By Stephen Mangan, Reuters
LONDON — Germany must change its “can’t do” policy against immediately forging a consolidated European fiscal and banking union, or risk becoming “the center of an empire” responsible for the eurozone’s collapse, U.S. billionaire George Soros said on Tuesday. German Chancellor Angela Merkel has resisted all proposals to provide relief to Spain and Italy from the excessive risk premiums prevailing in the market, Soros said in an opinion piece in the Financial Times. This week’s summit of European Union leaders could turn into a “fiasco” because of Germany’s aversion and will leave the rest of the eurozone without a strong enough firewall to protect it against the possibility of a Greek exit, Soros said. “This may serve Germany’s narrow self-interest but it will create a very different Europe from the open society that fired people’s imaginations,” said Soros. “It will make Germany the center of an empire and put the ‘periphery’ into a permanently subordinated position.” The Hungarian-born U.S. financier said there was a need to establish a European fiscal authority that, in partnership with the European Central Bank, could establish a debt reduction fund that would acquire and hold a significant portion of the outstanding stock of debt of Italy and Spain. A debt-reduction fund would “finance the purchases by issuing European Treasury bills and pass on the benefit of cheap financing to the countries concerned,” said Soros. He urged Merkel to abandon the “unrealistic and unreasonable” idea that a political union should precede a fully fledged fiscal and banking union. “The three have to be developed together, step by step,” Soros said.