CFK & SOROS: A BENIGN VULTURE?

Tomorrow will mark the 22nd anniversary of what in all likelihood does not bring happy memories inside the Bank of England.

That day, market operators (or currency speculators, with the definition to be chosen by the reader) launched a powerful attack on the British currency.

At the end of the battle, the UK had been forced to devalue the pound sterling, the Bank of England had lost 3.4 billion pounds and the United Kingdom was forced to abandon the European Exchange Rate Mechanism.

The key protagonist in the Bank of England’s “black Wednesday” was George Soros. His profit is said to have reached one billion pounds. This is the same gentleman who has an appointment to meet President Cristina Kirchner next Monday, in New York, just before she delivers her speech at the UN General Assembly.

This will be the second time they meet. Last time — two years ago — the meeting took place in similar circumstances, just before the United Nations General Assembly. No details emerged about what was spoken about. Similarly, the agenda for next Monday’s meeting is being kept under wraps.

In many aspects, George Soros is Argentina-friendly. For starters, his Quantum Fund entered the Argentine debt restructuring process and is now suing against Judge Griesa’s decision to block the June 30 payment on the restructured bonds in order to favour the holdouts/vultures. In addition, he owns a 3.5-percent stake in YPF. The market values this partnership at U$S 450 million. Over and above these new developments, he used to be a serious landowner (larger than Benetton) but, apparently, has divested from that sector. And then, there is his participation in shopping centres and real estate through IRSA.

One possibility is that their agenda will be largely positive. They could discuss how to form a common front against Griesa and/or possible new investments in Argentina. Or even slightly more thorny issues like repatriation of dividends and other similar problems. But one wonders if the president and Soros will limit their discussions to the points they have in common or if they will include those that divide them.

The issue with this billionaire is that he does not limit his activities to making money or giving headaches to central bankers. The man, who has a PhD from the London School of Economics, is seriously committed to the advancement of more democratic, less corrupt societies where citizens can fully exercise their rights and use all their potential. And he is prepared to put part of his more than considerable assets where his mouth is. His Open Society Foundation bankrolls a wide universe of projects which range from financing civil society organizations (CSOs) in the pursuit of improving democracy to the orderly legalisation of marijuana. A Hungarian by birth, helping to improve democracy in the former Soviet bloc remains high on his list of priorities, in an area not limited to Hungary but that includes Russia as well.

And this is one of the problems. Buenos Aires and Moscow have been making quite a lot of noise about their good relationship. An Argentine trade delegation of some 120 businesspeople is also about to visit Russia, precisely at a time in which the EU and the US have imposed or are seriously considering imposing trade sanctions against Russia on account of the situation in Ukraine. A scenario — by the way — where Argentina supports Russia.

None of the above is likely to cut much ice next Monday with George Soros. In an interview he granted recently to The New York Review of Books and discussing Ukraine he said: “Effective sanctions would discourage the inflow of funds, whether in the form of direct investments or bank loans. Moreover, the US could release oil from its strategic reserve and allow its sale abroad. That could put the Russian economy in to deficit. The Russian economy is fragile enough to be vulnerable to smart sanctions.”

Add to the above, the fact that the Open Society Foundation helps a number of Russian CSOs that often fall foul of their government and you will realize that, predictably, George Soros is a bit of persona non grata with the Russians. Will that be discussed in the meeting? In fact, it would be quite interesting because there are very strong rumours that a number of high-ranking Cristinista officials and influential supporters are less than enthused by local CSOs (especially those which are critical of the government) being financed by foreign backers. The complaint is that financially strong donors use local CSOs to meddle in Argentine politics. And that they do that by empowering organizations which have not been legitimized by voters.

This could be a quite sensitive point of discussion. Especially because the name of the Open Society Foundation appears frequently in the list of donors for projects not always kind to the Argentine government. True, the sums are not as large as in other parts of the world. But nevertheless, they exist. And, finally, there is the Obama factor. Soros is a strong supporter. Rightly or wrongly, the Argentine president is convinced that the US Democrats are against her.

Will this be part of their dialogue? Clearly, the George Soros of this world play the international relations game on their own terms. They have immense power and do not need anybody’s help to gain access to heads of state. In a way, it is a new phenomena in the international political system. Only time will tell if it is a healthy development.

@andresfederman

CREDITS: BUENOS AIRES HERALD