THE SOROS FACTOR

The billionaire political impresario George Soros gambled $27 million on
the campaign to defeat President Bush and came up empty-handed. But no one
should conclude that he has lost his eye for a winning investment. The
smaller wagers that he and his family have placed on New York politics
appear to be paying off in spades.

After years of debate, state lawmakers just agreed to reduce the penalties
for drug crimes in New York, which have been among the stiffest in the country.

In Albany County, voters just elected a maverick district attorney who is
promising to go easier on drug addicts and keep a sharper eye on corruption
at the state Capitol.

In the Legislature, leaders of both houses are pledging to change the way
they do business after two decades of late budgets and legislative
gridlock. And in the state Senate, Democrats are threatening to take
control for the first time since 1965.

A common factor in all of these developments is Soros money. With millions
of dollars in strategically placed grants and political contributions, the
Soros family is quietly reshaping the state.

Nothing illustrates their impact better than the campaign to soften New
York's anti-drug laws. Pushed through by Governor Rockefeller during a wave
of heroin abuse in the 1970s, the statutes imposed lengthy prison sentences
for possession and sale of narcotics. Someone caught with four ounces of
heroin or cocaine faced a minimum sentence of 15 years to life and a
maximum term of 25 years to life.

Earlier this month, after years of fruitless debate, Governor Pataki and
the Legislature agreed to an overhaul of these penalties that doubled the
weight thresholds for the most serious drug-related felonies, took away the
possibility of life terms for nonviolent crimes, and gave about 400 current
inmates an opportunity for early release.

Of the many activist groups that campaigned for these changes, none played
a more pivotal role than the Drug Policy Alliance, a New York City-based
group founded and largely financed by Mr. Soros and his Open Society
Institute. The alliance and its affiliates spent more than $100,000
lobbying at Albany over the past two years. In June 2003, when the governor
and legislative leaders brought hip-hop entrepreneur Russell Simmons into
their late-night, closed-door negotiations on the Rockefeller drug laws, a
lobbyist for the Drug Policy Alliance, Deborah Small, was at Mr. Simmons' side.

On another front, Mr. Soros's Open Society Institute has been a major
supporter of the Brennan Center for Justice at New York University's School
of Law, contributing at least $3.6 million over the past four years. This
summer, the Brennan Center published a study identifying New York's state
government as the most dysfunctional in the nation - a finding that has
been quoted in newspaper stories and editorials ever since, adding
considerably to the movement for reform at Albany. Reacting to
recommendations in the Brennan report, both the Republican majority leader
of the Senate, Joseph Bruno, and the Democratic speaker of the Assembly,
Sheldon Silver, have promised to change the procedural rules in their
respective houses.

The Soros money has flowed not just to activist groups, but also to
political campaigns.

This summer, the political arm of the Drug Policy Alliance - also founded
and financed in part by Mr. Soros - indirectly contributed $81,500 to a
candidate for district attorney of Albany County, David Soares, who made
his opposition to the Rockefeller drug laws a centerpiece of his campaign.
When Mr. Soares defeated the incumbent district attorney in a Democratic
primary, and went on to win the general election, elected officials
statewide took notice.

In legislative elections, meanwhile, Mr. Soros and his children emerged as
the most important backers of Democrats running for the state Senate,
contributing a total of $377,500 to their campaign accounts. That money
helped Senate Democrats add at least three seats to their minority, with a
fourth race still too close to call. As a result, the Senate GOP - which
has controlled the house every year but one since 1938 - will see the 38-24
advantage it had at the beginning of this year shrink to 35-27 or 34-28
come January. The minority leader of the Senate, David Paterson of Harlem,
predicts his party will win enough seats to take over in 2008 or 2010.

Most contributions in legislative races come from interest groups with a
state in state affairs, and they generally give most of their money to the
officials in the best position to help their causes - which is to say the
majority parties in the Senate and Assembly. This is one reason why
Democrats, who outnumber Republicans 5-3 among registered voters in New
York, have been unable to claim the Senate. By giving so much money to the
Senate minority, and largely ignoring the major players, the Soros family
represents a singular threat to the status quo.

The deputy minority leader of the Senate, Eric Schneiderman of Manhattan,
said that threat helps to explain why the Senate GOP agreed to this month's
compromise on the Rockefeller drug laws.

"These guys are professionals," Mr. Schneiderman said. "They don't hold
onto a majority in an overwhelmingly Democratic state by being slouches.
They took immediate notice of the contributions, and they will do what they
can do to try and neutralize the commitment."

The people campaigning to change the drug laws believe this month's
legislation - which they view as a partial victory - would not have
happened if not for the electoral victories by Mr. Soares and the Senate
Democrats.

"It was not because people had a change in heart; it's because people had a
change in political climate," said the public policy director of the Drug
Policy Alliance, Michael Blain. "It's a shift in power. And power is
something hardball New York politicians understand. It's the only thing
they understand."

A spokesman for the Senate Republicans, Mark Hansen, disputed this analysis.

"We have been discussing the Rockefeller drug laws for a number of years,"
Mr. Hansen said. "We continued having discussions with the governor and the
Assembly throughout the summer and the fall and ultimately reached
agreement in December. It was an ongoing process that culminated in the
reform law that was enacted this month."

Whatever the Senate GOP's motivations, its actions on the drug laws
probably weren't enough to convince the Soroses to put away their checkbooks.

"The Soroses' support for David Paterson and Eric Schneiderman and the
effort to take the Senate for Democrats is a long-term commitment," a
spokesman for the family, Michael Vachon, told The New York Sun last week.

"They understand the dynamics of Albany," Mr. Schneiderman said. "They are
not going to be fooled by mini-reforms into backing away from broader
reforms. They're not in politics to bring about small steps toward reform."