
The EU Is on the Verge of Collapse–An Interview with George Soros - nkurz
http://www.nybooks.com/articles/2016/02/11/europe-verge-collapse-interview/
======
lispm
Soros would be probably the last I would listen to. Money and politics is a
toxic mix. He influences politics and markets to create chaos to make profit
out of it. He is still upset that his manipulations against the EU and the
Euro has failed. In the last few years the news of the collapse of the Euro
was daily in the headlines of interested newspapers and magazines, manipulated
by persons like Soros.

The Euro is still there and the EU, too. Don't hold you breath to see them
collapse.

~~~
spangry
Just to provide the counterpoint (perhaps from a less biased position than
Soros): the EU was doomed from the start due to member countries (excluding
GB) losing sovereignty over monetary policy (i.e. common currency) but
retaining sovereignty over fiscal policy. This is a problem because there is
no strong mechanism for 'horizontal fiscal equalisation' (HFE) across EU
member countries.

Take Greece and Germany in the lead up to the GFC for instance. Germany's
economy is going great-guns and national income is rising thanks to their
strong exports. Greece is not doing so well, with low productivity and low or
negative economic growth. If Greece was not in the EU, they'd have had two
options to stimulate their economy: government spends more (fiscal policy) or
its central bank lowers interest rates (monetary policy). The latter option
also has the nice side benefit of depreciating their currency, meaning their
exports become more price competitive.

However, because they're a member of the EU monetary union, they're stuck with
the Euro as their currency. Which has a single centrally set interest rate. So
with Germany (and other EU countries) doing well, while Greece (and others)
doing poorly, the European Central Bank sets the interest rate 'too low' for
Germany, and 'too high' for Greece. Therefore, Greece's only option is to
deficit spend. And they have to spend more than normal because EU monetary
policy is working against them and they have little to no control over it. And
because there's no HFE, they have to go in to extreme budget deficit despite
being monetarily yoked to countries like Germany.

I think that the monetary union will eventually dissolve and EU nations will
move back to sovereign monetary policy. It's hard to imagine the alternative:
an effective and formal HFE mechanism being agreed. It's a hard sell in
domestic politics, especially if you happen to be one of the 'successful'
countries, who must now cross-subsidise 'unproductive' neighbours.

It's just my speculation, but I suspect they'll hold on to free trade and
'open boarders' within the EU.

~~~
jcfrei
> It's hard to imagine the alternative: an effective and formal HFE mechanism
> being agreed.

I believe a fiscal union is the only viable resolution to this crisis - any
dissolution of the euro would look like a huge defeat for European politics
from which Brussels wouldn't recover for decades. You are right that a fiscal
union is very hard to imagine - because it would undermine national
sovereignty even more. That's why I believe we will see the usual European
approach to this problem: Misusing existing institutions like the ECB to
create a "quasi fiscal union" (for example by guaranteeing rates for
government bonds of poorer countries). It would work almost like a real fiscal
union but its true nature would be somewhat hidden behind misleading
nomenclature, complex and indecipherable legal agreements and new institutions
with fancy names. It's a very schizophrenic situation, because every EU
official knows that creating a fiscal union (of sorts) is inevitable for the
survival of the Union, while at the same time promoting such an idea would be
political suicide for any government in the wake of recent nationalistic
movements.

~~~
spangry
I realise I'm replying to a fairly old thread now, but just wanted to say
thanks for the insightful comments. After giving it some though, I agree that
the scenario you've outlined is the most likely one.

I hope the 'eurocrats' keep an eye out for unintended consequences/incentives
that 'hidden' (but more complex) arrangements can spawn. Hidden subsidies,
like underwriting government bonds, give me the willies...

------
netcan
I like Angela Merkel, and I live in the EU (Ireland). I think she's wrong
about a lot of things though.

The EU is on shaky foundations. The original principles of free movement, free
trade, solidarity & peace are great. I totally support them. They move the
world in a liberal (ie liberty) direction and they really do promote the
central goal, centuries of peace. Europe has been at peace for a logn time.
It's an achievement, and we need to defend that. But, there was never a truly
agreed upon and understandable basis for how these would be promoted and
protected and an explicit definition of where and how the EU's authority ends
and the State's begins. This has left our national governments with a nice
scapegoat, great for populists, nationalists and fringe politicians to use for
their purposes.

The Greek saga is a perfect example. Rather than an intelligent abstract
policy of allowing Greek to make their own decisions, support with limited
liability for the Union we get a German style bureaucratic approach.
Regulation an oversight.

I also appreciate her refugee policy. My grandparents (like many's) were
refugees in WWII. I think it came from a genuine place of human solidarity. I
hope it doesn't sting Germany too badly.

I hope that the EU gets another round of constitutional, foundational work.
Take as long as it takes, but do it right. This is for the next 200 years. The
problem, as I see it, is that politics has polarized into pro and anti EU.
Anti-EU political outsiders from either (or neither) traditional wings using
anti-EU rhetoric as an easy populist tools and pro-EU insiders defending the
EU as a bureaucratic status quo.

One thing I think needs to change urgently is an exit policy. We need a way
for countries that don't want to be in, to get out. It will act as a relief
from a lot of populist pressure. If the UK want out, they should have an
available option. Similar for Greek. No hard feelings, civilized-like, we can
still be friends, just do what the people want.

