Fellow traveller

George Soros wants to be the Bono of the financial world. The speculator whose assault on sterling ejected Britain from the European exchange rate mechanism 10 years ago come September has a mission - to use his estimated £5bn fortune and his fame to help tackle what he sees as the failures of globalisation.

The idea that a man who made billions betting on the financial markets sides with the anti-globalisation movement might strike some as ironic. Soros is clearly genuinely appalled at the damage wrought on vulnerable economies by the vast sums of money which flow across national borders every day.

Leaning forward on the sofa in the study of his South Kensington house, he warns that the global downturn has exposed the weaknesses not just of corporate America but of how the International Monetary Fund and the US treasury run the international economic system.

"The US governs the international system to protect its own economy. It is not in charge of protecting other economies," he says. "So when America goes into recession, you have anti-recessionary policies. When other countries are in recession, they don't have the ability to engage in anti-recessionary policies because they can't have a permissive monetary policy, because money would flee."

Washington consensus


In person, he has the air of a philosophy professor rather than a gimlet-eyed financier. In a soft voice which bears the traces of his native Hungary, he argues that it is time to rewrite the so-called Washington consensus - the cocktail of liberalisation, privatisation and fiscal rectitude which the IMF has been preaching for 15 years.

Developing countries no longer have the freedom to run their own economies, he argues, even when they follow perfectly sound policies. He cites Brazil, which although it has a floating currency and manageable public debt was paying ten times over the odds to borrow from capital markets even before the Workers' Party candidate, Luis Inacio "Lula" da Silva, gave traders the jitters.

"The prospect of a leftwing president has increased the nervousness of the market, depressed the bond market, raised the cost of money and pushed down the exchange rate, which makes it very difficult for Brazil to grow," he says.

Soros, who at one stage after the fall of the Berlin Wall was providing more assistance to Russia than the US government, believes in practising what he preaches. His Open Society Institute has been pivotal in helping eastern European countries develop democratic societies and market economies.

As Bono, the U2 singer and songwriter turned campaigner, has shown, fame can be a powerful tool for influencing politicians. Soros has the advantage of an insider's knowledge of the workings of global capitalism, so his criticism is particularly pointed. Last year, the Soros foundation's network spent nearly half a billion dollars on projects in education, public health and promoting democracy, making it one of the world's largest private donors.

His charitable work began nearly 25 years ago, when he began providing funds for black students to attend Capetown university. Soros is still active in South Africa today, providing mortgage guarantees for nearly 100,000 homeowners through an organisation called Nurture.

His latest cause, working with the Global Witness group, is the drive to force oil companies to disclose how much they pay governments in the developing world for drilling rights. The tragedy of Africa, he says, is that Sierra Leone, Angola and Congo, among the world's poorest countries, have vast mineral and oil wealth.

"It is really striking; you look at countries which are resource rich and you would expect them to be more prosperous than countries which are resource poor. But in actual fact it is often the other way. They tend to be more devastated by civil strife and fighting over mineral resources," he says.

Oil companies are not necessary directly responsible for the corruption, he says, but the money they pay foreign governments is frequently misappropriated. By declaring such payments, they would give voters in poor countries the chance to hold their governments to account for the funds.

Companies that fail to do so are complicit in the disempowerment of these electorates, Soros argues. Regulation is the best way, rather than expecting companies to act individually, he adds.

"If individual companies did it, they would suffer a competitive disadvantage against others that don't do it. The proof of the pudding is in the eating. BP was actually willing to disclose in Angola and got threatened by the Angolan government that they would be pushed out," he says. "That is why they need to have their arms twisted for their own good."

British oil companies have reacted reasonably favourably to the calls for mandatory disclosure, but Soros has received a dusty response so far from the US oil majors. "The prospect of legislation might be enough to get all the companies to comply voluntarily, but I don't think, based on the responses that I got, that without the threat of regulation we would get them on board."

Soros credits the anti-globalisation movement for having made companies more sensitive to their wider responsibilities. "I think [the protesters] have made an important contribution by making people aware of the flaws of the system," he says. "People on the street had an impact on public opinion and corporations which sell to the public responded to that."

By itself, the corporate social responsibility movement cannot cure the ills of the international system, though. "In the same way that the defects in corporate accounting came to the surface after the bust, the weaknesses of the international financial architecture are also coming to the surface," he says.

Because the IMF has abandoned billion dollar bailouts for troubled economies, he thinks a repeat of the Asian crisis is unlikely. The fund's new "tough love" policy - for which Argentina is the guinea pig - has other consequences. The bailouts were a welfare system for Wall Street, with western taxpayers rescuing the banks from the consequences of unwise lending to emerging economies. Now the IMF has drawn a line in the sand, credit to poor countries is drying up.

"It has created a new problem - the inadequacy of the flow of capital from centre to the periphery," he says.

War on recession


The one economy Soros is not losing any sleep about is the US. "I am much more positive about the underlying economy than I am about the market, because we are waging war not only terrorism but also on recession," he says. "Although we don't admit it, we are actually applying Keynesian remedies, and I am a confirmed Keynesian. I have not yet seen an economy in recession when you are gearing up for war."

He worries that the world's largest economic power is not living up to its responsibilities. "I would like the United States to live up to the responsibilities of its hegemonic power because it is not going to give up its hegemonic power," he says. "The only thing that is realistic is for the United States to become aware that it is in its enlightened self-interest to ensure that the rest of the world benefits from their role."

What would he like to be remembered for - his career as a speculator or his philanthropy? "I prefer to be a legend in my own lifetime rather than afterwards. I think that is an idle kind of idea that you can live on after your death, you have only one life," he says.

The CV

Born Budapest, August 12, 1930

Education London School of Economics

Career After moving to the US in 1956, founded and managed a series of successful investment funds. He is president and chairman of Soros Fund Management, which advises his flagship Quantum Endowment Fund

Family Married; five children, three by a former marriage

Other interests Author of seven books and involved charitable causes, including chairing the Open Society Institute