The euro crisis is about to be resolved because eurozone members are working toward aligning their fiscal policies, but Europe is still “flawed,” financier George Soros said on Friday.
The euro crisis “is about to be resolved. There is now a determination to make up the missing element, which is a common fiscal policy or a common treasury,” Soros told the Munich Security Conference in Germany.
“But I’m afraid that the structure that is being put together will also be flawed,” he added.
“It is clearly visible that it will create problems in the years to come because the euro, which was supposed to bring about convergence has actually created a divergence within the performances of the various countries,” Soros said. “The structure that is currently being discussed will cast this divergence in stone. That will have very serious consequences because you are creating a two-speed Europe between surplus countries surging ahead and indebted countries sinking under the weight of their debt.”
His comments came as Germany and France pushed at an EU summit for a pact aimed at closer fiscal and economic policy in order to prevent another crisis of the kind that saw Greece and Ireland need to be rescued last year.
German Chancellor Angela Merkel and French President Nicolas Sarkozy described a “pact for competitiveness” that would bring the bloc closer together and reinforce confidence in the shared currency, but they held off on concrete economic proposals that could provoke political resistance.
The Franco-German proposals “will be about improving competitiveness and at the same time making it clear that we have the political will to grow together,” Merkel told journalists on Friday as she arrived at the summit of EU leaders.
The conclusions of Friday’s summit are the first written confirmation that the eurozone’s bailout fund will grow in size and power, and that economic coordination among eurozone nations will improve. But what Merkel and Sarkozy presented to their European counterparts over lunch created more questions than it answered.
“It would have served the discussion if concrete measures” had been suggested, Luxembourgian Prime Minister Jean-Claude Juncker said.