George Soros says EU may not survive crisis 'tragedy'

George Soros: "You are facing long-lasting stagnation and unfortunately the European Union may not survive it"

Related Stories

Billionaire George Soros has told the BBC that the European Union may not survive its "long-lasting stagnation".

He says that Germany is responsible for many of Europe's problems because it has not taken on a leadership role.

Talking to the Today programme, he said; "My hope is that Germany is going to change and realise that the policy of austerity is counter-productive.

"Their memory is inflation, so they continue fighting inflation when the threat is deflation."

He added: "The only people who can change it are the Germans, because they are in charge. They don't want to be in charge, in fact they are determined not to be in charge. And that's the tragedy."

Mr Soros, an investor and philanthropist, is famous for speculating against the pound in 1992, contributing to its collapse and exit from the EU exchange rate mechanism (ERM), the forerunner of the euro.

Start Quote

This euro crisis has converted what was meant to be a voluntary association of equal sovereign states that sacrificed part of their sovereignty for a common benefit into a relationship between debtors and creditors”

End Quote George Soros
Debtors and creditors

He told the Today programme: "There are many nations that go through long periods of stagnation, but they survive.

"Japan has just had 25 years of it and is desperately trying to get out of exactly the situation that Europe is moving into.

"But the European Union is not a nation. It is just an association of sovereign states, a very incomplete association, and it may not survive.

"This euro crisis has converted what was meant to be a voluntary association of equal sovereign states that sacrificed part of their sovereignty for a common benefit into a relationship between debtors and creditors.

"The debtors can't pay their debts and are dependent on their creditors' mercy, and that creates a two-class system. It's not voluntary and it's not equal."

He said that although the International Monetary Fund had improved its understanding of the financial sector since the 2008 crisis, many other organisations had not.

"There is a group of people around the Bundesbank," he said, "who go by the law [whereby] the Maastricht treaty defines the role of the central bank.

"That definition was a bad one and actually doesn't allow the central bank to function as a lender of last resort, and without it there is a danger we will have some kind of financial crisis again."

'Parasite'

In his book, The Tragedy of the European Union, published in the UK on Tuesday, Mr Soros also writes that he believes the banking sector is a "parasite" holding back the economic recovery and that little has been done to resolve the issues behind the 2008 crisis.

He told Today: "Their first task is self-preservation, not servicing the economy, so small and medium enterprises, which are the lifeline of the economy, are not being served.

"Italy is the worst case - so these enterprises are going bust."

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

From BBC Capital

Programmes

  • Narrow boats on Regent's Canal, LondonThe Travel Show Watch

    Explore London’s industrial past on a narrowboat trip along the atmospheric Regent’s Canal

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.