, to my greatest astonishment, I found that principles of open society are endangered in my own adopted country, in the most established open society, the United States. I became involved personally and politically, but that is a subject for another day.

I would like to explore the relevance of the open society concept in the activities of the Foundation in Latin America, because now we have a global network, but it is relatively not so much engaged in Latin America. We have an annual budget of about $400 million dollars, but our spending in the Latin America region is less than $20 million dollars. It is around 15 million at the moment.

We do have national foundations in Guatemala and Haiti, and I am very proud of the work of both those foundations. In Guatemala, the local board brings together the urban liberal intelligentia and the leaders of the indigenous organizations, and that, I think, is a very fertile combination. In Haiti, the foundation has really done, I think, an outstanding job in helping rural communities fostering education, libraries, and so on.

When it comes to theory, obviously, open society is a universal concept. Therefore, it applies to Latin America as everywhere else. I am really very pleased that I meet quite a few Latin American leaders, thinkers, who are as committed to the idea as I am. Former president Ricardo Lagos of Chile, for example is as eloquent a proponent of those ideas as I am, or even more so.

But a couple of things from my experiences in the former Soviet Union may also be relevant to Latin America, and I would like to select two things. One thing that we discovered was that the collapse of a closed system (or a totalitarian regime) does not automatically lead to an open society. It can just simply lead to collapse, which is what happened in the Soviet Union. So, what we discovered—and what Popper was saying—is that totalitarian regimes and totalitarian ideologies represent a threat to open society. What we discovered was that weak states and failing states can equally be a danger to open society. Open society is threatened from all sides. That was a very enlightening discovery.

And the second lesson is that the nature of a liberal democracy does not consist merely of free elections. Free elections are important, but you also need constraints on governmental powers, a division of powers, the Rule of Law, an independent judiciary, independent media, freedom of speech, and other institutions. If it comes down to a sort of sequencing of introducing democracy or open society, it is actually more important to have the institutions in place because if you just have free elections without the institutions and traditions, then you will have results that are now called illiberal democracy, or you could have, in fact, a breakdown into failed states. I think those two lessons that I learned are relevant.

South Africa provides an example of the importance of institutions. In South Africa there is a dominant party that could endanger democracy and open society, but, in fact, you have an open society because you have an independent judiciary and you have an active civil society that holds the government accountable. Now, that effort generally does need financial support, and it is not so easy to get it from philanthropists, because philanthropists do not like to be involved in things that may be politically controversial. That is where, I think, that my Foundation has a particular niche, so to speak, a role to play, and recently, I decided that the Foundation should continue beyond me. Originally, I wanted to spend the money while I am in control of spending it, because spending it on a philanthropic basis is actually more difficult than spending it efficiently; it is actually more important and more difficult than making it. When you make money, it is relatively easy. You have a single criterion as the bottom line, but when you are giving money away, you have to look at what effect you have on society. Different people are affected differently, and you cannot really add it up. It would be inappropriate to add it up.

When it comes to the work of the Foundation, basically we have come to the conclusion that the Foundation has an important role to play to fill a certain vacuum in two areas: first and foremost, in helping civil society to hold governments accountable; secondly, the Foundation’s role in helping governments that seek to build open societies by providing them with assistance and capacities to deliver on their promises. This is particularly needed in cases of what you might call democratic regime change, when a group that has been previously excluded is elected to power with good intentions but without the capacity to deliver on those intentions. This is what happened in the former Soviet Empire.

Helping governments like, for instance, Ukraine to build that capacity helped to establish democracy there, and I am very proud of the fact that Ukraine is a democracy. People speak about the Orange Revolution in the Ukraine, and I should make it clear that I am not a supporter of revolutions, because revolutions are manifestations of a democratic deficit. The revolution itself cannot possibly fill that deficit. So, it is much more important to build the institutions rather than to foment revolutions. I am an evolutionary, not a revolutionary, even though I am very proud of having built the foundations on which countries like Georgia and Ukraine did insist on democratic principles. But, it was the failure of the system that required that outcome.

Although Guatemala and Haiti are the only countries where we have established national foundations in Latin America, we do carry out activities in other countries in the region, including Mexico, Peru, Colombia and elsewhere. I would mention an organization in Mexico, called Limac, which is pioneering freedom of information. We support them. They, in turn, support our efforts in other parts of the world in passing enlightened laws on freedom of information. There is another organization in Mexico, Fundar, which monitors budgetary expenditures. The same applies: We support them, and they, in turn, support our foundations in other parts of the world, in training people in the methods of monitoring budgetary expenditures. That, I think, is a very important part of an open society.

One subject that I would like to talk about, which I think has particular relevance to Latin America, is the “resource curse.” In developing countries that are rich in natural resources, you often find that the people are poor, even poorer than countries without natural resources, because you have the worst governments; you have civil strife, lots of wars. If you look at Africa, you know, Angola, the Congo, Nigeria, Sudan, these are key trouble spots in Africa. It is easier to try to capture resources that are there, than it is to create resources where there aren’t any.

So, greater transparency and accountability is a very promising field for reform globally and in Latin America. We began working on this started in 2002 with a campaign called , “Publish what you pay,” which aimed at holding the international oil and mining companies accountable for reporting what they pay to various countries so that it could be monitored and the governments held accountable. The second step was “Publish what you receive,” which aims at getting governments to report publicly what they receive in revenues from natural resources. For instance, Nigeria, which is a country where practically everything has been tried and nothing has worked well to combat corruption, during the second term of President Olusegun Obasanjo the government published the revenues that they received from the oil companies, and then they distributed the revenues to various states and local authorities. Then, the people could ask questions, “Where is the money?” Out of that came actual legal proceedings against some governors, so in the last few years, Nigeria’s performance has greatly improved.

The civil society initiative was actually taken up by the British Government, which brought together governments, companies, international oil and mining companies, and civil society. They established something called: Extractive Industries Transparency Initiative (EITI), not a very catchy name, but it actually has made a lot of progress. Its standards have been established and a lot of progress has been made in countries like Nigeria, or Azerbaijan or Kazakhstan, countries which are, otherwise, not necessarily greatly known for very democratic governments. A lot of progress has been made on accountability of resources, setting up oil funds, and so on. This has been so promising that we now set up an independent Revenue Watch Institute, supported not only by me, but also in an equal amount by the Hewlett Foundation and the Norwegian Government as well. I think other people are coming in.

We haven’t penetrated very far in Latin America, but I very much hope that there will be receptivity, and I think in some ways it may be something that even the OAS could encourage its member governments to participate in and to join. So, that really is the most practically relevant thing that I could propose to you. I wonder what you think. I would like to stop at this point and open the floor for questions.