By Simon Miller
The euro currency could destroy the political unity of Europe claimed veteran investor George Soros at a press lunch today.
Speaking to reporters at the World Economic Forum in Davos today, Soros said Germany had taken on the role of the taskmaster rather than the International Monetary Fund imposing fiscal discipline.
As a result this could “generate both economic and political tensions that could destroy the political union,” he said.
Soros added: “"There is a real danger that the euro will undermine the political cohesion of the European Union."
He added that although the measures introduced by the European Central bank had relieved the liquidity problems of European banks, they “did not cure the financing disadvantage from which the highly indebted member states suffer”.
Soros continued: "Half a solution is not enough. It leaves the weaker members of the eurozone relegated to the status of third world countries that become highly indebted in a foreign currency.”
He added that even if the European authorities had not deliberate prolonged the crisis atmosphere in order to maintain the pressure on the embattled peripheral countries not been driven to this by divergent views that could not be reconciled, German was dictating policy because “at times of crisis, the creditors are in the driver’s seat”.
Soros concluded: “The trouble is that the austerity that Germany wants to impose will push Europe into a deflationary debt spiral.”