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Thursday, March 13, 2014

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.

21 comments:

jon livesey said...

It seems to me that there is something fundamentally irrational about Soros' stance. He recognizes that a big part of the problem is Germany. Germany has influence out of proportion to its size, and it also suffers from an irrational inflation phobia.

So Germany will always have a big influence on euro-zone policies, and Germany will never allow higher inflation in Germany to promote economic convergence, nor will it accept mutualization of debt.

And the Soros urges the UK to become more integrated in the EU and to join the euro.

So we would go from being ignored but being able to insulate ourselves from the worst euro-zone policies, to being ignored and directly damaged by them?

In what way would this be a good idea?

Jim Kemeny said...

Yes, I would like an answer to that too.

Freedom Lover said...

Is George Soros perhaps wanting his book to be compared to Mark's Das Kapital or Hitler's Mein Kampf? Clearly if his book has the same baleful influence on Europe as these latter two works, then Europe's future is not one many of us will like at all!

Rollo said...

What Soros has missed is the slow, steady, inevitable decline of the EU in terms of the proportion of world trade.
This will continue as long as the Euro continues to exist. The Euro crisis is not over, it is just swept under the carpet. The youth of the Southern states will never know prosperity as long as they stay in the Euro.

Patrick Barron said...

And there was nothing wrong, per se, with communism. It was just implemented poorly by the wrong people. Right, George?

Denis Cooper said...

Hang about, it seems to me that you are not only misrepresenting Soros's current views but also your own chap's account of Soro's current views ...

When I look at the Forbes article by Raoul Ruperal:

http://www.forbes.com/sites/raoulruparel/2014/03/13/george-soros-is-right-about-the-tragedy-of-the-eu-but-wrong-about-the-solutions/

he does indeed write about Soros:

"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."

but that was referring to evidence which Soros gave to the Commons Treasury Select Committee back in December 1998, the next sentence being:

"This was a tension which one of the Committee members picked up on and pushed Soros on the difference between his aims and what is achievable in reality."

And when you now write here:

"At our event he described the UK’s current position as “the best of both worlds” ...

my understanding is that his "best of both worlds" comment specifically referred to the UK being in the EU but not in the euro; at least when I do a google search:

https://www.google.co.uk/#q=soros+UK+%E2%80%9Dbest+of+both+worlds%22+EU+Euro&start=0

that is what comes up, for example in the first reference:

http://www.breitbart.com/Breitbart-London/2014/03/13/Soros-EU-Exit-Would-Trigger-Exodus-of-Multinationals

"He added that Britain has the best of both worlds in being in the EU but not the Euro."

Which of course is the official position of the Tory party, but with a pretence that Cameron will be able to negotiate significantly improved terms for our EU membership.

There are however two major problems with this position, one which has always been present and one which has newly emerged this week.

The problem which has always been present is that being in the EU but not in the euro will become an increasingly lonely business, as only the UK and Denmark have treaty opt-outs from ever having to join the euro and with the passage of time the UK will increasingly head towards being in a minority of one among the EU member states, and eventually a government of whichever party or parties would declare that this was no longer tenable and so would take us into the euro, if necessary without a referendum.

While the problem which has emerged this week is that if Labour win the next election they will introduce a new "referendum lock" which would remove the Tories's preferred option from the ballot paper, because if the government wanted to take us into the euro the referendum question would no longer be:

"Are you in favour of the UK adopting the euro?"

so that if the result was "no" we would not adopt the euro but we would stay in the EU, instead the question would be:

"Do you prefer to stay in the EU and adopt the euro, or would you prefer to leave the EU?"

Perhaps somebody should ask Cameron how he would vote in such a referendum.

Denis Cooper said...

jon livesey said...

"And the Soros urges the UK to become more integrated in the EU and to join the euro."

No, Soros did previously urge the UK to join the euro but now he says that being in the EU but not in the euro is "the best of both worlds".

Unfortunately that option would not be on the ballot paper under the new "referendum lock" law that Miliband has proposed, it would be "either agree to join the euro with the other EU member states, or get out of the EU".

Denis Cooper said...

I also note that in your account of last night's event you report a view expressed by Fresh Start merchant Andrea Leadsom:

"She also agreed on the need for the eurozone to integrate, however, warned that this fundamentally changes the UK’s position in the EU."

