Will the euro crisis lead to a 'German empire'?

Billionaire investor George Soros says it's in Germany's economic interest to keep the euro — but it might come at a steep cost to everyone else

Business magnate George Soros continues to sound the alarm over the euro-zone crisis, saying the result will be an E.U. entirely dependent upon Germany.
(Image credit: Shen Hong/Xinhua Press/Corbis)

Billionaire business magnate George Soros is lighting up the financial world with an expansive speech on the history of the euro, which argues that, since its inception, the currency has been a bubble waiting to burst. Soros says the euro was forged on the untenable arrangement that saw creditworthy Germany balancing out weaker, debt-filled countries like Greece. Soros argues that Germany will do the bare minimum of what is "necessary to preserve the euro" — because its banks would suffer massive losses were the euro to crumble — "but nothing more." The result would be "a German empire with the periphery as the hinterland," a system in which Germany would continue to prop up weaker nations with the equivalent of financial aid. Could the European Union become a German empire?

Yes. Germany is dependent on weaker nations: Soros has made "one of the smarter arguments" for why the euro will stick around, says Ezra Klein at The Washington Post. The weaker countries on Europe's periphery act as an "ongoing subsidy to Germany" by making the euro weaker. As a result, Germany's exports are cheaper and far more competitive on the international market. If the euro were to collapse, the Germans would "lose one of the main drivers of their economy."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us