Browse Category: Ukraine’s Economy

Arguments from George Soros Regarding Ukraine and the European Union

According to author and investor, George Soros the European government is experiencing five crises because of its currency structural defects. He has almost 64 years of expertise and experience studying the trends of international economies, investment strategies, and governments policies. Mr. George Soros is featured on national media and online publications providing economic predictions, giving interviews, and promoting open society & immigration reforms. His focus was primarily on Ukraine’s economic crisis and Russian aggression against the country during 2015. Europe’s internal crises, including euro, Greece, Britain possible separation from EU, and migration continued through 2016, and Britain eventually left the European Union.

George Soros raises significant arguments, including the Ukrainian government deserving top priority and dividing the European Union into creditor and debtor countries. He said in his article published in the New York Review that Europe may turn new Ukraine into the old country. Currently, the Ukrainian government is reforming its economy to serve the people rather than political private gain. Soros believes his arguments are valid because of his expertise of the new Ukraine and his ties to the country. In October of last year, he offered his winning strategy of creating an effective financial assistance, which combines large budgetary support with incentives, such as affordable political risk insurance.

George Soros Ukraine wrote in The Wall Street Journal in August 2015 that Russian aggression affected the Ukraine’s economy and caused the country to be unable to sustain its debt. He’s confident the country deserves debt relief in the midst of struggling to negotiate its debt with creditors. In order for Ukraine to receive additional financial support, the International Monetary Fund required the country’s government to make arrangements to settle its debt with lenders. When sovereign borrowers default on debts, most bondholders are likely to threaten the possibility of blocking further investments in defaulted countries. Soros explained that sovereign defaults are expensive and have long-term effects when creditors prolong debt relief agreements.

It happened in Latin America in the 1980’s and in Greece in 2015. In most cases, a country who reaches an agreement with its lender are able to reenter the global markets within two years. Soros explanation is defaults originate from economic problems, which has nothing to do with a country remaining out of the markets. The Ukraine government is hopeful for a debt relief plan similar to the 1989 Brady Plan, which required banks to accept debt relief. The plan was formed by Nicholas Brady, former Treasury of the United States as reasonable reforms for countries in Latin America.

George Soros said the Ukrainian government is fighting for structured reforms to remove corruption, encourage agriculture, and transform the banking system. Although, bondholders of Ukraine’s debt may reject debt relief, the truth is it’s the only option. Even Soros admits he’s a sovereign bondholder and hates losing on his investments. He believes his strategy for the country would benefit the EU and turn the new Ukraine reforms into attractive investment opportunities.

Learn more about George Soros and Ukraine at Bloomberg
Read more of George Soros’s opinions about the Ukraine on Project Syndicate