In the past few months, there has been increasing attention paid to the idea of Greece leaving the Eurozone. Last year this notion was present on the periphery, but the announcement of a parliamentary re-election and the severe resistance to austerity exhibited by Greece has led many more politicians and economists to see the possibility of a Greek exit, or a ‘Grexit’ as it has been colloquially termed, as eminent. These sentiments have been manifest in the business world in the form of contingency plans created by large and small companies alike.
While there has been a great deal of publicity on the economic side of things, namely on how Greece is going to survive and what it is going to mean for Europe, what many people have overlooked is the legal side of a potential Greek exit. The problem that exists with such an action is that the Maastricht Treaty of 1992, which created the monetary union of the Eurozone, does not accommodate a withdrawal from the Euro. There is one existing legal way in which Greece can exit the Eurozone. The exit clause to the Maastricht Treaty was provided by the Lisbon Treaty of 2007, which was, in effect, an amendment to Maastricht. Article 50 of the newly consolidated European Union Treaty states that an EU member state may negotiate its exit from the European Union. The problem with this clause is that it facilitates the exit from both the political and monetary union rather than simply allowing Greece to abandon the Euro. However, in theory Greece could leave the EU and then renegotiate its entry without taking on the Euro, much like the current position of the United Kingdom. Still, there would be certain risks if this action were taken, such as the possibility that Greece would not be accepted back into the EU, given that a consensus in ratification is demanded for any new adhesion.
An interesting alternative route that Greece can potentially exploit is the Vienna Convention on the Law of Treaties created in 1969. This treaty provides articles defining conditions in which a country may be authorized to break an agreement, or abstain from following certain clauses in the agreement. Here are a few articles in the treaty which may allow Greece to exit from the Eurozone without leaving the EU:
- Article 44: States that a country can choose to refrain from certain clauses of an international treaty, under specific conditions. In order for this article to be called upon, the clauses that are being denounced must not be intrinsically tied to other parts of a treaty and the following of these clauses must not be the reason why other states signed onto the treaty. Since there are certain countries in the EU that do not use the Euro, there is a good chance this article can in fact be mentioned.
- Article 61: Permits a country to justify leaving a treaty because of the impossibility of keeping the terms of the agreement.
- Article 62: Allows withdrawal from a treaty because of a foundational change in circumstances when compared to the period when the treaty was signed.
The Vienna Convention would be a viable weapon for Greece’s exit from the Eurozone and not the European Union if it was ratified by all the EU states. As it is now, France, Malta, and Romania have not signed the convention and as such there is a significant amount of uncertainty with invoking its postulates in international legal proceedings.
Another way Greece can consider leaving the European Union is to proceed through the bureaucracy of altering a treaty. Greece would formally request to alter the Maastricht Treaty, perhaps amending article 50 to have a postulate about leaving just the monetary union. The problem with this method is that Greece would be publicly announcing its plan to depart from the Euro, risking a run on banks. Furthermore, the process would be a lengthy one, requiring research and debate, and time is something that Greece likely won’t have if it is at the point of proclaiming its intentions to leave the Euro.
Although Greece’s future is not clear, what is evident is that if the country departs from the Eurozone the action will be unprecedented, and thus the procedures that it adopts to perform this action will be a first in the world of international relations.
For your reference, here are the three treaties mentioned in the article:
Treaty of Maastricht, 1992: http://www.eurotreaties.com/maastrichtec.pdf
Treaty of Lisbon, 2007: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2007:306:0001...
Vienna Convention on the Law of Treaties, 1969: http://untreaty.un.org/ilc/texts/instruments/english/conventions/1_1_196...