Why Soros Is Retreating From Europe

Paul Hockenos

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The announcement by the Open Society Foundations (OSF), the global grant-making network founded by billionaire financier and philanthropist George Soros, to sharply curtail European funding has rattled the continent’s civil society communities. Part of a momentous overhaul, the $25 billion-strong philanthropy that the 93-year-old hedge fund tycoon handed over to his son Alexander Soros this year will phase out many of its long-standing European programs and grant-giving activities. In an Aug. 31 internal letter, the younger Soros explained that the OSF was not withdrawing as such from Europe: “In our new operating model, we will be better positioned to allow the robust civil society sector in many EU countries to move forward, as we free resources and personnel to anticipate emerging threats from authoritarians across the region, and indeed, around the world.”

What’s indisputable is that the changes reflect a larger reorientation that will pare down OSF staff from 1,650 a year ago to fewer than half of that. Although it’s unclear how much of the roughly $209 million allocated to Europe annually—about 14 percent of the group’s total $1.5 billion budget—will be affected, the OSF will still have a presence in Europe in Ukraine and the Balkans. The foundation is now in the process of redirecting operations to the global south. The recalibration bears the distinct signature of Alexander Soros and the mark of a private philanthropy that tried very hard to advance democracy in Europe—and didn’t always succeed.

European NGOs on the OSF drip might be screaming, but the retreat had been in the cards for some time. In contrast to its hand in overthrowing communism and getting Central and Eastern Europe’s fledgling democracies on their feet, the OSF’s record on piercing the armor of authoritarian governments such as those today in Russia, Hungary, and Poland is dismal. In fact, although George Soros vehemently denies it, the OSF’s condoning of the West’s 1990s economic prescription for post-communist Central and Eastern Europe—namely free market neoliberalism as part and parcel of liberal democracy—proved fodder for nationalist populist strongmen like Hungary’s Viktor Orban, who rallied the discontented masses against liberalism as such—personified in none other than Soros and the OSF. To its credit, the OSF seems to have taken this hard-learned lesson to heart and hopes that a new formula with social justice at its core will achieve results in the global south—in as much as a private philanthropy, dictated by the whims of family members, can do so at all.

Since the 1980s, when hedge fund manager George Soros started funding grassroots, oppositional groups in communist Central and Eastern Europe, the OSF has been a major presence in democracy promotion in the region and a crucial lifeline to an array of democracy-minded NGOs. Those civil society groups were at the forefront of the 1989-91 democratic revolutions, winning Soros some credit for communism’s peaceful overthrow. Through the 1990s and beyond, his philanthropic operation expanded, shifting focus from regime change to democracy assistance and spreading across the globe, even to the United States, where his billions bolstered Democratic election campaigns and drug treatment programs.

The phaseout from Europe continues a process begun in the mid-2000s, when the OSF calculated that the European Union, with funds many times larger than its own, would take over the turf of its newest members. Interestingly, the OSF opted to start pulling up stakes at exactly the same time that nationalist populists—viscerally opposed to Soros’s liberal, secular, rational agenda—came to power one after another in Central and Eastern Europe. The OSF downgraded its funding of Hungarian NGOs (Soros is a Hungarian expat, having left the country after World War II) in 2010, the same year that Orban came to power for a second time. In 2005, in Poland, the ultra-conservative Law and Justice party won the presidential and parliamentary elections. Everywhere in Central and Eastern Europe, liberal-minded parties found themselves on the defensive, many tossed out of parliaments altogether. (And a final ingratitude: In 2018, Orban’s government chased the Soros-founded Central European University, a beacon of liberal thinking, from Budapest to Vienna.)

Some years later, Soros himself reflected on the backlash, which had reverberated across Europe and beyond. “When I got involved in what I call political philanthropy some 40 years ago, the open society idea was on the ascendant—closed societies were opening up,” he told NPR in 2019. “And now, open societies are on the defensive and dictatorships are on the rise. … I have to admit that the tide has turned against me.”

The dilution and, in some hard-hit cases, contamination of democracy in exactly those countries targeted for years by the OSF’s bankrolling caused some to point a finger at the nature of Western democracy promotion as such. “The big mistake was taking neo-liberalism for granted,” said Mary Kaldor, a professor emeritus of global governance at the London School of Economics. “There wasn’t even a discussion about it.”

Although Soros himself denies this was the case, the OSF was on board—if not as the loudest cheerleader—with the Western governments and financial institutions that trumpeted a transition to a brand of free market capitalism that looked purist even compared with Western Europe’s established social democracies. The laissez-faire prescription sent Central and Eastern Europe’s unprepared economies and expectant societies into a tailspin: State-owned industries went broke and were sold for pennies, unemployment soared, corruption flourished, and communities splintered. The resultant fear and ire were fertile soil for nationalistic populism, as John Feffer argues in Aftershock: A Journey Into Eastern Europe’s Broken Dreams. OSF Senior Vice President Leonard Benardo admits that it was a “massive, massive failure on the part of the West” to understand human rights chiefly as political and civic constructs and not in social and economic terms.

Given the OSF’s comparatively gentle approval of “shock therapy,” as it was called, it was hardly fair that the populists—and none more so than Orban in Hungary—singled out Soros and the OSF as the boogeymen responsible for what they called callous, elitist, foreign-designed economic policies. Orban’s Fidesz party and its cronies also seized on Soros’s Jewish identity to tap antisemitic prejudices. Whether fair or not, grantees in Central and Eastern Europe became tainted by association with the OSF, to such a degree that many welcomed a smaller role for the OSF and a more indirect means of funding.

Since the populist surge, the OSF has proved unable to crack the shell of democratically elected authoritarian governments the way it did Soviet communism. Last year, Fidesz coasted to another supermajority in the Hungarian parliament—its third in a row. Poland’s Law and Justice has been nearly as successful. Vladimir Putin’s Russia is, thus far, unassailable, at least with OSF methods.