Wall Street Financier Backs Change


JANOS VARGHA was broke. He just had been fired for leading opposition to the communist government's decision to build a dam across the Danube. He could expect no unemployment insurance and no further job possibilities as a biologist.

But then an unexpected savior appeared, none other than a Wall Street financier named George Soros. His Soros Foundation offered Mr. Vargha a two-year grant. Vargha's battle against the Danube Dam continued until this spring when the authorities cancelled the project.

``Soros was the basic factor keeping me alive,'' the environmentalist says. ``Without him, there would be almost no independent activities in this country.''

The private Soros foundation, the first independent foundation to operate in a communist country, is a model for Western involvement in Eastern Europe.

President Bush planned to announce a series of Soros-style measures on his visit this week to Budapest. He also planned to meet with Vargha and other opposition leaders, visit the new International Management Center, the first Western-style business school in a communist country, and launch a $100 million Soros Mutual Fund for the budding Hungarian Stock Market.

``The Hungarian fund has succeeded beyond my wildest expectations,'' Mr. Soros told the Monitor during his latest stay in Budapest. ``I expected it to make a dent, but it's made much more than a dent.''

The man ``denting'' communism is a charming, mild-mannered 58-year old financier, an archetype of the American rags-to-riches dream. Ever since his family left Budapest in 1948, fearing that anti-Semitism would worsen under communist rule, he has enjoyed a meteoric financial career, founding two ``hot'' money market funds, the Soros Management Fund and the Quantum Fund. His fortune now reaches an estimated $300 million.

``After you've made a lot of money,'' he says, ``you get more interested in finding ways of spending it.''

But when he approached Hungarian communist leaders with his idea of an independent foundation, the initial response was cool. ``They were suspicious, fearful that we were a CIA front,'' recalls Janos Betlen of the Soros Foundation committee. ``But they also wanted to attract Western confidence, especially from the 'emigr'es who had become so successful.''

A compromise gave the official Academy of Sciences a veto over any Soros projects, and the foundation opened on Oct. 1, 1983. Since then, it has funded everything from international art exchanges to independent student groups. From an initial $1 million budget, it plans to spend $3 million this year.

This relatively small amount packs a large punch. Because the Hungarian forint is not convertible, the Soros foundation provides hard currency for Western imports such as medical equipment, which the hard-pressed communist regime cannot afford.

The hospitals pay the foundation in forints, which then are channeled back into cultural projects, buying books for local libraries, funding renovations of small-town churches, and funding research projects ranging from Gypsy culture in Transylvania to the 1956 uprising. The Fund also has sent hundreds of Hungarian academics, businessmen, and students to the West for study.

``If you spend efficiently, you can get a bigger impact for your money here,'' Soros explains. ``Three million dollars goes a long, long way.''

As Hungary approaches free elections next year, the Foundation is expanding its activities. It recently launched a competition for ``New Democratic Organizations,'' which will finance new independent trade unions, the new independent student union FIDESZ, and budding opposition political movements such as the Free Democrats and the Democratic Forum. The money goes into practical areas such as buying computers and copying machines.

One Soros-funded activist recently organized a May Day political rally which drew 100,000 people. That was an embarrassment for the Communist Party which drew only about 5,000 people for its own traditional celebrations. Soros's personal representative, Miklos Vaserhely, was the driving force behind last month's reburial of martyrs from the 1956 uprising.

Hungary's communist authorities have proved understanding, if not exactly enthusiastic, despite these brazen political activities. To convince Westerners of their seriousness about reform, they have no choice.

``You can't expect me to be enthusiastic about these activities,'' says Janos Barabas, the Central Committee ideology chief. ``But I don't consider them harmful.''

Soros now is trying to preach his gospel throughout the communist world, establishing foundations in Warsaw, Beijing, and Moscow. Success is not assured. After the recent massacre in China, he is on the verge of pulling out. The Polish foundation has floundered, he says, unable to even find office space. And the Moscow organization is still in the funding stage.

``We can open new channels, new possibilities,'' breaking the Communist Party's monopoly on money and access to the outside world, says Betlen of Budapest Soros Foundation. ``But what's happening now is the result of a general crisis of communism, not external pressure. We only can help speed the change.''

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