Tuesday

16th Aug 2022

EU states seek advice on Greece exit scenarios

The European Commission on Tuesday (12 June) confirmed it is giving legal advice on possible capital controls and border checks should Greece leave the eurozone.

"We are the guardians of the EU treaty and we provide info to whomever asks what is possible under European law to cover these scenarios. This doesn't mean we are preparing a particular plan," commission spokesman Olivier Bailly said during a press conference.

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  • Public safety may be a reason for capital controls and border checks in Greece (Photo: Contact)

He was asked whether the commission - as part of the so-called Eurogroup Working Group, comprising eurozone finance ministry officials - is aware of contingency plans being discussed.

"I have not said I am not aware of discussions, but that I was not aware of plans. Some people are working on scenarios, we are providing information on EU law."

Reuters on Monday quoted unnamed officials saying such plans could put limits on cash withdrawals from Greek subsidiaries and reintroduce border controls to prevent large numbers of Greek citizens leaving their country.

"Our role is to say what is possible under EU law, not to draw up scenarios. We are not scriptwriters for disaster movies," Bailly said, adding that the commission's sole concern is to keep Greece in the eurozone.

The spokesman confirmed that capital controls were possible under article 65 of the Lisbon Treaty, but only for reasons of "public order and public security."

Citing EU jurisprudence, Bailly noted that "economic security" cannot be invoked to trigger such a mechanism.

The same is valid for border checks. Member states are allowed to re-introduce temporary controls only in case of threats to public order and security - ranging from terrorism attacks to large football events.

According to Reuters, the Greek contingency plans were discussed in conference calls over the past six weeks.

They reflect growing concerns in the eurozone that the radical left Syriza party will win the elections on Sunday and carry out its promise to cancel the second bail-out, de facto forcing Greece out of the common currency.

Switzerland last month also said it is considering capital controls if the eurozone were to "collapse." "We're preparing ourselves for turbulent times," Thomas Jordan, head of the Swiss central bank told SonntagsZeitung in a recent interview.

A special taskforce has been set up to look at various scenarios, one of which would be controls on foreign capital entering Switzerland.

Meanwhile, a spokesman for the Austrian finance ministry told this website he could not confirm any eurozone contingency plans.

"As far as capital flight is concerned, it is true that there has been a continuous, slow drain of capital out of Greece during the last couple of years. However, the situation has been stable for some time now," spokesman Harald Waiglein said.

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