George Soros spoke at the LSE today in a speech entitled “Tragedy of the European Union: Disintegration or Revival?: how Europe must now choose between economic and political revival or disintegration.” My Hungarian classmates told me he is known in his native Hungary as “Grandaddy”, which I thought was rather cute, as he does seem like he could be anyone’s granddad. He spoke about a number of issues. Some of his main points were:
- The Euro is definitely here to stay, as long as the EU is a thing (ok, I’m paraphrasing), which isn’t a given either.
- We see a move towards divergence of creditors from debtors, whereas historically Europe has stressed “convergence”. The point is that, for example, Italy is falling less than Germany is rising, so Germany should be allowed to push forward and not be dragged down by slow-growing economies in the Euro Zone.
- However, Germany must “leave or lead.” Soros was pretty strong in emphasizing Germany’s responsibility rather than a more collective – greater European – responsibility. Germany, Soros argued, is, in fact, in charge, though the country seems to find it very difficult to accept, since they have gone out of their way historically to avoid that position. But as the country with the most economic power and the best credit rating, this naturally leaves them in the dominant position; and they have to live up to that.
- The promise of the “New Ukraine” was highlighted, especially in light of the previous Orange Revolution‘s failure. The Ukranian people and the interim government, especially, are motivated and united in a shared European vision now more than ever.
- Russia’s furtherance into Crimea was discussed at large as well. Soros made it clear that, for “existential reasons” – namely the country’s vested interest in Ukraine – it would not totally back down. Just as, for existential reasons as well, Europe and the West should not give up pressing for greater European integration with Ukraine. In this sense, there is huge potential for diplomacy in reconciling this situation which seems to place all actors between a rock and a hard place.
- This was one of the funnier quips from the afternoon – when Soros made the example of “stupid vs. smart” sanctions. In other words, a stupid sanction would be discouraging Russian FDI. Russian oligarchs clearly have no faith in the Russian economy, which is exemplified by them sending their money and children abroad. There was an outburst of laughter in the audience, to which Soros added: “There must be a few of you here… and welcome” (followed by an overwhelming round of applause).
The point was, forcing Russian money to remain in the already weak Russian economy would just encourage money to stay within the country and, most likely, lead to a deep recession, which is never good.
Overall, it was an interesting speech. Nothing too controversial was said or discussed; but that is the nature of these public lectures, unfortunately. For a podcast of the event, click here.