George Soros posits that Europe and America may not be willing to provide Ukraine with financial support because of two factors. One is the ongoing financial crisis in Greece, which has not set a good example for the EU to follow in Ukraine. The crisis in Greece was precipitated by the Euro crisis. The second factor is the Minsk agreement, which induced authorities in the EU to maintain a tight financial leash on Ukraine. The euro crisis has occasioned a shortage of resources for various budgetary purposes. EU’s budget stands at Û145 billion. This is about 1% of the member states’ GDP. With Europe stagnating in terms of growth, member states are not willing to increase their contributions to the EU budget. In the euro zone, there is shortage of funds because the zone lacks a budget of its own.
George believes that European authorities, especially the German leaders, are responsible for mishandling the Greek crisis. These leaders agreed to provide Greece with emergency loans. However, the interest rates were punitive. In addition, the authorities brought forth their own reform programs. They also micromanaged the reform agenda instead of letting Greece take ownership of the reform process. George Soros posits that even though Greece should be blamed for the financial crisis, the largest blame lies with the German leadership because they were in charge of the reform and micromanagement of the same. He continues to say that the national debt of Greece is unsustainable but authorities in Europe are not willing to write off their loans to the country.
George Soros – Project Syndicate
Soros contends that Europe and IMF have disputed over writing down their loans. The European authorities have been correcting their mistakes and are now insisting on bailing in instead of bailing out bondholders. The essence of bailing in is that bondholders write down their bond values. However, the authorities repeat other mistakes. Soros contends that the biggest mistake made by the European authorities is to treat Ukraine in a similar way as Greece. Soros continues to assert that the new Ukraine is seeking to be better than Greece. Even though the country is not a member of the EU, it is actively defending the same against Russia’s political and military threat.
George argues that the future of both the European Union and Ukraine are at stake. The loss of Ukraine would make Russia more superior, thus become an alternative to the EU through the rule of force instead of the rule of law. According to Soros, if Europe resolves to provide Ukraine with the finances that it require, President Putin will have no choice but abandon his aggression. George agrees that Putin can easily say that the economic troubles in Russia have been caused by Western hostility. He continues to say that the populace of Russia will agree with Putin’s arguments. However, should Europe generously assist Ukraine with finances, the people of Russia will blame Putin for the country’s financial troubles. This way, the Russians may force him to follow the economic reforms in the new Ukraine.
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