If she believes that eurozone integration "fundamentally changes the UK's position in the EU", why did she not object to Hague putting fine print into his "referendum lock" law so that EU treaty changes to further eurozone integration would not trigger a referendum in the UK?

For example, the major EU treaty change agreed on March 25th 2011, which Hague told Parliament did not need a referendum in the UK under his law because on paper it did not "apply" to the UK, even though it might affect the UK.

Open Europe blog team said...

Thanks for all the comments.

@Denis Cooper

Not entirely sure which part you believe has been misrepresented, could you clarify?

As we see it, Soros previously argued for the UK to join the Euro back in 1998 (although he did qualify it by saying if the UK did join the euro would need tighter links with the dollar). He has since accepted this is wrong and/or unlikely and now argues that the UK's position is the best of both worlds.

The point about referencing Soros' previous views was to provide context for his current ones, and to highlight that there has been a tension between what he would like to see but what he actually believes is achievable.

More generally, while supporting the UK's current position he does call for the UK to rediscover its European identity and engage more with the EU, if not actually integrate more. The exact distinction between the two is not entirely clear.

Anonymous said...

Why is Open Europe lauding Soros - a vile, brutal and ugly criminal -- as some kind of leading light?

He's scum, and he should be in prison for his many crimes against Humanity.

Denis Cooper said...

"Not entirely sure which part you believe has been misrepresented, could you clarify?"

It's obvious, anyone reading just this article without checking any other information would come to the same conclusion as jon livesey, that Soros is urging us to join the euro.

Which is clearly no longer true, as he is now supporting the Tory party position that we should be in the EU but not in the euro - "the best of both worlds".

However the main point is that voters would never be allowed to choose what he and the Tory leaders regard as "the best of both worlds" in any referendum triggered under Miliband's new "referendum lock"; that option would be excluded from consideration, leading to the question of what position the Tory party would then take - would it campaign to stay in the EU even though that meant joining the euro, or would it campaign to leave the EU?

Open Europe blog team said...

@Denis Cooper

Thanks for clarifying.

Apologies if it wasn’t entirely clear but we did try to make it clear that his comments about the UK joining the euro relate to his evidence in 1998. We also clearly state his position now which he laid out at our event, that the UK has the best of both worlds.

Maybe we could have been more explicit about his position changing over time, but it seems pretty clear where he stands now – or as clear as it can be given the inconsistencies in his position which we outline above.

Denis Cooper said...

Thanks.

And if there was a referendum triggered under Miliband's new version of the "referendum lock" law, and the only choice on offer was between a) staying in the EU and joining the euro, or b) leaving the EU, which side do you think the Tory leadership would take?

Or do you think that it would remain neutral and inactive, because it could not support either choice?

David said...

My question would be does anyone trust George Soros? What is his actual agenda? Would he stand to gain financially if the UK joined the Euro?
He said the UK has the best of both worlds. I say we have the best of one world: that is, not being in the Euro. The best of the other world would be not being in the EU.
One comment said it would be a lonely place outside of the Euro. Only as lonely as all other currencies which are of course not the Euro.

Rik said...

Sounds pretty silly for a guy who has been actively commenting on this for as long as the crisis has been there to miss the complete lack of popular platform and all the legal issues like referenda that would be triggered with no chance of success.

Anonymous said...

My question to Soros is :

Would you and your fellow Americans allow yourselves to be ruled over by these EU clowns in return for membership of a free trade area and/or currency bloc?

NO - of course you wouldn't! So don't expect us to either and stop trying to prod and poke us into it.

Why do people confuse the issue of sovereignty with free trade?

Sovereignty = NO
Free trade = YES

SC

Denis Cooper said...

David said...

"One comment said it would be a lonely place outside of the Euro. Only as lonely as all other currencies which are of course not the Euro."

I actually said that "being in the EU but not in the euro will become an increasingly lonely business", and that is true.

And whether or not Soros would stand to gain financially if the UK joined the euro the fact is that he is not now urging that the UK should join the euro.

Denis Cooper said...

And it seems that Anonymous has also been misled into thinking that Soros is still urging us to join the euro ...

Denis Cooper said...

While Rik still hasn't sussed out that under Miliband's alternative "referendum lock" law it would be much easier for the government to win a referendum on whether we should join the euro because the referendum would not actually be just about whether we should join the euro, staying in the EU irrespective of the outcome of the referendum, it would be about whether we should leave the EU rather than join the euro.

Rik said...

