Monday 18 June 2018

EU 'will dig own grave' if it tries to 'teach Italy a lesson', warns Soros

European Commission President Jean-Claude Juncker. Photo: AP
European Commission President Jean-Claude Juncker. Photo: AP

James Crisp

George Soros, the billionaire anti-Brexit campaigner, has warned the European Union could collapse if Brussels fails to appease Italy's new Eurosceptic government and reform the eurozone.

"There is a strong inclination in Europe to use the occasion to teach Italy a lesson," said Mr Soros.

"If the EU follows this line, it will dig its own grave.

"The euro has many unresolved problems and they must not be allowed to destroy the EU," he wrote in an opinion piece for the Italian newspaper 'Corriere della Sera'.

The philanthropist called on the EU to give Italy compensation for its efforts during the migration crisis, which exposed stark divisions in the bloc. 700,000 migrants and refugees have arrived from Libya in the last five years.

"The EU is threatened by Trump's America, Putin's Russia, Erdogan's Turkey and Assad's Syria.

"Inside, Poland and Hungary are undermining the values on which the EU is based, but Italy is emerging as the most pressing challenge to its sustainability," Mr Soros, a Hungarian American, said.

"The disintegration of Europe is no longer a figure of speech; it is a harsh reality," said Mr Soros, who is backing the 'Best for Britain' campaign for a second Brexit vote before the end of the year.

Italy and Greece have borne the brunt of the migration crisis, while countries such as Hungary and Poland have refused to accept redistributed refugees under the EU's quota system.

Mr Soros, one of the world's most successful investors, said the crisis spurred voters to back the anti-migrant League and anti-establishment Five Star Movement, which formed a coalition government in Rome last week.

Slovenian voters have made the anti-immigrant SDS the country's largest party in elections held this weekend.

The SDS is an ally of Hungary's strongman leader Viktor Orban, who has waged a campaign of persecution against Mr Soros, but is expected to struggle to form a government.

Hungary and Poland are also at loggerheads with the EU over what Brussels fears is a swing towards authoritarianism.

Mr Soros (87) predicted the new Italian government could fall after putting forward a budget that breaks Brussels' tight fiscal rules on public spending, leading to fresh elections.

If the EU tried to punish Rome for electing a populist government, he said, Italians would re-elect Five Star and the League with an increased majority.

On Saturday, Jean-Claude Juncker, the president of the European Commission, denied Brussels would meddle in Italian affairs.

"I prefer to keep calm and I will not interfere in domestic Italian issues," he said.

"I have not interfered, although I have been tempted to."

The coalition is threatening to throw fiscal prudence to the wind and to embark on a spending splurge that economists estimate could cost Italy, which has a huge public debt, anything from €100bn to €170bn a year.

Five Star has previously called for a referendum on Italy's membership of the single currency but that has been dropped in favour of a push to force Brussels to negotiate reforms.

Mr Soros, who made a fortune betting against the pound in 1992, said the Italian people had "legitimate complaints as to the way the euro area is being managed" but the new government should stop threatening to leave the single currency. Any "innovation that could be seen as a parallel currency" would trigger a run on government bonds and banks.

The founder of the Open Society Foundation, meanwhile, has predicted that Germany and France could be in conflict over who will succeed Mr Juncker next year.

"The EU has little chance of avoiding disintegration unless the Franco-German alliance holds together.

"But that alliance is endangered by the elections for the European Parliament in 2019 where they will be opposing each other in order to control the selection of the next president of the European Commission," he said.

Mr Soros added: "France and Germany have many other issues to resolve, the most important of which is the future of the euro area."

Emmanuel Macron, the president of France, has called for a series of ambitious eurozone reforms.

This weekend, in an opinion piece in a German newspaper, Angela Merkel set out her far more conservative response to some of Mr Macron's major ideas, highlighting the divides between Paris and Berlin on the future of the EU. (© Daily Telegraph, London)

Irish Independent

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