Europe Needs a Plan B

July 18, 2011Marketsby George Soros

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The European Union’s Catalogue of Failures
The European Union’s Catalogue of Failures: George Soros

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Yet Europe’s political establishment continues to argue that there is no alternative to the status quo. Financial authorities resort to increasingly desperate measures in order to buy time. But time is working against them: two-speed Europe is driving member countries further apart. Greece is heading towards disorderly default and/or devaluation with incalculable consequences.

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If this seemingly inexorable process is to be arrested and reversed, both Greece and the eurozone must urgently adopt a Plan B. A Greek default may be inevitable, but it need not be disorderly. And, while some contagion will be unavoidable – whatever happens to Greece is likely to spread to Portugal, and Ireland’s financial position, too, could become unsustainable – the rest of the eurozone needs to be ring-fenced. That means strengthening the eurozone, which would probably require wider use of Eurobonds and a eurozone-wide deposit-insurance scheme of some kind.

Generating the political will would require a Plan B for the EU itself. The European elite needs to revert to the principles that guided the Union’s creation, recognizing that our understanding of reality is inherently imperfect, and that perceptions are bound to be biased and institutions flawed. An open society does not treat prevailing arrangements as sacrosanct; it allows for alternatives when those arrangements fail.

It should be possible to mobilize a pro-European silent majority behind the idea that when the status quo becomes untenable, we should look for a European solution rather than national ones. “True Europeans” ought to outnumber true Finns and other anti-Europeans in Germany and elsewhere.

George Soros is chairman of the Soros Fund Management, which functions as the primary advisor for the Quantum Group of Funds – started in the early 1970s by Soros and Jim Rogers. Soros is famously known as “the man who broke the Bank of England” in 1992, when the Quantum Fund forced the United Kingdom to devalue the pound. Soros is also known for his philanthropic work, mainly in support for liberal ideals and causes.

Copyright: Project Syndicate, 2011

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