Monti warns against stoking prejudices in crisis

MUNICH (AP) — Italian Premier Mario Monti said Saturday the eurozone needs to avoid stoking resentment among its members as it tackles its debt crisis, while philanthropist George Soros said that German-backed austerity measures risk pushing Europe into a "lost decade" or worse.

Monti said at the annual Munich Security Conference that the crisis has brought back into the picture misconceptions and prejudices he called "extremely dangerous." But he also was optimistic that Europe ultimately is pulling closer together in the crisis.

"We have to find not only a solution — and I think we are almost there — to the eurozone crisis," but also a harmonious one, Monti told the gathering of security officials, which has an unusually strong focus on financial problems this year.

Monti's government has been trying to regain investor confidence by cutting public spending and reforming a sluggish economy. Italy's struggle with high borrowing costs is a cause for concern because the country is considered too big to rescue if it gets into deeper trouble.

"Of course we have to go down the path of austerity, but at the same time we must do it in ways that are able to give a reasonable promise of a brighter future," Monti said.

Former financier Soros took a bleaker view of efforts to get a grip on the eurozone debt crisis. Shaped to a large extent by Germany, they have drawn criticism for focusing on austerity rather than growth. Most European Union leaders agreed last Monday on a German-pushed pact to strengthen budget discipline.

"It's Germany that is the creditor, that is calling the shots and is ... imposing austerity that will lead to at least a lost decade for Europe," Soros said.

He called for "stimulus that will re-establish growth .... we are in a trap that we need to escape."

The crisis "is undermining the political cohesion of the European Union, and it can potentially destroy the European Union," Soros said.

Josef Ackermann, the CEO of Germany's biggest bank, Deutsche Bank AG, questioned whether anyone would buy a share in Europe if it were a company.

"Probably not," he added, because different people on the continent are constantly expressing different views — "we have to stop this cacophony."