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Russia: Soros Upbeat On The Economy, Lukewarm On Putin

Billionaire philanthropist George Soros is in Russia this week to present new initiatives of his charitable foundation. In his recent writings, Soros has criticized the West for failing to help Russia and focusing on mistaken theories of what he calls "market fundamentalism." RFE/RL correspondent Sophie Lambroschini reports on Soros's comments in Moscow.

Moscow, 8 June 2000 (RFE/ RL) -- George Soros has $1 billion invested in commercial enterprises in Russia. That's not including the $750 million he has given to his foundation's charitable programs there.

So when Soros talks about the Russian economy, people pay attention. In Moscow today, the Hungarian-born financier gave reporters a positive assessment of Russia's economic situation, saying he sees "genuine growth." Despite some discouraging results on some of his investments, Soros says there are now opportunities for "strong-hearted" investors in Russia.

Things have changed, he says, since 1997, when he joined a consortium to buy 25 percent of Russian communications giant Svyazinvest. At that time, the juicy privatization deal spurred an all-out battle between oligarchs that Soros says destroyed the country's chance to move from robber capitalism to legitimate capitalism. The 1998 financial crisis in Russia wiped out much of Soros's profits from Svyazinvest.

But now, he says, genuine efforts are being made to create hospitable conditions for investors.

"I think that the prospects now are better and that the government is extremely sensitive to preserving transparency in its privatization efforts."

But he says that while the economic situation is encouraging, the political situation is less so.

"I think on balance, things are getting better because the economic conditions are improving and that, I think, is the most important. Of course if you look at things more closely, you can see these two tendencies. One which is the economic and financial and the investment area, which is basically positive. And two, the political, where it's more questionable, because on the one hand you do need a stronger state, and other hand the prevailing conception of what a state should look like was formed in Soviet times."

Soros points out that strengthening the state can be a means of strengthening democracy. In this sense, he supports Russian President Vladimir Putin's plans to bolster the central government's authority over the regions.

But at the same time, Soros says, more central authority can also lead to autocratic rule. So it is important to strengthen grassroots democracy as well, by boosting local government and regional self-government. In this sense, Soros says Putin's reforms -- which include the right to remove governors he doesn't like -- could signal a troubling tendency.

Economic growth cannot happen without the respect for basic freedoms, Soros warned. "I think that freedom of information is essential not just for democracy and open society, but also for investment. And there are some troubling signs. And I'm not only talking of the mass media, because that is very well known. There are also some troubling tendencies in connection with the Internet."

In several cases, he said, regional Internet providers have been forced to secretly hook up their servers to the Federal Security Service, enabling the agency to monitor their clients' web usage. Soros says these incidents emphasize the need for proper legislation to protect freedom of information.

Speaking about the war in Chechnya, Soros says his foundation is trying to keep Russian attention focused on the plight of civilians.

"Whatever the foundation can do fades into insignificance compared to what the government can do. So I think that one of the bottom functions of the foundation is to keep the issues before the public in Russia."

"Brutality of one side feeds on the brutality of the other side, so it's a kind of vicious circle descending in the inferno that Chechnya has become."

Soros says his foundation is trying to help the humanitarian aid effort in the refugee camps of Ingushetia by providing schooling and legal counseling, and by equipping hospitals.