Book review - George Soros 'The Tragedy of the European Union: Disintegration or Revival?'

Over on his Forbes blog, Open Europe’s Raoul Ruparel provides a review of George Soros’ latest book ‘The Tragedy of the European Union: Disintegration or Revival?’ off the back of the event we hosted with him last night (the full write up of which can be found here).

The abstract of the book notes:

“The euro crisis was not an inevitable consequence of integration, but a result of avoidable mistakes in politics, economics and finance; the excessive faith in the self-regulating financial markets that Soros calls market fundamentalism inspired flawed institutional structures that call out for reform. Despite the considerable perils of this period, George Soros maintains his faith in the European Union as a model of open society.”

In his interviews Soros focuses on the failings of Europe during the eurozone crisis – specifically looking at the structural flaws in the euro and the role of Germany. Soros posits that the crisis could have been averted, or at least ended earlier, if Germany had taken the lead in the eurozone and allowed for greater solidarity through fiscal union. He also suggests the future of Europe could be marred by on-going political crises and economic stagnation if these flaws are not corrected.

Raoul argues that:

“His comments in general are interesting and for the most part accurate. However, he remained overly optimistic on the prospects for the euro despite these flaws and even called on the UK to join the single currency.”

“In particular there seems to be an inconsistency between his desire for greater centralisation and a firm grounding in democracy and an “open society” (which is transparent and responsive). It seems that behind Soros’ approach is the assumption of a European demos. However, I fundamentally believe that this is simply not the case.”

“While I do not believe the goals Soros outlines are readily achievable at this point in Europe, the one thing that comes through during the book is that this is not a policy proposal but a pitch to try to bring the reader round to his ambitious goals for Europe despite the current problems.”

One part which isn’t discussed on the blog is Soros’ view of the UK’s position in the EU. At our event he described the UK’s current position as “the best of both worlds” and called on it to rediscover its “European identity”. This comes through in the book as well, where he warns against a Brexit and accuses the UK of “blackmailing” the rest of the EU with the threat of an exit.

However, it doesn’t entirely fit with his broader view of the EU and the eurozone, which he believes needs much deeper integration. If that were to happen (and it is to some extent albeit more slowly than Soros would like) it would fundamentally change the UK’s position in the EU and the makeup of the EU itself. He seems to review the UK’s position in a much more static way than he does the EU and euro which he views as largely fluid.

This context also makes his “blackmail” comments a bit strange since part of the UK’s move is in response to the crisis. It also does not fit with his idea of an open society and democracy, given that many in the UK are keen to see a reformed EU and a referendum.

Nevertheless, it’s an interesting book and certainly worth a read if you’re looking for an overview of the current crisis and some historical factors around it as well as thoughts on the future.

George Soros: The euro is "bound to break up the European Union"

In an interview with Dutch TV programme Nieuwsuur (about 28 minutes in), prominent investor George Soros has warned that, "I am terribly concerned about the euro potentially destroying the EU. There is a real danger that the solution to the financial problem creates a really profound political problem."

Asked what kind of change is needed, he said,

"Germany needs to realise that the policy it impose on the euroarea - the austerity programme - is counter-productive. It cannot actually succeed. At the moment they [the South] is being pushed - unwittingly, not with bad intentions, but the effect is that they are being pushed into a long lasting depression and that is what is happening to Europe. And it may last more than a decade, in fact it could become permanent, until the pain is so big that eventually there may be a rebellion, a rejection of the EU, and that would then be the destruction of the EU, which is a terribly heavy price to maintain to preserve the euro, which is meant to be just a servant of the EU."

On whether the euro will survive, he said,

 "It could last quite a long time, the same way as the Soviet Union, which was a very bad arrangement, lasted for 70 years. However, I think that eventually, it is bound to break up the European Union. The longer it will take, and it may take generations, those will be lost in terms of political freedom and economic prosperity. The solution is to me a terrible tragedy for the EU. And it's happening to the most developed open society in the world. To me it's a terrible tragedy. It doesn't have villains, because I don't think that Germany is doing it with bad intentions but its happening out of a lack of understanding of very complex problems."

Strong stuff...