Ireland got a 'raw deal' in the euro crisis, global investor George Soros has said, drawing comparisons with Iceland as ECB president Mario Draghi said the central bank's loose monetary policy was helping the euro zone return to growth.
Mr Soros was attending the World Economic Forum in Davos, Switzerland, where business and global leaders are gathering for the five-day event.
Speaking on RTÉ Radio One, Mr Soros said Iceland had fared better with its banking troubles.
"If you compare the fate of Ireland with the fate of Iceland, Iceland is actually flourishing, although it had a bigger banking crisis than ireland in relation to its population, because it simply did not accept the liabilities of the banks," he said. "But Ireland was not so lucky."
He said the "minimum" of demands on Irish debt would probably be met.
Mr Draghi said the "positive contagion" on financial markets is not yet feeding into the economy at large but the euro zone should see recovery in the second half of the year.
"The level of economic activity is in the process of stabilising at very low levels ... We see a recovery in the second half of the year," Mr Draghi said in Davos. "All the indices point to substantial improvement of financing conditions."
But Mr Draghi tempered any thoughts of normalisation, saying that the economy at large was still troubled.
"It is a situation where you have positive contagion on the financial markets and for the financial variables, but we don't see this transmitted to the real economy yet."
Doubts over the health of public finances and banks in several countries has led to large differences in lending rates across the union, with healthy northern countries seeing record-low rates while consumers in southern Europe face much higher costs.
Mr Draghi noted the positive impact of the central bank's announcement of its new OMT programme to buy government bonds of indebted countries. It has helped removed worst fears of the common currency area falling apart.
But the central bank will not be satisfied before the real economy is also aided by central bank actions, Mr Draghi added.
"At the end of July, we announced the OMT programme, which turned out to be very helpful in removing the tail risk for the euro as such," Mr Draghi said.
"Are we satisfied with that? I think, to say the least, the jury is still out, because all in all we have not seen equal momentum on the real side of economy, and that's where we have to do much more."
Yesterday, Mr Soros told attendees the euro is here to stay and will gain as other nations seek to devalue their currencies.
Mr Soros, who made $1 billion shorting the British pound in 1992, said that while the causes of the euro crisis haven't been solved, the acute phase of the turmoil is over.
Germany will always do "the minimum" to preserve the currency, he said, and forecast a "tense" two years for the euro region.
Yields on sovereign debt of countries from Spain to Greece have fallen since European Central Bank president Mario Draghi announced an as-yet-untapped bond-purchase plan in September last year. Mr Soros, reiterating his view that austerity is the wrong policy at this time, said the German insistence on tight fiscal and monetary policies means the euro will appreciate as other countries pursue more expansive policies, a situation that may lead to a currency war.
"Currencies have been remarkably stable in the last few years," he said. "Now there is the making of more fireworks, more volatility."
Additional reporting: Agencies
