George Soros: Ukraine Deserves some Debt Relief

For some time now, Ukraine has been struggling to reach an agreement with all its creditors. This is because it is a requirement from the International Monetary Fund for all countries that need to get financial support. George Soros, one of the wealthiest individuals in the United States, believes that the Russian aggression has affected the economy of Ukraine terribly, and this has made its debt of nineteen billion unsustainable. Although the talks to try to negotiate the debts of the country are still underway in San Francisco, George Soros says that this country deserves to be given some debt relief.

The greatest concern, however, is the fact that Ukraine lacks a recourse for bankruptcy. George Soros also states that no policy allows the sovereign borrowers to introduce a ceasefire between the borrowers and lenders, choose the debts that deserve to be reorganized and at the end of the day mediate on the negotiations between the affected parties. This means that Ukraine and all its private lenders have been left to negotiate on the best way forward.

In such a situation the country has been left with just one option in the negotiations: to threaten to default the loans unless it is given some debt relief by its debtors. On the other hand, George Soros says that the bondholders have been warning the country that if it decides to default, then there will be no people who will be interested in investing in the nation in the future.

Sovereign defaults are considered to be very costly. According to the United States billionaire, they have long lasting especially when the lenders decide that they will drag out the battle. This has been happening in the recent times, especially in Latin America and in Greece. The Hungarian-born investor, George Soros says that countries that choose to reach an agreement with its lenders is able to get back to the market in a very short duration, even when it imposes losses on the lenders. This is because the default is not what keeps the nation outside the market but the severe economic problems that forced it to default accoridng to George Soros Ukraine.

This concept was clearly understood by the former United States Treasury Secretary, Nicholas Brady. The successful secretary decided to unveil the Brady Plan in the year 1989. The unique program urged all banks in the country to accept debt relief, especially in the cases concerning the Latin American nations that were pursuing sensible reforms. Brady knew that the savvy investors in his country were going to look at the future instead of focusing in the past when considering whether to give their money to an individual country that had decided to default in the past.

At the moment, Mr. Brady works as the chairman of a successful organization known as Darby Overseas Investment, considered to be a private equity arm of the Franklin Templeton. Franklin Templeton is considered to be one of the greatest bondholders for Ukraine, and it has been pressing hard against the motion advocating for debt relief.

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Ukraine’s Efforts to Move Closer to Europe Threatened by Russia

Many Ukrainian lives were lost as its citizens took to the streets and fought for democracy. Their efforts were not in vain, as the revolution resulted in the removal of President Viktor Yanukovych and planted the seeds for what billionaire investor and philanthropist George Soros refers to as a new Ukraine.

This new Ukraine seeks to unite itself with the European Union and embody its values; the perfect tonic for what ails it at the moment. Yet these changes are at risk of being undone at the hands of Russian aggression. George Soros has implored the EU to do everything in its power to ensure Ukraine’s success by warning that the country’s failure could lead to a second Cold War.

Shortly after the ouster of the pro-Russian Yanukovych, Ukraine’s new government sought to implement ambitious reforms that flew in the face of the country’s previous ideology. Yet, old habits die hard, and remnants of the old Ukraine have made life difficult for the reformists.

This difficulty was exacerbated when Russian troops invaded the sovereign nation and seized Crimea. The end result was a Ukraine that could no longer meet its debt obligations or fund programs to implement what it called “big bang” reforms.

The bickering amongst EU members has emboldened the Russian leader. His decision to annex Crimea was popular amongst his constituents and made easier by the bloc’s constant distractions with each other.

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George Soros – Project Syndicate

George Soros – Business Leader, Philanthropist

While the sanctions imposed on Russia as retribution for its aggression have been sever and painful, Putin has been able to successfully argue that Russia’s financial struggles are the result of Western hostility.

If Ukraine falls, Russia will also grow in influence and offer nations an alternative to the European Union. This outcome would be a devastating blow to the EU and everything it represents.

In order to avoid this scenario, Ukraine must receive the funding it requires to implement reforms and defend itself against Russia. George Soros has argued that this can be achieved through a number of different measures, including sovereign debt relief, and offering Ukraine the ability to borrow at same interest rates as EU members.

He established his Renaissance Foundation in Ukraine long before the nation won its independence and continues to stand ready to aid its pro-European ambitions. European leaders should answer his call and do the same.

Putin has shown a willingness to use force to achieve his global ambitions, and is promoting an ethnic national ideology to drum up support. A new Ukraine not only undermines Putin’s political arguments back home, but also forces him to abandon his military aggression.

Saving Ukraine is the one act that boosts both the security and health of every EU member while simultaneously unifying the bloc.

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