Is Germany to be blamed for euro-zone instability?
“I admire Chancellor Merkel for her leadership qualities, but she is leading Europe in the wrong direction.” The statement belongs to George Soros, the Hungarian-American business magnate, in a recent interview given to the German magazine DER SPIEGEL.
Talking about Germany’s government policies in finding solutions for the euro-crisis, Mr. Soros explains that in order to solve the euro deadlock, he advocates “a two-phase policy -- which is first austerity and structural reforms as Germany implemented them in 2005, but then also a stimulus program.” He believes that if no more stimulus is to be provided in Europe, more European countries are to follow the same way.
Commenting on Germany’s decision to carry the greatest burden of revival of the European economy, Mr. Soros says that such a decision taken by Berlin is righteous “but it is not exactly correct, because Germany was among the first countries to break the euro-zone rules.” He adds that “the Germans were not exactly innocent. Everybody broke the Stability Pact rules, which means that there were not enough effective rule enforcement mechanisms in place.”
The global investor partly blames Germany for the economical instability in the Euro-zone. “It is not the failures of Italian or Greek politicians that are currently the greatest problem, rather the high penal interest rates,” said George Soros, adding that “Germany has mishandled the rescue operation by providing the bailout at penal interest rates, which then led to an increase in the indebtedness of Greece.”
George Soros is the founder and chairman of the Open Society Foundations.