Friday

22nd Jun 2018

Brussels: 'No one can leave the euro'

  • Expulsion but not withdrawal from the euro is 'conceivable' (Photo: Images_of_Money)

The European Commission on Thursday (8 September) insisted that no member of the eurozone can leave the single currency after Germany and the Netherlands suggested publicly for the first time that such an extreme move should indeed be considered.

However, a European Central Bank legal study from 2009 argues that while voluntary withdrawal is legally not possible, expulsion remains "conceivable".

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Responding to suggestions both from Germany and the Netherlands that countries that do not adhere to strict budget discipline be required to dump the euro, EU economy spokesman Amadeu Altafaj-Tardio on Thursday insisted that there is no debate happening at any level on whether Greece should be kicked out.

"There is no discussion whatsoever on such an eventuality," he told reporters in Brussels.

"Neither exit nor expulsion from the euro area is possible, according to the Lisbon treaty under which participation in the euro area is irrevocable," he added, referring to the European Union’s rule-book.

Earlier the same day, the Dutch prime minister, his economy, finance and foreign ministers outlined proposals for the creation of a specially appointed European commissioner who would be given the power to take over the economy of heavily indebted member states and ultimately kick a state out of the euro.

The same day, German finance minister Wolfgang Schaeuble told Deutschlandfunk radio that the Greek people must decide whether they want to stay members of the currency union.

"I understand that there is resistance among the Greek population to austerity measures," he said. "But in the end it is up to Greece as to whether it can fulfil the conditions that are necessary for a membership of the common currency."

Despite the commission's insistence that withdrawal or expulsion from the euro is not legally possible, the Lisbon Treaty did for the first time introduce a clause describing exit from the European Union itself.

"Any member state may decide to withdraw from the Union in accordance with its own constitutional requirements," article 50 of the text says, going to describe the mechanics of such a move.

In 2009, the European Central Bank produced a legal working paper examining the legal issues surrounding euro and EU exit.

It concluded that euro exit is only possible upon exit from the union as a whole.

"A member state’s exit from European monetary union [EMU], without a parallel withdrawal from the EU would be legally impossible," the paper said regarding a country deciding to exit itself.

But there is a slight nuance to the question of whether a country can be kicked out against its will, noting that this is "next to impossible".

"A member state's expulsion from the EU or EMU, would be legally next to impossible," the author wrote.

The paper goes on to say that expulsion, while "remote" is "still conceivable", however.

"The difficulties faced by some of them in steering clear of excessive budgetary deficits and in complying with their Stability and Growth Pact obligations at a time of acute financial crisis suggest that, however remote, the risk of a non-compliant member state being expelled from the EU or EMU is still conceivable."

Nevertheless, as there is no legal basis for this within the Lisbon Treaty, the paper concludes that while possible, the likelihood of such an event is next to nil.

"In the absence of an explicit treaty mechanism – expulsion from either the EU or EMU would be so challenging, conceptually, legally and practically, that its likelihood is close to zero."

Spectre of fresh EU treaty returns to haunt ‘incomplete’ Europe

So exhausted were they by the struggle by the time the soap opera ended, European leaders then swore it would be very long indeed, perhaps a generation, before the EU treaties would be opened again. But now, in the last few days, as Europe’s economy and the single currency stand on the precipice, these same leaders have begun to eat their words.

Spanish commissioner lashes out at core eurozone states

Spain’s European commissioner has lashed out at core eurozone states in the wake of suggestions from the Netherlands and Germany that heavily indebted members of the single currency could be booted out of the club.

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Analysis

Greece facing post-bailout challenges

Creditors are expected to agree Thursday on a final loan and debt relief measures for Greece. After eight years on an international lifeline, the country will remain under close surveillance - but will have to find a new economic model.

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