George Soros on the Future of Europe and Russia as Open Societies

Within the Eurozone there is now a division between creditor countries and debtor countries. Because of the crisis, the creditor countries are always in command.
In a conversation with Sergei Guriev of the New Economic School, Moscow, George Soros discusses civil society in Russia, the crisis in the European Union and what it will take to reverse the process of European disintegration and return to European integration.

You’ve been known as one of the most optimistic supporters of Russian transition for many years. Where do you think Russia is going now?

I have been very optimistic for the longer term in Russia and I remain so. I think what Russian people basically want is more freedom of expression, freedom of thought. For the last few months there has been an accelerating crack-down on civil society and on freedom of expression. This may unfortunately last, but not forever. Even in the darkest days of the Soviet Union the people’s desire for freedom remained. It can never be extinguished.

To what extent do you think the “foreign agents” law will be an issue for your support for civil society in Russia?

It will not change my support or my Foundation’s involvement. It will always stand for supporting the ideal of an open society. I don’t think that that ideal can ever be permanently extinguished. It can be suppressed, it has been suppressed in the past, and it is now being suppressed again. But I think that those who are critical of the regime in Russia are actually exercising a patriotic role, because what is happening now and the direction that the regime has taken is bad for Russia. It’s really reinforcing a decline of Russia. And this fact cannot be changed by the regime labeling those who are critical as “foreign agents.” So that is in itself an expression of how wrong the regime is in this policy. And the people who are continuing to exercise their human right, civil right, to take a critical position are working for the greater benefit of Russia.

Why is Russia so special in your philanthropic activity?

I do have a “soft spot” for Russian intellectuals. There is, I think, something quite special in the Russian tradition. Perhaps, because this quest for freedom has been suppressed and had to flourish in very adverse conditions.

You’ve recently spoken about the situation in Europe. You question whether Europe is going in the right direction and whether the values of open society can prevail.

I think the European Union is going through a very deep crisis. The euro crisis, which is a financial crisis, is endangering the European Union, which was originally meant to be an embodiment of an open society and an association of democratic states—a voluntary association, in which countries sacrificed part of their sovereignty for the common good. Because of the financial crisis this is now changing and it’s in danger of becoming a compulsory association that people and countries cannot escape.

Within the Eurozone there is now a division between creditor countries and debtor countries. Because of the crisis, the creditor countries are always in command. When there is a financial crisis they dictate the policy. There’s a danger that this may become permanent. Then you have Germany as by far the largest of the creditor countries emerging as an imperial power effectively, that is holding down the debtor countries because of the policies that Germany is imposing. That is, I think, a very big mistake on the part of Germany. It’s not something that they really want to do. It’s something they’ve been driven into doing and they will themselves regret.

Do you think this crisis shows that the European Union is a mistake? What lessons can one draw from this?

Well, I’m afraid it is a failure of an open society. It is a failure, if you like, of multilateralism, where you’ve got 27 countries and it’s very difficult to have an agreed policy on how to correct mistakes. Because the idea of an open society is based on the recognition that we all make mistakes, that all the rules that we establish are liable to be deficient in some way. And even if they work for a while they actually eventually lose their effectiveness. So, something that works for a period doesn’t continue working forever. I think that is the human condition. The founders of the European Union actually understood this. They took one step at a time knowing that it’s not sufficient, that they would have to take another step once they could get the political will to move forward.

That’s how the European Union was brought together, by what Karl Popper called “piecemeal social engineering.” It worked very well for a while and now it’s not working. Instead of a process of integration we are now in a process of disintegration.

This has changed the behavior of the authorities, because during the process of integration they were in the forefront of moving forward. But now that the political will has changed and they know that if there’s any change, it’s more likely to be a retrograde, regressive change, they are opposing change and they are insisting on maintaining the rules that have been established. Unfortunately those rules turned out to be fundamentally flawed.

The construction of the Euro as a currency has revealed some real, very serious deficiencies. Instead of correcting it, they are enforcing it, and this is becoming like a form of oppression. I call it “Procrustean Bed.” You know that Procrustus had a bed and if your legs were too long they cut it off and if it was too short they would pull you out and kill you in the process. That’s what is happening in Europe.

Are you optimistic for Europe?

