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George Soros
George Soros

BBC BREAKFAST WITH FROST INTERVIEW:
GEORGE SOROS

OCTOBER 21ST, 2001

Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST:
The world may well have been heading for recession before September the 11th but those events have accelerated the process, a little earlier I caught up with George Soros the billionaire financial expert who you'll remember made so much money out of Black Wednesday, if anyone can read the economic writing on the wall it's him and while he was making a quick trip to Paris we caught up with him and I asked him if America is now sliding rapidly into recession?

GEORGE SOROS:
Well they are in a recession and we know that the fourth quarter is going to be awful and we hope that because of the counter-cyclical measures now taken that we will have reasonable recovery in, latest the second quarter of next year.

DAVID FROST:
And when you talk about next year and we there, are you just talking about the United States or do you mean the rest of the world as well? GEORGE SOROS:
No I was talking of the United States which is likely to lead the world, they led the world down and is likely to lead, lead it up. But there is some question in my mind about the strength of the recovery, in other words we kind of fell into a hole here partly because of the events of September 11th and we're going to climb out of the hole but how far, how much further we go on the recovery track, that remains very much an open question because we have had a big asset boom that is liable to take some time to dissipate.

DAVID FROST:
Almost every country in the world at the moment has cut its interest rates to try and stave off recession, but do you think the central banks have done enough at the moment or do you think they need to do more?

GEORGE SOROS:
Well the, the, the US Federal Reserve certainly has, is moving aggressively, maybe going for an overkill and the European Central Bank is firmly backward looking and is not moving until inflation has come down so the, there is room to criticise the policy of the European Central Bank.

DAVID FROST:
And so if you were giving advice to the central banks what would you tell them is the most important thing to be done?

GEORGE SOROS:
Well I think the European Central Bank has to take economic activity into account and not merely prize stability, that's an old-fashioned doctrine and that would be my, the point I would try to make.

DAVID FROST:
And turning now to the issue of globalisation which I know is something you are really interested in at the moment, will September the 11th have any effect on globalisation, will it strengthen globalisation?

GEORGE SOROS:
I, I think globalisation is here to stay, what matters is what kind of globalisation we have, I think we have a very lopsided one, we have global markets but a political system based on the sovereign state and it's a very uneven playing field and I think we need to, to do more to make it a more even one and I think the events of September 11th have made this more urgent than it was before.

DAVID FROST:
So do you think we need something like a sort of latterday Bretton Woods conference like we had towards the end of the last War, do we need to get nations together to make the playing field more even?

GEORGE SOROS:
Yes I think we do, we don't need to have a grand conference because we can just improve the institutions we have and create some additional ones that are lacking. I think that for instance there's going to be a conference in Monterey in March of next year about finance, financing development, then that conference could introduce some of the measures that I'm advocating. I'm advocating for instance the issue of a specialist Europe, of special drawing rights that would be pledged to international assistance. I think this is, this is something that could be done at short notice so to speak because it's already in the works it just needs to be speeded up and, and pledged to the right cause.

DAVID FROST:
And if they're going to do that do you think that the First World, as it were, needs to start giving more aid to a Third World?

GEORGE SOROS:
Well I think definitely more than what the United States gives because we give 0.1 per cent of the Gross National Product but even more important how it is given because it has been rather ineffective currently, it has particularly in the, in the United States a bad image and I think it could be done a lot better.

DAVID FROST:
And do you think that's why globalisation gets so criticised at the moment, because it looks like the rich countries are profiting at the expense of the poor, I mean why do you think globalisation has so many enemies?

GEORGE SOROS:
Well because it is, it does create greater differences between rich and poor, it's run by the rich countries and not for the benefit of the poor, so I think they, they need to take the, the interests of the poorer countries, the periphery countries more into account. Take, for instance, a country like Brazil which has done all the right things but currently has to pay more than double the interest that the United States pays because of all the risk premium involved.

DAVID FROST:
So in summing up George, what would you say is the difference between globalisation as we're talking about it today and international trade which we used to call it 20 years ago?

GEORGE SOROS:
I think it's a, it's a much broader thing because you also have global financial markets and that makes us much more integrated and you know what we have discovered in the United States, that we are not invulnerable, that actually what goes on inside other countries is a matter of vital security interest to us and therefore we really have to have a, a constructive positive vision of a better world and not merely wage war on terrorism because that alone will not do the trick. We also have to, to, as I say, project a positive vision of a better world.

DAVID FROST:
And that of course was George Soros.

END

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