As one of the foremost figures in international finance, George Soros is respected around the world as an expert on economics. In fact, Soros has gained such a reputation as an international investor that journalists frequently seek his opinion on topics as varied as the United Kingdom’s decision to leave the European Union to the presidential election in the United States.
During the recent political and economic crisis in Ukraine, Soros took a proactive approach to sharing his policy prescriptions for the troubled country. In particular, Soros sought to convince policymakers and Western publics that economic sanctions against Russia were not the only way to deter Russian aggression and keep Ukraine as a strong, intact European country.
Soros, who has been involved in Ukraine for decades through the work of civil society organizations and think tanks supported by his philanthropic Open Society Foundation, shared the concerns of many other people about the prospect of Ukraine’s sovereign territory being carved up by Russia.
In fact, in his February 2015 piece in the New York Review of Books, Soros took the opportunity to explain what he saw as the motivations of Russian President Vladimir Putin. In fact, Soros argued that Putin was using “a nationalist ideology based on ethnic grounds, social conservatism, and religious faith the brotherhood of the Slavic race, homophobia, and holy Russia” to replace the Communist ideology that had failed in the early 1990s.
As Soros noted, Putin had used the ethnic grounds and the need to appease Russian nationalism as grounds for foreign aggression as early as his 2008 war with Georgia. However, Soros expresses deep concern that the lessons Putin gleaned from that conflict had been applied with greater effect in the Ukraine: a mixture of destabilizing propaganda and special forces military power.
To directly deter Putin and the resurgent Russia, Soros saw only two options for the West: war or sanctions. As Soros notes, however, neither the European Union or the United States have evinced any interest in war with Russia. That left economic sanctions as the only option for leaders like President Barack Obama and Chancellor Angela Merkel.
However, Soros views sanctions – at best – as a “necessary evil.” In Soros’ view, the sanctions were only effective because they coincided with a sharp decline in the price of oil, which tightly squeezed the Russian treasury. (As Soros notes, Russia required $100 a barrel oil to balance its budget, but prices have dipped as low as $50 a barrel.)
Given that the combination of low oil prices and sanctions were biting Russia’s economy, Soros expressed serious fear that Russia could be pushed into a financial default. While this would cause critical harm to Russia, Soros was particularly afraid it would affect the West by increasing the risk of deflation in the European Union.
Instead of tightening the screws on sanctions, Soros recommended a different policy: he lays out a compelling case for massive Western assistance to Ukraine to help it become solvent and reinvigorate its economy.