No, I’m actually extremely worried. I regard it as a most pressing political issue confronting the world, not only Europe. Because the problem is very complicated, the understanding of the problem is inadequate and an agreement on how to correct it seems to be unattainable. So this is the harsh reality. When I analyze it I recognize that this could really destroy the European Union as an open society. So it’s a political crisis. I consider it a severe crisis. I feel that one must find some way to avoid what is really a very threatening prospect. In a way, there’s a parallel here with the Soviet Union, because that was also a pretty unacceptable system, but it prevailed for 70 years. So, the present trend could actually lead to something that would be unacceptable in the long run.

The financial solution is politically unacceptable. The financial solution is to have the creditors dictating the terms, and politically that will not last. But, while it lasts, Europe is declining both politically and economically. We are in a recession that is getting deeper, so it will eventually become a depression. Politically, instead of integration you have disintegration. Once you recognize that this is unacceptable then you must do everything you can to find a way out. But right now we are still on the way to a very unacceptable future. This is what economists would call “an unfavorable equilibrium.” But it is not an equilibrium, because it will be a conflict; a conflict between the financial requirements and the political requirements.

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With all due respect to Mr. Soros, that seems to be quite over the top: "Then you have Germany... emerging as an imperial power effectively, that is holding down the debtor countries because of the policies that Germany is imposing."

You can find in the recently published Q3 2012 Commission TF report what policies are "imposed" on Greece, for instance measures against corruption and tax evasion. A land property register. Who dare they! Truth is not as convenient for a "sovereign people" as scapegoating creditors and demanding unsubstantiated "growth" policies for even more debt. Now, I understand the drama and the cultural discomfort with taking responsibility. What I don't get is why someone who is fully aware about the fiscal unbalances and the monetary system spreads and nurtures these anti-German sentiments.

this analysis is very great and deep , either Russia's situation or Europe's crisis.
But i want to know how you can envisage the future for these two zones according to the open society he proposed. Because for me , the dirigeants of these zones must take difficult political decisions to resolve there problems. What can he also propose for poor countries which have similar problems? I am a Cameroonian living in Yaoundé.
Great Regards

Dear Monsieur Soros,
"Instead of a process of integration we are now in a process of desintegration"i like to read you,this quote could be applied for a global vision of the whole political world with the USA at the head of it all.
As i am also pessimistic about a possible descent future for humanity.
Russia today with Putin is again in an iron prison,what a shame such a beautifull culture;i was in Soviet Union many times and have dear friends today living in Canada;they made me discover all the facets of old Russia and communist revolution,intellectually it was a real fascination which i enjoyed as a red carpet guest..
i believe the true noble Russia will rise again,they expresse it with so much talent in all their art.
Culture is my favorite open door for diplomatic relations for peace,because music and all the arts speak directly to the soul of every man(of course not when man is starving)it still is a blessed universal link from the heart to all men.
As words and logic or mathematics seems to be an obstacle to fair play.Because greed,control and finance are in the way.
i sincerely hope that the Ideal of the Open Society will survive the political power stage.
As politics encourage manufacturing of war equipements for more profit;it also is building its own potential end by a possible unconscience atomic explosion.
As i said many times,it takes a new conscience for change to emerge from men of good will in power;you are one of those rare men leading for a more human way may other men of your caliber follow ,Claire Costom

The biggest flaw of the EU in its current form, I believe, is that the peoples have and had almost no say in decision-making. Each of these countries has certain qualities, which can be seen as advantages and disadvantages, depending on one's horizon. A mere quantification in economic and fiscal terms that have led to growing social injustice in the wake of attempting to fulfill the expectations of volatile speculative global markets, is a humiliation of the peoples and their diversity. Any national or transnational leader in Europe stating that "the markets expect us to do this or that", not to mention the installing of investment bankers as heads of state or the ECB, shows their moral and political bankrupcy. Yes, it is a poltical crisis more than a financial crisis. The cultural diversity of European countries is the true wealth. Whoever expects to successfully yoke the destinies and mentalities of 27 countries (and even more peoples) under one central technocrat government, is either completely mislead or trying to establish an empire under the rule of the market.
The peoples won't just sit and watch. The United States of Europe will never happen. The peoples don't want that. In those countries that allow for a referendum, the peoples clearly said NO to that. And that was before austerity, in times of more growth and stability.
The EU needs to be adjusted.
Europe maintained peace over decades through a union of sovereign democracies.

Great analysis. Thank you. The parallel to the Soviet Union is interesting.

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