A competitiveness pact agreed by euro zone leaders to draw a line under the region's debt crisis would "set in stone" a two-speed Europe and could threaten the European Union's political cohesion, billionaire investor George Soros said on Tuesday.
"The European Union will suffer something worse than a lost decade," Soros wrote in the Financial Times ahead of an EU summit on Thursday when the measures are expected to be formally adopted.
"It will endure a chronic divergence in which the surplus countries forge ahead and the deficit countries are dragged down by the burden of accumulated debt."
Euro zone leaders agreed earlier this month on a comprehensive series of measures, proposed by Germany and France in February, calling on EU countries to write limits on public debt and budget deficits into national law, review wage indexation and have more flexible labor markets.
"The competitiveness requirements will be imposed on an uneven playing field, putting deficit countries into an untenable position," Soros wrote.
"Even Spain, which entered the euro crisis with a lower debt ratio than Germany, could be dragged down."
Soros said the EFSF, the euro zone's rescue fund, would need to rescue the banking system as well as member states to restructure sovereign debt without leading to a banking crisis.
The risk premium on borrowing costs of countries that stick to the rules must also be removed, Soros said, through the creation of common euro zone bonds.
"The solution to the euro crisis to be put in place at the end of March will set in stone a two-speed Europe. This will generate resentments that will endanger the EU's political cohesion," Soros wrote.
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