George Soros

Billionaire investor George Soros says Germany has three days left to spearhead the creation of the «embryo» of a European fiscal union in order to save the eurozone.

«There’s a disagreement on the fiscal side, and unless that is resolved in the next three days, then I’m afraid the summit could turn out to be a fiasco, and that could be actually fatal because you are facing the possibility of Greece leaving the euro and perhaps the European Union, and you need to strengthen the remaining euro structure to withstand that shock,» Soros told Bloomberg TV.

Soros has said he is concerned that peripheral eurozone countries will be stuck in a permanent economic downturn in which they have to pay sky-high interest rates on their debt. He said only fiscal backing by the eurozone can reassure investors enough to lower interest rates for these countries, allowing them enough breathing room to implement policies that will spur economic growth.

Soros said without a full-fledged European fiscal union to address these issues, «the euro system will not work.» He added that Germany, as the most powerful eurozone country, must lead the creation of such a European Fiscal Authority and debt reduction fund, The Huffington Post reported.

An EFA fund would allow troubled eurozone countries to borrow at a fraction of the interest they now are paying, in the form of European Treasury Bills backed by the fund, in exchange for implementing structural economic reforms. The fund would be able to penalize countries that did not meet their commitments through fines and other means.

The consequences of not creating a fiscal union would be dire, 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 imagination. It will make Germany the centre of an empire and put the ‘periphery’ into a permanently subordinated position,» he explained.

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