~~~
return0
> We need a way for countries that don't want to be in, to get out.

Can you imagine a US state doing that? I don't think unions are reversible at
this state in history. The national state is not exactly living a revival.
This is majorly a financial crisis.

> This has left our national governments with a nice scapegoat, great for
> populists, nationalists and fringe politicians to use for their purposes

That is a very good observation. It's the reason Greece is suffering at the
moment. But leaving the EU at this point would be even worse.

~~~
xmj
>The national state is not exactly living a revival.

...unless you look at Eastern Europe. Poland and Hungary show that homogenous
nation states are not as much a thing of the past than you'd thought, and that
their 'revival' (they were never dead though!) is doing just fine.

~~~
prodmerc
So, they used EU aid and know how to stabilize and start growing and now they
leave?

Sounds like an amazing idea /s

~~~
lukasLansky
It's difficult to attribute success. Heck, it's difficult just to compare your
situation to the situation 20 years ago when you were a different person.

The populists in Poland and Hungary made a story where good aspects of the
current development (for example: competitive workforce, open borders) are
taken for granted and bad aspects like perpetuating big differences (like,
wages, or quality of public institutions) between Hungary/Austria or
Poland/Germany are attributed to some evil manipulation by the seemingly
neutral EU.

Every explanation for the big wage differences is quite complicated: you can't
rely on any popular simple ideology. If market is efficient, why the
difference? If state-regulated society is just, why the difference? This
leaves space for quite stupid populist "solutions" that are not true, but at
least short.

Full disclosure: I'm from the Czech republic.

~~~
prodmerc
Hey, I'm kinda torn on the issue as well. If not for the EU, we would not have
that huge brain drain that left our country kinda stupid and slow to develop
(lots of unskilled workforce left, as well).

But then again, I am fairly certain that EU integration helped with our
progress, especially since we had corrupt ex-commies running the show ever
since '89.

It stopped them from being too greedy, plus the aid, advice and reforms did
help.

And now if some people who left return out of a feeling of patriotic duty or
just wanting to improve their home country, they'll be much more effective
with the knowledge they gained in western Europe...

The ability to manufacture for cheap and export without too many taxes and
customs headaches really helped, too, and we've set a very low corporate
income tax to attract foreign (mainly EU) companies here (which worked).

