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MONTERREY,
Mexico -- George Soros, Founder and Chairman
of the Open Society Institute, blasted the Zimbabwean
President Robert Mugabe who claimed victory in
the recent elections held in the southern African
country. "Mugabe clearly stole the elections," he
said at an International Business Forum meeting
on Monday afternoon, "by the simple strategy
of inflating the votes in the rural areas and
preventing people in the urban areas from exercising
their
vote. He was able to do so by flaunting all the
rules of having the process properly supervised.
This is setting new standards for the kind of
election fraud that failed regimes can get away
with." Soros,
whose foundation has programs in ten southern
African countries, said that good governance
is key in
ensuring that international development financing
and aid is spent appropriately.
"There
is not much point in discussing financing for development,
let alone good governance, without confronting the
problems presented by the situation in Zimbabwe," he
said. "The elections in Zimbabwe have cast doubt
on the ability of the African states to create suitable
preconditions for private investment on their own.
Events in Zimbabwe have already had a deleterious
effect on private capital flows in the entire region,
and after the elections the situation is likely to
deteriorate." On Tuesday the 54-member Commonwealth
suspended Zimbabwe's membership for one year, saying
the electoral process was not free.
Delegates from
some African countries do not, however, agree
with this point of view, saying
that Soros is making this into a bigger issue
than it is. "Why does Soros go for Mugabe,
when the election is over and the people of
Zimbabwe have cast their vote, giving him another
term?" asked Shogholo Msangi, a member
of the Tanzanian delegation. "Did President
Bush win the United States' election?"
Zimbabwe aside, Soros has been lobbying hard
for countries, especially the United States,
to agree to a proposal involving the use of
Special Drawing Rights or SDRs as a financial
instrument for financing development. The SDR
is an artificial currency unit, developed by
the International Monetary Fund, which is defined
as a basket of national currencies. The SDR
forms an international reserve from which member
countries can draw to supplement their existing
reserve assets. Soros has proposed that the
IMF launch a new issue of SDRs-a $27.5 billion
SDR issue was already authorized in 1997 and
ratified by 72 percent of IMF members-and use
this money for international assistance.
As Soros himself
concedes, the SDRs and their use are incredibly
complicated. "This
is a complicated proposal because the SDRs
are complicated instruments," he said
at a briefing on Tuesday. "My proposal
is that the developed countries should donate
their allocations to give maximum assistance.
Now, when they donate they are actually giving
money away, in other words they are making
a contribution. This would be more evenly distributed
according to the quotas of the countries, which
is related to their GNP." The Monterrey
Consensus agrees to keep SDRs under review,
but does not make any outright commitments
to them.
Soros also
proposes to ensure the quality of the programs
the money is allocated to,
thereby avoiding common accusations of favoritism
and of giving money to corrupt programs or
governments. "[My program] would introduce
a mechanism that would insure that the money
is better spent because I propose to have a
selection process that ensures the quality
of the programs, which would have specific
focuses like providing Global Public Goods," he
said. He added that the United States Congress
must ratify the program before it can be implemented,
and urged President Bush to support the program
during the heads of state and government retreat
in Monterrey on Friday.
A longtime
investment fund manager and a philanthropist
for more than 20 years, Soros also said that
there are serious problems in the current international
financial system. "Because of the changes
that have occurred following the 1997 [financial]
crisis there is now an inadequate flow of capital
to emerging markets," he said. "Money
can leave these countries, but not enough money
is going back. Since the risk of investing
in periphery countries has increased, the cost
of investing has increased."
Soros added
that the decision by the IMF to stop "bailouts" is a positive development,
but it creates its own problems. "There
is now the problem of the inadequate flow of
capital, and for that you need some mechanisms
for credit enhancements and credit guarantees
to compensate," he said. In the meantime
he continues to push for SDRs and hopes that
action can be taken on his proposal in the
next year.
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