@Denis
1. You are probably right from a legal perspective (and exact wording of Milli's promise) that an Euro membership would not require a referendum.
Doing it without one would be a) political suicide for Labour because of the fact itself and b) political suicide for trying to get around a referendum.
Simply hard to see how any UK government especially one lead by a very weak and unappealing figure as Mr Ed could do that and not pay the price.
Only Europe's own third world in the East is still interested in Euro membership not any country with things to lose however is and for good reasons.

2. This promise is imho very unsuperior compared to Dave's one and in several ways.
It makes when a referendum is there a straight out (with still completely unoverseeable consequences) considerably more likely.
Looking at the polls now if the only choice would be out now or definitely in, it looks like a clear out now that we would see.
Hard to see as well in this respect that there would be any relevant reform to bargain with at that point. It is either an even worse case (because the trigger is a transfer of power) or a combination. It will more likely be triggered by political necessity at that time than by this promise in the strictest sense.
If you like your EU membership you simply need reform to be able to win a referendum.

3. Dave's stuff simply looks way superior to this 'Frankenstein'.
Likely caused by the fact that Labour wanted to do something different on one hand. Donot want in proper EU tradition a referendum on the other, as the outcome looks very certain.

4. This is not a definite word. First of all Mr Ed changes views more often than other people underware. Second politics will be the driver of if and when a referendum will be held in in which form.
As said earlier eg IP very likely will now start to shoot on Labour. Labour itself seen the polls have roughly half its voterbase as outs and probably at least as much as pro-referendas.
While at the same time IPs market on the right has dried up as far as further growth is concerned. And all over Europe these kind of parties attract voters from both left and right.
Very likely the EU will mess something up as well. They are pretty good at that. Now we have: the Euro;
immigration/welfaretourism;
split EZ not EZ.
To name just a few. All bad strategic choices if you like your popular platform.
The trigger even under a Labour government will be very likely something else than this promise.

So in a nutshell any not reform referendum is very likely to result in an out.
Whatever Milli thinks it is hard to see it can be avoided anyway (directly or indirectly via general elections/polls that enforce it). As said many times this goes over several election cycles. Simply nearly impossible at this stage to keep the voter out.

Rik said...

@Denis2
Side remarks:
A.
EZ is still not even close to an optimal currency area. It might be relatively calm now, but very likely (almost certain) new problems will arise as a consequence of that. Any rich country with things to lose that wants to become a member should get its political head examined. It moved from sucking 90% to sucking 70 or 80% (if all EZ reforms as proposed now are made), but at the end of the day it simply still sucks.

B
Hard to see as these current polls suggest that is is only 50% against this. It simply doesnot add up with other polls.
It basically means a no reform EU. Which show close to 60% as outs.
On top of that it basically means no referendum, while all earlier polls where opinions could be worked out by the general public show nearly 20% more pro-referendum on top of that.
These earlier polls look to be a better indication (as people had time to hink things over) and much more stable as well.
Most likely explanation is that the general public simply hasnot got time to process all this in an as rational way as possible.
Anyway they will do that Cameron and Farage simply will put it on top of the agenda in next election. Probably Clegg as well (he is probably best served to be the 'Real In Party').

Euro in or EU out will be a mixed bag in some respect. Some people will clearly be afraid of leaving (likely as well a rising percentage btw) others do not want EU membership and do not want the Euro.
However at the end of the day the polls simply clearly indicate a huge majority for EU out in such a poll. If a non-Euro membership referendum now would trigger 60%outs hard to see that including the Euro in an In vote will not substantially increase that.
Any referendum that gives an out choice will be basically about that. Even when not given one it will be about that (and the discontent with politics) rather than the topic itself.

C
At the end of the day Ed is simply missing that the EU-UK relation needs a sustainable platform to be long term viable.
And parties obstructing that will be punished. Simply another huge show of being disconnected with their voters (which is probably the main reason for the political credibility crisis we see today).

D
Another step towards Labour getting under electoral attack imho.
What we see in several other countries in Europe. Basically all leading to a considerable worsening of its position.
Germany they have lost half of their half of the vote.
Holland Labour moved from 1/3 of the vote to now less than 10% in all polls.
France where Hollande is speeding up the PR disaster.
In other words Labour is a nearly certain candidate to come under attack, it only didnot happen yet in the UK. And its present leadership looks simply not able to keep the groups together when put under pressure.