------
joostdevries
I'm not terribly interested in the views of a billionaire investor on the EU.
I have to say though that I searched for the original interview in
Wirtschaftswoche and Handelsblatt Online. And I did not find words as strong
as "on the verge of a collapse". Those articles read "on the future of the EU
[he] is pessimistic"

All the same the Schengen treaty is at risk with the current flood of
immigrants. [1]

As far as the EU goes: I'm a Dutch citizen. And the NL have a long history of
belonging to a coöperation of nations. Just after WWII it founed the BeNeLux.
And it was a founding member of the EU later on. So I lived in a supra-
national organisation for as long as I live. And I have to say that when I
work here in the NL with people from France, Spain, Italy, Germany, ... I
truly feel that we're all Europeans. It's some feeling of shared fate, shared
history, shared culture, speaking their languages, intuïtively knowing their
characteristic strengths and foibles. So as far as I'm concerned even if the
current EU would fail we'll just start anew with an EU 2.0. Less expansionist
and less idealistic probably. Sadder and wiser surely. But in my estimation
the sense of a shared EU identity has become stronger than even the current
vicissitudes or the meddling from billionaire investors.

[1] [http://www.theguardian.com/world/2016/jan/21/dutch-pm-
says-r...](http://www.theguardian.com/world/2016/jan/21/dutch-pm-says-refugee-
crisis-could-shut-down-europes-open-borders-for-good)

~~~
brownegg
Soros is definitely weird at times, and he is almost always too-certain. But
your negative characterization of "billionaire investor" is a disservice to
you and him. Rather than learn about the world by selling products or climbing
a political ladder, he formed opinions and made bets. Massive, massive
respect.

~~~
ginko
How does gambling in the finance market worthy of respect?

~~~
brownegg
If we throw out, even if momentarily, that there's more to success in the
markets than pure luck, then people who have succeeded have done so in a very
pure way: you can only make money in trading by being right. When you're right
as often and to the extent that someone like Soros is, you have insight that
99.9999% of people don't.

------
ane
Soros has insightful opinions regarding Orbán and the internal political
struggle arising within the EU, but caveat lector: Soros has a large,
literally vested interest in seeing the Euro collapse. That is to say, he has
bet a huge amount of money on it collapsing. So he paints a bleak picture
about the future of the Euro, because it is the future he desires.

~~~
visakanv
Could it be the other way around? Could it be that he sees the bleak picture,
and bets his money accordingly?

~~~
qb45
What's the difference? If somebody bets money on X, you can suspect he's more
likely to work for X than against X.

~~~
Houshalter
If he didn't really believe what he was saying, he wouldn't have bet such a
large amount of money on it. There is no reason to believe he is lying.
Whether he is correct is another matter, but he's not "working for/against"
anything, he's just stating his actual opinion.

------
gal_anonym
The whole world today is based on countries and their respective borders. When
you want to travel between countries anywhere in the world you must have valid
passport, to prove your identity. Countries can issiue or choose not to issue
visa, so not everyone can pass every border. Things are working this way, and
have worked this way for very long time. A very basic principle. Why is that?
Many reasons, and the main is national security.

EU opened borders between their own countries. This is a good thing, it allows
free travel and flow of products and money between EU countries. But EU still
borders countries that are not in EU.

Now they are allowing everyone without valid documents to pass EU border in
Greece and Turkey. You just need to say that you are a Syrian refugee and that
you are going to Germany. Sane countries like Poland and Hungary are only
reacting to this insane situation. Racism is not involved here, only logic.

------
k-mcgrady
It's hard to care about articles like this anymore. They're like the SV bubble
articles. Every month some other genius tells us the EU is about to collapse
and they've been telling us this since 2008. The EU has faced some pretty
massive hurdles in that time and managed to overcome them and I see no reason
that can't continue with the new refugee crisis and the ongoing financial
crisis in some of the member states.

~~~
rtpg
It's like how people have been predicting the fall of the American empire for
over 100 years now.

~~~
threeseed
What empire ?

The idea that the USA is a superpower is antiquated and I am still surprised
people think it is. It is unquestionably the strongest country but it isn't
able to just unilaterally impose its will.

