George Soros has added his voice to the Eurozone bears who think the sovereign debt crises of the last few years will continue to wreak havoc if Germany doesn’t change its policy soon.

George Soros bill ackman pershing square

Soros on eurozone’s status quo

“The eurozone status quo is neither tolerable nor stable,” he wrote in an op-ed for Project Syndicate. “I call it a nightmare… The problem is that the debtor countries feel all the pain, while the creditors impose the misconceptions and taboos.”

According to Soros, Germany is uncomfortable with its role as regional hegemony because of its recent history, but the fact is that it is the most powerful economy in the EU and can essentially call the shots. German president Angela Merkel’s opposition to Euro bonds is enough to kill the idea, even though Soros believes it would help debtor countries other than Greece to stabilize.

Greece debt payback

“Everyone knows that [Greece] can never pay back its debt, most of which is held by the official sector,” writes Soros. “If the official sector could forgo repayment as long as Greece meets the conditions imposed by the Troika (the ECB, the European Commission, and the IMF), private capital would return and the economy could recover rapidly.”

But again, this solution is anathema to Merkel and other German officials, and while default is still possible, loan forbearance remains off the table. He points out that Germany benefited from write downs three separate times in the last century: the Dawes Plan of 1924, the Young Plan of 1929, and the Marshall Plan. He also argues that just as France’s hard stance on German war debt contributed to the rise of fascism, Germany’s hard line is contributing to the rise of the fascist Golden Dawn party.

More suffering for debtor countries

He predicts a lot more pain and suffering in the debtor countries if Germany and the ECB continue on their present course, possibly leading to the dissolution of the EU and leaving everyone worse off.

“Many countries have lived through nightmares and survived,” writes Soros. “But the EU is not a country; it is an incomplete association of sovereign states that will not survive a decade or more of stagnation.”