Soros wants to help Ukraine. Merkel says it is not necessary!?
EU Germany Ukraine Russia
BSSB.BE forbes.com 20.01.2015
George Soros, the billionaire investor and philanthropist known for his successful attack on the British Pound and, more recently, for his generous support of NGOs and various pro-democracy organizations throughout Eastern Europe, recently wrote an essay for the New York Review of Books.
In it, he called on Europe to spend $50 billion (yes, that’s billion with a B) bailing out Ukraine. More generally, Soros argued that Europeans need to realize that Ukraine isn’t just another emerging market and that their future depends on the success of Kiev’s current reform-minded government.
“Europe needs to wake up and recognize that it is under attack from Russia. Assisting Ukraine should be considered as a defense expenditure by the EU countries.”
When he was a young man, Soros famously had to flee his native Hungary to escape the Soviet-backed communist regime. Given this personal history, Soros’ wariness of the threat posed by Russian revanchism, if a bit overheated, is perfectly understandable.
Even if you disagree with his thesis about the “threat” posed by Russia, Soros quite unambiguously argues that Russia’s current regime presents far and away the greatest security risk to Europe, one can easily understand where he is coming from.
Given Ukraine’s extremely close economic linkages with Russia, any disruption to the Russian economy will have an inevitable trick-down effect. In other words when it shoots at the Russian economy, the West inevitably ends up hitting the Ukrainian economy toо.
But despite his evident passion for the topic, Soros failed to confront the single most obvious obstacle that a “Marshall Plan for Ukraine” will face: opposition from the German government. Angela Merkel, you might recall, has been extremely consistent in advocating on behalf of fiscal austerity. Germany has driven extremely hard bargains with Greece, Spain, and other economically unstable members of the European Union.
The idea that Germany would countenance cutting a $50 billion check to a government that, for all of the positive press it has received, is actually moving rather slowly on economic reform simply does not comport with political reality.
There’s no indication that Russian actions in Ukraine have made the German government willing to undertake a radical departure from its previous policies, no sign whatsoever that Merkel and her advisers are preparing to sign over to Kiev what amounts to a giant blank check.
Indeed on this one question the EU has been entirely consistent: from the very beginning of the negotiating process, it was made abundantly clear to Kiev that no meaningful financial assistance would be forthcoming and that no one would underwrite the painful reforms necessary for integration with Europe.
Whether Soros is right or wrong, and there are reasons to be skeptical that his plan would actually work, is ultimately irrelevant: Ukraine isn’t going to get $50 billion. Indeed it will be lucky to get just enough money to prevent a messy default on its sovereign debt obligations, and even that much is currently in doubt.
In the world we live in, there is no political will in Europe to sign away such massive sums of money to a country that many voters view as irrelevant. And if the events of the past twelve months haven’t changed that calculus, it’s unlikely to shift in the future.