Obama's most notable legacy for me has been the acknowledgement of this and
realising that the USA is far stronger and far more successful leading
multilateral coalitions.

~~~
pdkl95
> What empire ?

We absolutely are an empire... which is failing rapidly. But don't take my
word for it - Lawrence Wilkerson[1] as a much better explanation[2] of the
travails of the American Empire.

[1] retired Colonel and former chief of staff to Sec. of State Colin Powell

[2] [https://www.youtube.com/watch?v=ckjY-
FW7-dc](https://www.youtube.com/watch?v=ckjY-FW7-dc)

------
SunShiranui
I think the fundamental problem with the European Union is the way it's
organized and governed.

The reason we don't see a wholly European solution to many of these problems
is due to the fact that the decision making progress is functionally biased
towards each of the member's states unique interests.

The most important institution we have in Europe is, in my opinion, the
European Parliament. It is designed in a way that ensures fair representation
of all countries and at the same time enables us to pass legislation for which
there is collective support. Its members are elected directly by the people in
the European elections, which are separate from national elections, for
obvious reasons.

All of this, however, is subverted by the existence of the European Council as
well as the Council of the European Union (yes, the naming is a bit
confusing). Their members are respectively the 28 heads of state of each EU
country and members of their government.

This means that, while the European Parliament is elected with the express
purpose of dealing with EU law, the European Council and the Council of the
European Union are fruit of very different elections and because of that, they
are bound to put their national interests first, since they might lose votes
at the national level otherwise.

In my opinion, the European Council and the Council of the European Union
should be replaced by a body elected directly by either the European
Parliament, or in some way, the European population.

~~~
aikah
> In my opinion, the European Council and the Council of the European Union
> should be replaced by a body elected directly by either the European
> Parliament, or in some way, the European population.

The EU is never going to work because its people are too different, they don't
speak the same language, don't have the same culture and its citizens aren't
that mobile (good luck finding a job in France if you don't speak french, good
luck expending your business to Germany if you don't understand the German
market and law, thinking that the EU can copy the US in anyway is a huge
mistake). We have already seen that with each crisis ( the Greek crisis, the
refugee crisis ... ) that it is still everybody for himself and rightfully so.
Mind you i'm not anti-european, I was fine with the EEC, the EU is an
experiment and us citizens are the guinea pigs.

~~~
lispm
> The EU is never going to work

It works already.

> good luck expending your business to Germany if you don't understand the
> German market and law

Example: German companies have expanded all over the globe, learning the local
markets and laws. What are you talking about?

> that it is still everybody for himself and rightfully so

The Greek are still in the EU.

> I was fine with the EEC, the EU is an experiment and us citizens are the
> guinea pigs.

I'm fine with the EU.

------
danmaz74
The situation in Europe now reminds me a lot of the situation of Italy and
Germany before their own unifications: for external powers, it was easy enough
to stoke up rivalries between the various statelets, and push even the most
successful around. Without the EU, this is the future I see for us: as
difficult as it can be to unite a continent which lacks a common language, the
alternative is to become irrelevant on the world stage - and the world market.

------
pdkl95
EU _is_ in a risky position, but the article seems to only tangentially
mention the main problem: shared _money_ without a proper merging of _monetary
policy_. The _5 trillion_ euro bank bailout abused Greece with idiotic
austerity policies a left quite a few countries (France in particular) with
banks that are leveraged many times larger than their host country's GDP.

Mark Blyth[1] has a very good explanation[2] of this mess that covers a lot of
the history. More recently, his analysis has unfortunately changed for the
worse[3]. We find ourselves in a precarious situation on both sides of the
Atlantic, and I hope we can find enough good men willing to actually do
something about these problems; if instead we do nothing and let the
profiteering and institutional corruption continue to grow, _some_ sort of
collapse seems inevitable.

[1] Econ professor at Brown University.

[2]
[https://www.youtube.com/watch?v=B6vV8_uQmxs#t=674](https://www.youtube.com/watch?v=B6vV8_uQmxs#t=674)

[3]
[https://www.youtube.com/watch?v=9fP6YSCpm8g](https://www.youtube.com/watch?v=9fP6YSCpm8g)

------
marvel_boy
Spaniard here. Unemployment has reached 20% after 2008 real state collapse,
central government is corrupt and incompetent. I guess that any economic
trouble could be fatal.

