Objections by Poland and Hungary over an EU plan to deal with the economic crisis has put the bloc in a “very difficult situation” and raises doubts over its future, according to billionaire investor George Soros.

Soros had previously said the EU should issue “perpetual bonds,” which means the principal amount of the money borrowed would never be repaid, only the annual interest payments. It also assumes the EU would last forever and therefore keep paying the interest back to the lender. Perpetual bonds could allow the region to fund projects at very low costs.

However, Soros has changed his mind, writing in an opinion article that “Right now, it would be impossible for the EU to issue perpetual bonds, because the member states are too divided.”

He explained that “Investors will buy perpetual bonds only from an entity that they believe will continue to exist for the foreseeable future… Sadly, it is not true of the EU today.”

Last month, the Hungarian and Polish governments vetoed EU’s plan to link access to the union’s funding to the application by member states of rule of law, a check on whether countries are complying with European values.

If accepted, the budget would allow Brussels to limit funding and sanction EU governments that did not abide by their own laws. The veto means that the contents of the next EU budget, which runs from 2021 to 2027, are in doubt.

Soros suggested that in order to overcome the challenges at EU level, individual countries should issue perpetual bonds on their own. “They would be issued by member states whose continued existence would be readily accepted by long-term investors such as life-insurance companies,” he wrote.

According to the investor, “If one country issued perpetual bonds, it would have the additional advantage that other European countries would find it an example worth following.” Such an idea would allow nations to save money too, he argued, citing this as a particularly important issue for countries such as the Netherlands and Finland.

“Eventually, the EU could grow strong enough to also issue perpetual bonds in its own name. That is a goal worth striving for,” Soros said.

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