Why Soros Wants "Revolution" in Egypt

Simple: Follow the money.

Following up on RW's post at EPJ central, in which he quotes a WaPo OpEd written by Soros:

I am, as a general rule, wary of revolutions. But in the case of Egypt, I see a good chance of success. As a committed advocate of democracy and open society, I cannot help but share in the enthusiasm that is sweeping across the Middle East. I hope President Obama will expeditiously support the people of Egypt. My foundations are prepared to contribute what they can. In practice, that means establishing resource centers for supporting the rule of law, constitutional reform, fighting corruption and strengthening democratic institutions in those countries that request help in establishing them, while staying out of those countries where such efforts are not welcome.

It's worthwhile recalling that Soros has been a leading advocate of IMF Special Drawing Rights (SDR's),an old global quasi-currency idea from the 1970's that was resurrected during the 2008 panic. Here is what Soros wrote in an FT OpEd on March 22, 2009:

As things stand, the G20 meeting will produce some concrete results: the resources of the IMF are likely to be doubled, mainly by using the mechanism of the “new arrangements to borrow”, which can be activated without resolving the vexed question of reapportioning voting rights.

This will be sufficient to enable the IMF to help specific countries at risk but it will not provide a systemic solution for the less developed countries. Such a solution is readily available in the form of special drawing rights. SDRs are complex but they boil down to the international creation of money. Countries that can create their own money do not need them but periphery countries do. The rich countries should therefore lend their allocations to the nations in need.

Recipient countries would pay the IMF interest at a very low rate, equivalent to the composite average treasury bill rate of all convertible currencies. They would have free use of their own allocations but would be supervised in how the borrowed allocations were used to ensure they were well spent.

In addition to the one-time increase in the IMF’s resources, there ought to be a big annual issue of SDRs, of say $250bn, as long as the recession lasts. It is too late to use the April 2 G20 meeting to agree this, but if it were raised by President Barack Obama and endorsed by others, this would be sufficient to give heart to the markets and turn the meeting into a resounding success.

Soros has major skin in the game of climate change, and has pushed repeatedly for more SDR's to Africa as a form of philanthropy. As the Sunday Times reported December 10, 2010 (emphasis ours):

George Soros, the billionaire currency speculator, has proposed the creation of a $100 billion fund to help the world’s poorest countries to cope with global warming — and he says that it need not cost anyone a penny.

Mr Soros announced his plan today at the Copenhagen climate change summit, at which the issue of how much money the Third World should get and who will hold the purse strings has emerged as a key sticking point in negotiations for a global deal.

Mr Soros told delegates and activists that he had found a way to “bridge the gap” by using foreign-exchange reserves issued by the International Monetary Fund that are lying unused in the reserve accounts of rich nations. He said that the resulting fund would be entirely additional to money already being raised at Copenhagen and would not add at all to national debts.

“Developed countries’ governments are labouring under the misapprehension that funding has to come from the national budgets, but that is not the case,” he said. “They have it already: it is lying idle in their reserves accounts and in the vaults of the International Monetary Fund.”

...

His plan involves using Special Drawing Rights (SDRs), which is liquidity funding issued by the IMF pegged to a basket of major currencies. The IMF issued $283 billion (£174 billion) of SDRs to governments in September this year in response to the global financial crisis, but Mr Soros said that more than $150 billion of that money remained untouched in the reserve accounts of the 15 biggest economies.

The reason for that is that SDRS are essentially a notional currency, giving governments the right to draw down on IMF funds. When they are drawn, they start to incur interest, currently less than 0.5 per cent, but Mr Soros said that the interest payments could be covered from IMF gold reserves.

Mr Soros called it an “off-balance sheet solution” that could be used for for high-impact projects such as reforestation and land-use reforms and which could even become self-financing if it is properly run.

This "off-balance sheet solution" is, of course, nothing more than money printing at the supra-national level. Returning to Egypt, we learn from the WSJ that only last Tuesday, January 28, the IMF was considering another expansion (sic printing) of SDR's:

The board of the International Monetary Fund will discuss a possible expansion of the role of the Special Drawing Right, IMF Deputy Managing Director John Lipsky said Friday.

“One of the options being discussed is to increase the usage and stock of SDRs, and broaden the terms on which they could be used,” Lipsky said in an interview on the sidelines of the World Economic Forum annual meeting.

This year, Davos has been a-buzz with talk of expanding the currency basket that underlies the SDR, a notional currency that at present has only four constituents: the dollar, the euro, sterling and the yen.

Whether or not this was already on the Davos agenda is unclear, but one can imagine the buzz there as Egypt burned. And why let a good crisis go to waste?