~~~
tormeh
Does those 20% include Spaniards employed in other countries?

~~~
marvel_boy
No. 20% is living from subsidies. When economy were at full speed there was 20
milion people working, now there is just 16 millions.

------
ju-st
> “Chancellor of the Free World.”

Merkel took only charge because everybody else didn't and the other European
leaders indirectly expected her to lead them in the Ukraine crisis and the
refugee crisis.

In my opinion there are two problems with the refugee crisis: (1) for many
years the calls for help from Spain/Italy/Greece have been ignored and the
refugee problem was swept under the mat. And now since Syria everyone is
unprepared because no sensible policy was created back then. (2) the EU
members from eastern europe wanted to join the EU for economic gain and
protection from Russia. Now they have to realize that the EU is a union and
not a economic aid programme. But this is also a consequence of problem nr.1
because it was politically ignored to set policies for distributing refugees
in the EU.

------
petke
Eu is a work in progress. Its end has been announced many times. With every
crisis it changes a bit. Organically through pragmatism and consensus. What we
end up with is not a thing of beauty but it holds together and works with the
help of a bit of duct tape and grease.

------
VeejayRampay
I'd be cautious about an in-depth article about the state of the European
Union where the protagonists never bring up the subject of France. Not once.
Kind of strange.

------
mahouse
Says the guy who has put his money to keep the Eastern European countries
heads low.

------
Htsthbjig
One of the things I recommend everybody to do is learning languages. This
article is one of the reasons for doing that. You are manipulated by
translators' interests.

The original in "WirtschaftsWoche" does not use such a strong wording in my
opinion. I am Spanish native but work using German most of the time in central
Europe.

In my personal opinion traveling around the world I find the Muslim countries
in lots of ways having opposite principles to Western values.

They are not compatible: Mohamed told them that adultery women had to be
punished with stoning death, Jesus response was forgiveness.

In Qur'an it is said that anyone that does not believe in Ala, Christians and
Jews should be killed, including those that call their selves "Muslims", but
are not real Muslims. Of course Mohamed could say who was real Muslim and who
was not. In other words he could kill anyone he wished with no consequences.

Jesus told everybody should be respected, including those that believe in
something different, or did not believe at all. A great difference.

Mohamed married a 5 year old girl and consummated the act when the girl was
10, so by Western standards he was a pederast.

If you believe that Mohamed is God's prophet you have to believe all he did is
ok if you do yourself.

Muslim countries are not open, I have visited countries were they kill you if
you define yourself atheist or homosexual. There are atheists there, they will
tell you as foreigner, but they could not tell anybody in their own country.

If Europe opens the gates to Muslims, Europe will became a Muslim territory.
As a European I don't want this for Europe.

~~~
nroets
"If Europe opens the gates to Muslims, Europe will became a Muslim territory".

There are many caveats to this. For example, the US absorbs so many immigrants
of different religions that it's guaranteed to stay secular.

"In Qur'an it is said that anyone that does not believe in Ala, Christians and
Jews should be killed"

I have been ignorant of Islam. But, if this is true, is the Qur'an not hate
speech ?

~~~
nightspirit
It seems that most of the time people point verses 2:190-194 as example, but
frankly, they only tell to "fight those who fight you" [1].

However, in practice apparently some leeway in definition of what constitutes
an attack on believers and reasonable retribution is used to justify things
going on in Syria and, recently, in Europe. Or maybe they just don't care that
much. It's not like medieval Europe followed the Gospels to the letter. The
whole discussion is pretty academic.

[1]
[http://www.islamicstudies.info/tafheem.php?sura=2&verse=189](http://www.islamicstudies.info/tafheem.php?sura=2&verse=189)

