“Assisting Ukraine should be seen as a defense measure by European countries. … The US and the Europeans are determined to avoid a war but unless they balance sanctions with support for Ukraine, they may well have one.” – George Soros
The following is a detailed summary of an article which appeared in the January 7th, 2015 edition of Financial Times under the title “Save Ukraine to counter Russia”.
Financial Times reports that billionaire investor George Soros has accused western leaders of dangerously miscalculating their strategy towards Russia and Ukraine, arguing that the crisis there posed a lethal risk to the eurozone.
The Hungarian-born philanthropist complains that European leaders are treating Ukraine as “just another country” in need of financial assistance rather than realising that the crisis on the EU’s eastern border posed a greater danger to Europe’s economy, and even the survival of the EU, than the Greek election.
Mr Soros believe sanctions on Moscow ware having a far deeper effect than western leaders had ever imagined because of the collapse in oil prices. Soros would not be surprised were Russia to default on its debt.
FT quotes Soros as saying that “(s)anctions against Russia reinforce the deflationary and recessionary pressures that were already present [in Europe] but have now become a reality” and that “(a) default would be a big blow to European banks exposed to Russia.”
In Soros’ opinion Russia’s financial meltdown represents a strategic as well as an economic threat to Europe, with Moscow’s policy likely to become even more aggressively nationalist as the economy deteriorated.
FT reports that, despite those dangers, Soros stresses that he is not calling for the easing of sanctions, which are a “necessary evil” to push Russian forces out of Ukraine.
Instead, he says the US and EU are making a big mistake by failing to back up their sanctions with a massive financial support programme for Ukraine, which he estimated would have to run to $50bn and would need to be approved in the first quarter of 2015.
FT reports the 84-year-old hedge fund financier as saying that Europe needs to “wake up” and accept that it is under attack from Russia. “Assisting Ukraine should be seen as a defense measure by European countries,” says Soros. “The US and the Europeans are determined to avoid a war but unless they balance sanctions with support for Ukraine, they may well have one.”
Ft reports that Mr Soros was speaking before the publication of an essay in The New York Review of Books where he lays out detailed proposals for how a $50bn support plan for Ukraine could be marshaled by international institutions, including the EU and International Monetary Fund.
This massively expanded financial firepower, argues Soros, was the only way Europe could counter Moscow’s nationalist expansionism and save Ukraine from a bankruptcy that would strengthen hardliners in Russia. “Hopefully, Russia’s troubles and Ukraine’s progress would persuade President Vladimir Putin to give up as a lost cause his attempts to destabilise Ukraine,” Mr Soros wrote in his essay.
FT says Soros acknowledges that EU leaders are reluctant to provide more funds and even struggled to raise €1bn for the fight against Ebola. Similarly, western nations are holding back on pumping fresh money into Ukraine until they see evidence of reform in Kiev. European officials balked last month at the idea of extra support for Ukraine when the IMF identified a $15bn funding gap.
FT reports that for Soros, this was evidence that western leaders had not understood Russia’s ambitions to undermine the EU itself, supporting anti-bloc politicians and using gas exports to play countries off against each other. “The EU itself is disintegrating,” he said. “Russia offers an alternative view of the world — force rather than rule of law”.
FT reports that according to Soros an economic rescue of Ukraine would change Russian politics. While a Ukrainian bankruptcy would cement the power of hardliners, Soros believes economic regeneration in the country, led by the EU and US, would bolster a more western-looking opposition in Russia.