Speaking at the Brussels Economic Forum, the billionaire investor said the EU had “lost its momentum.”
Commenting on the current state of the European experiment, George Soros warned the European Union has plunged it into an existential crisis as a result of “dysfunctional” institutions and austerity mandates and will require the bloc to reinvent itself to survive. Speaking at the Brussels Economic Forum, the billionaire investor said the EU had “lost its momentum” as he urged policymakers to abandon hopes of “ever closer union” driven by a top-down approach from Brussels, a statement which will likely displease Germany.
“The European Union is now in an existential crisis,” Soros told a Brussels audience. “Most Europeans of my generation were supporters of further integration. Subsequent generations came to regard the EU as an enemy that deprives them of a secure and promising future.”
Just a day after Brussels published a paper mapping out its vision of Euro Zone integration, Soros warned that the single currency area had become “the exact opposite of what was originally intended” according to the Telegraph.
Quoted by CNBC, Soros said Europe’s “reinvention would have to revive the support that the European Union used to enjoy.” The reinvention would have to review past mistakes and explain what went wrong and make proposals to make things right.
Soros welcomed a German idea to cut European funds aimed at reducing income inequalities at the regional level for those countries disrespecting the rule of law. Both Hungary and Poland, which are net recipients of the so-called cohesion funds, have been criticized by European institution for their weak standards with regards to the rule of law.
The billionaire also reminded his hosts that “the European Union was meant to be a voluntary association of like-minded states that were willing to surrender part of their sovereignty for the common good. After the financial crisis of 2008, the eurozone was transformed into a creditor/debtor relationship where the debtor countries couldn’t meet their obligations and the creditor countries dictated the terms that the debtors had to meet.”
“By imposing an austerity policy they made it practically impossible for the debtor countries to grow out of their debts. The net result was neither voluntary nor equal.”
He, correctly, said the loss of trust in the EU has paved the way for support for anti-European political parties and said the goal of “an ever closer union” had to be abandoned.
“Now we need a collaborative effort that combines the top-down approach of the EU institutions with the bottom-up movements that are necessary to engage the electorate,” said Soros and added that “instead of a “multi-speed” Europe we should aim for a “multi-track” Europe that would allow member states a wider variety of choices. This would have a far-reaching beneficial effect.”
He urged the bloc to focus on three key areas – dealing with the refugee crisis, Brexit and “the lack of an economic growth strategy.”
Predictably, the man who some have alleged was behind the great migration movement that sent 1 million mostly Syrian refugees in Germany in the past 2 years, Soros said Europe needs to overcome the current “existential crisis” by fighting together against the rise of anti-European sentiment, xenophobic feelings and surrounding “hostile powers.”
“Externally the EU is now surrounded by hostile powers: Putin’s Russia, Erdogan’s Turkey, Sisi’s Egypt and the America that Trump would like to create but can’t,” Soros said.
He called for an update of European treaties to make the EU work better and allow a “multitrack” bloc where countries would have a wider variety of choices when it comes to integration.
Discussing Brexit, Soros – who rose to prominence as the man who broke the Bank of England for his bets against the pound in the early 1990s – warned Brussels against punishing Britain in forthcoming Brexit negotiations and said Brussels should not get distracted with the upcoming EU exit negotiations with the U.K. and continue their work to regain the trust of EU citizens.
“Brexit will be an immensely damaging process, harmful to both sides. Most of the damage is felt right now when the European Union is in an existential crisis, but its attention is diverted to negotiating the separation from Britain,” he said.
He also said Brexit is likely to take “as long as five years” and that the EU should approach negotiations in a “constructive spirit” and should use Brexit “to transform itself into an organization that other countries like Britain would want to join”, instead of seeking to punish Britain.
“The European Union must resist the temptation to punish Britain and approach the negotiations in a constructive spirit. It should use Brexit as a catalyst for introducing far-reaching reforms,” Soros said. “The divorce will be a long process taking a long as five years… During that time the EU could transform itself into an organization that other countries like Britain would want to join. If that happens the two sides will want to be reunited even before the divorce is completed.”
Watch an excerpt of Soros’ speech below: