George Soros Explains the ‘Surge’ Fund Solution to Europe’s Refugee Crisis

George Soros a well renowned investor, author and philanthropist has written an essay on that details the refugee crisis in Europe and the measures that EU should take to contain the situation.

The Refugee Crisis

Civil war and terror in 2015 caused over a million people to seek asylum in Europe from Middle East and Africa. Right now the situation is even more desperate. George Soros wrote that “Asylum seekers are desperate”, he urged that the refugees should be allowed to attain asylum in the places that they prefer.

George Soros advised that the only way European Union can survive and contain this situation is by quickly getting great amount of cash to fix the crisis. In an article published in CNBC, George Soros said, “EU leaders need to embrace the idea that effectively addressing the crisis will require ‘surge’ funding, rather than scraping together insufficient funds year after year.” George Soros estimated that an amount of $34 billion (30 billion Euros) will be needed per year.

Soros pointed out on that while the amount may seem to be huge, the consequence of the refugee crisis will be more costly. The refugee crisis if not contained will cause failure of the Schengen system. Failure of this system will affect the trading and economy of the 26 member countries.

George Soros calculated the number of refugees that Europe can comfortably receive per year to be between 300,000 and 500,000. This regulated number will have two benefits. First, the refugees will be assured of getting asylum in countries that they seek. Secondly, the governments of the various countries will be able to plan for the refugees and make proper provisions for them.

EU’s Available Sources for the ‘Surge’ Fund
Having set the amount, Soros went ahead to point out the different mechanisms that EU can use to get the ‘surge’ funds. The tax revenue should be increased in all EU countries. But since, the move will face objections from various members; the European Commission’s Multiannual Financial Framework should be employed. This forum is concerned with the long term spending plan of the countries and it can fairly increase the VAT values. Soros pointed out that while this method was effective; it lacks the ability to create great funds quickly.

Soros assured that EU has the ability to create the ‘surge’ funds urgently. The union should make use of the unused $68 billion funds from the Balance of Payments Assistance Facility and the Financial Stabilization Mechanism (EFSF). The ability of the financial entities (EFSF and ESM) to leverage easy credit terms should be used. Soros further advised that now is the time for EU to use their triple-A credit. The refugee crisis is a national emergency and as such EU should use the latter mechanism to acquire funds.

George Soros

George Soros is a very successful investor. He is listed among the top riches people in the world. He is the founder of Soros Fund Management which is a very successful investment management firm. He is also the founder of Open Society Foundation which supports charity activities around the world. He has written various important articles. He has dual citizenship in U.S. and Hungary. Visit Open Society Foundations website to know more about George Soros.

Weak Economic News Continues

The United States service sector slowed to a new two-year low in January 2016 causing officials with the Federal Reserve to become worried. The Federal Reserve has been watching the market very closely since they raised interest rates for the first time in over a decade in December 2015.
The report and other recent economic news have caused the Federal Reserve to fear that the United States economy could weaken further. While the United States dollar is already strong, president of the Federal Reserve Bank of New York William C. Dudley says that United States economy could weaken further, but that most global markets will fare far worse.
The Institute for Supply Management’s(ISM) Nonmanufacturing Index fell another 2.3 points in January to reach the lowest level that it has been at since February 2014. The index is at 53.5 which is still above the neutral 50 level which would indicate that businesses are still manufacturing more than they did in recent years.
The ISM’s New Export Orders Index dropped to its lowest level since March 2009. Marc Sparks points out that import orders were also lower reaching levels not seen since July 2012. The only good news in the report is that United States companies continue to hire, although at a slower rate than anticipated.
Factors driving the market include the strong dollar, weakening in the global economy and the quick decline in profits in the United States energy sector.