The legal possibilities of a Greek exit from the Eurozone
An older post, but still up-to-date.
The long-debated exit of Greece from the Eurozone as a consequence of the current financial crisis has re-emerged in January 2015 when German finance minister Schäuble indicated that a so-called ‘Grexit’ would be a scenario no longer unimaginable for the other Euro member states to cope with.[1] Apart from the economic and political consequences of such an exit from the EMU, the question of the legal feasibility of such a scenario arises as the treaties remain silent on this matter though in general commentators are in agreement that no right to (unilaterally) exit the Eurozone exists.Considering[2] the lack of any treaty provision, it seems that a member state wanting to leave the Eurozone only has two options:[3] 1) either leaving the European Union as a whole and re-entering it or 2) by means of a treaty amendment.
Concerning the first option, the existing treaties do not mention a right to exit the EMU, neither permitting nor prohibiting it; they merely provide for a right to withdraw from the European Union as a whole. Thus, article 50(1) TEU states that: ‘Every Member State may decide to withdraw from the Union in accordance with its own constitutional requirements’. The withdrawal agreement is to be negotiated with the Council acting on behalf of the EU and with the consent of the European Parliament. Failing such an agreement, the withdrawal becomes effective automatically after two years (article 50(2) and (3) TFEU). As EMU membership is inextricably linked to EU membership, leaving the European Union would also automatically mean leaving the EMU. Thus, it seems that a member state wishing to leave the Eurozone could take recourse to this route and leave the EU completely before re-applying for new membership. New member states do not automatically join the Eurozone but remain ‘member states with a derogation’ until they meet the relevant criteria therefor (article 139 TFEU) – if they ever do. Once a newly entered member state is categorized as a member state with a derogation, it can successfully avoid joining the Euro simply by refusing to meet the convergence criteria.
A second possibility to exit the Eurozone would be by ways of a treaty amendment,[4] either introducing a clause on withdrawal from the Eurozone or altering the conditions of Greece’s membership to the EU. Currently, all the member states except for Denmark and the United Kingdom, which have been granted an opt-out,[5] are under a duty to adopt the Euro as their currency as soon as they meet the relevant criteria[6] – a process which according to the former Protocol on the Transition to the Third Stage of Economic and Monetary Union (no longer in the treaties) is of an ‘irreversible character’.[7] Yet, it can be argued that this does not preclude the member states – as the masters of the treaties – to negotiate a withdrawal from the Eurozone by means of a treaty amendment under Article 48 TFEU.[8] This can either be done by introducing a similar clause to article 50 TEU with regard to the EMU, thus providing for a general right to leave the Eurozone. Or alternatively, if such a general right is deemed undesirable, the member states could decide to add a protocol to the existing treaties relating to Greece only, and granting it a similar exception to the one applicable to the UK and Denmark.
Thus, while the treaties do not foresee an explicit right to leave the Eurozone, it nevertheless seems possible to do so through different means. It seems noteworthy to mention, however, that both recourse to article 50 (and 49) TEU and a treaty amendment would require negotiations with as well as the ratification by all member states (not only the ones in the EMU), which can be both lengthy and arduous.
[1] http://www.spiegel.de/spiegel/vorab/bundesregierung-griechenlands-ausscheiden-aus-dem-euro-verkraftbar-a-1011099.html.
[2] C. DAMMANN, ‘The Right to Leave The Eurozone‘, (2013) Texas International Law Journal 48(2), pp. 125-155; H. SCOTT, ‘When the Euro Falls Apart – A Sequel‘, (2012) Havard Law School Public Law & Legal Theory Working Paper Series Paper No. 12-16; P. ATHANASSIOU, ‘Withdrawal and Expulsion from the EU and EMU’, European Central Bank Legal Working Paper series No 10/December 2009.
[3] The possibilities of invoking the clausula rebus sic stantibus under the 1969 Vienna Convention seem to be rather limited due to its strict conditions and have inter alia been discussed here: DAMMANN, supra note 2, pp. 133-137.
[4] SCOTT, supra note 2, p. 9.
[5] Protocol No 16 on Certain Provisions Relating to Denmark and Protocol No 15 on Certain Provisions Relating to the United Kingdom of Great Britain and Northern Ireland to the TEU and TFEU.
[6] See article 140 TFEU for the procedure, which can actually be initiated without the consent of the member state in question.
[7] See also: ATHANASSIOU, supra note 2, p. 28.
[8] As such a treaty amendment would fall within Part Three of the TFEU, the simplified revision procedure would be applicable.