GREXIT: A Preliminary Review of the Legal Literature on Withdrawal from the Eurozone

GREXIT: A Preliminary Review of the Legal Literature on Withdrawal from the Eurozone

Abstract:

Following the inconclusive results of the Greek election on May 6th 2012, talk of a Greek exit from the Eurozone (known as Grexit in the financial press) has dominated international media. A lot of discussion however by policy makers, political and economic commentators in Greece and internationally ignores the legal realities of an exit from the Eurozone. This short paper offers the results of a preliminary literature review on the issue of withdrawal from a legal perspective. It is hoped that this will offer some context to debates as to the feasibility of a Greek exit. The analysis here suggests that the legal framework shows no obvious route out of the Eurozone. The only technically secure way to leave the Eurozone seems to be via unanimous agreement to Treaty changes at EU level, something logistically and politically challenging. The Greeks cannot choose to leave unilaterally, nor can their partners choose to expel them from the Eurozone. For Greece to leave, both the Greeks and their partners need to wish to terminate the relationship. Even then the legal and institutional barriers to exit remain significant.

via GREXIT: A Preliminary Review of the Legal Literature on Withdrawal from the Eurozone by Ioannis Glinavos :: SSRN.

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One thought on “GREXIT: A Preliminary Review of the Legal Literature on Withdrawal from the Eurozone

  1. hcparekh

    The Greek Tragedy

    With a public debt of $ 320 Billion , and unable to raise fresh loans ( to pay off old loans ) , Greece is on the verge of bankruptcy – and exit from Euro-Zone

    Dire predictions are being made by the Economists / Bankers / Politicians etc , as to what will be the impact on :

    * Other debt-ridden countries like Portugal / Italy / Spain etc

    * Economies of the European lender-countries

    * Balance Sheets of Financial Institutions ( eg : IMF / European Common Bank etc )

    * Economies of Developing countries , unable to export to Europe

    But hardly anyone seems to be asking :

    * Why did Greece land itself in such a trouble ?

    * Will Spain / Portugal / Italy – and other debt-ridden countries – soon find themselves in a similar condition ?

    You don’t need to have a Ph D in Economics to know the obvious answer !

    Greece finds itself in this trouble for the same reason that a person would , if he starts spending far in excess of his income

    Usually by borrowing lots of money from friends / relatives , who , oblige without asking :

    > What is your current income ? What is your current savings ?

    > What is likely to be your future income ?

    > What do you need this loan for ? When – and how much – will you repay ?

    If there are no satisfactory answers , then you know that either the borrower has no capacity to repay

    or , ( worse ) , no intention to repay !

    Apparently , Greeks have been living beyond their means ( income ) for many many years

    Generation after generation of Greeks thought :

    > Let us enjoy today . Why worry about tomorrow ? Let our children worry about that !

    The 20+ something Greek youth ( of which , 26 % are unemployed ) , have ” inherited ” that debt of $ 320 billion , from their fore-fathers

    Hence , it is reasonable for them to say :

    ” Hey , I did not borrow / spend all that money ! Why should I be made to suffer for the sins committed by my parents / grand parents ? ”

    Problem is not that the lenders cannot accept this argument and agree to , even write-off $ 320 billion

    All that the lenders are telling the Greek Youth ( thru Greek Government ) , is :

    ” No problem , but no more money either ,

    Just learn to live within your own income . Learn to fend for yourself .

    Stop living on borrowed time ( – and borrowed money ) ”

    Here , there is a lesson for us Indians , as well !

    —————————————————————————–

    hemen parekh / 29 June, 2015

    B2BmessageBlaster

    Reply

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