Billionaire George Soros is of central European ancestry, and has long been a supporter of democracy in the region. Soros warned on Tuesday that the European Union, a mainstay of post-war could unravel if the 28-country organization cannot agree on a forceful common response to Russia’s ongoing military aggression in Ukraine. He had just returned from a visit to the Ukraine.

Soros was addressing a group in Düsseldorf, Germany, at a dinner sponsored by Handelsblatt, a German financial newspaper. The E.U. discord over a response to Russia threatens the entire alliance of nations, George Soros said.

George Soros Says Ukraine Could Lead to Breakup of EU

George Soros: “Wake up, Europe!”

Soros argued that Europe needed to take a tougher line against Russia’s Ukraine aggression in his speech. “I think the real question is whether the European Union will break up over Russia,” Soros told 400 people at a dinner held at K21-Ständehaus, a Düsseldorf museum. “The E.U. is under threat from Russia. Here is Russia, not an attractive country. The E.U. is broken, and it is not functioning.”

“Wake up, Europe,” Soros said. “There is now an alternative to the European Union, a different way to run a state through use of force. I’m talking about (Vladimir) Putin’s Russia. The reason he is making headway is because of the failure of the E.U.”

Soros comments on economic issues

In discussing economic issues, George Soros blamed Germany for doing very little to maintain euro zone stability. He also pointed out the inflation-fighting role of the European Central Bank is no longer important when deflation rather than inflation is the real threat.

Given the ECB is dominated by Germany, the EU’s largest economy can force tough austerity demands on weaker euro countries such as Greece, Spain, Portugal and Italy, George Soros said. Referring to the ECB president, Mario Draghi, Soros said: “Draghi can do whatever it takes (to save the euro) as long as he has the support of Angela Merkel. The ECB is independent as long as it has support from Germany.”

He went on to say German demands for austerity are wrong-headed, and will slow the EU’s economic recovery.

“The policy of austerity is inappropriate to the current conditions,” George Soros said. “We are in a situation of deflation and the policies are directed at inflation.”

H/T ZeroHedge