MUNICH — Italian Premier Mario Monti said Saturday that the eurozone must avoid stoking deeper resentment among its members as it tackles the debt crisis, while philanthropist George Soros said German-backed austerity measures risk pushing Europe into "a lost decade" or worse.
The chairman of an international group of creditors, meanwhile, warned that Europe must fix Greece's problems or risk "opening up a new Pandora's box."
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.
"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 said at the Munich Security Conference, a gathering of security officials which has an unusually strong focus on financial problems this year.
The debt crisis has "brought back into the European picture misconceptions, prejudices — the north, the south, the large, the small countries — which is extremely dangerous, much more in the longer term perspective than the eurozone crisis itself," Monti said.
"We certainly do not need in Europe to have phantoms of the past coming up again," he added.
Efforts to tackle Europe's debt crisis — shaped to a large extent by Germany, its biggest economy — have drawn criticism for focusing on austerity rather than growth. Most European Union leaders agreed Monday on a German-pushed pact to strengthen budget discipline.
"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.
"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 asserted. "We are now in a process of political disintegration and this will be exacerbated by this policy of austerity."
Monti rejected that portrayal of the situation. He conceded that "we are certainly in a process of growing political resentment among each other, but in fact we are in a process of growing political integration" as a result of the crisis.
As Monti spoke in Germany, worries over Greece — whose troubles kicked off the debt crisis — ran high.
Greece's finance minister, Evangelos Venizelos, said in Athens that negotiations for multibillion-euro bailout deals must be completed by late Sunday. He said negotiations with creditors for a new €130 billion ($171 billion) bailout deal are at "a very crucial stage."
Josef Ackermann — the CEO of Germany's Deutsche Bank who is also the board chairman of the creditor group, the Institute of International Finance — said in Munich that "we are in a make-or-break situation and Greece plays a very important role."
"If we find a solution in the next few days, I think we are on the right track," he said. "Mario Monti does fantastic things in Italy, good things are being done in Spain, Portugal, Ireland — so I think we are getting out of the crisis."
"But we have to fix the Greek problem," he added. "If we see Greece collapsing, then I think we're opening up a new Pandora's box."
"Those who are talking about exiting (the euro) and default are underestimating two things: the collateral damages ... and secondly the contagion," Ackermann said.
The private sector is being "extremely generous" in offering to take what he characterized as "a loss of over 70 percent now" on the value of Greek bonds, Ackermann said.
"I can only ask other constituencies to do the same," he added. He didn't specify whom he meant but calls have been growing for the European Central Bank and others to take losses on their holdings.
Germany has been resisting calls for the public sector to make a further contribution.
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