The proposal by the German finance minister, and agreed to by others, that Greece take a five year break from the Eurozone is astounding. Its not so astounding that a man who has been musing on this for years has now tabled it. Schauble has as far back as 2012 been wanting this. What is astounding is that he had the gall to table it at the Eurogroup. Given that the Eurogroup is self admittedly a body with no legal basis or structures, I suppose they can do whatever they want. But when it’s a group of finance ministers musing on something ultra vires we should be concerned. And what they are doing, or proposing to do, is exactly that.
The last paragraph, agreed to by all, is as follows
[In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area, with possible debt restructuring.]
How, legally, would a timeout work? The reality is that throughout all this talk there has been a dearth of legal opinion on how a GREXIT, temporary or otherwise, would happen.
One way, as yet off the table although you just know that its in Schauble’s briefcase, is where a country exits the EU in toto. Under A50 of the Lisbon treaty a country can leave. Theoretically the Greeks outside the EU could euroize, that is to say become like Panama with the Dollar or Montenegro with the Euro and adopt it anyhow. That is unlikely but a possibility. Membership of the Euro is mandatory for all EU members not otherwise excluded but adoption of the Euro is another matter for non EU members.
A possible way to exclude Greece is under article 7(2-3) of the EU treaty but there it would require that Greece were to be in breach of basic human rights as specified in Article 2. In any case this would only suspend voting rights in council etc.
While it might be arguable that the Article50 right to leave the EU extends, even if it is not specified, to leaving the Eurozone, the Article 50 provision was introduced, by the Treaty of Lisbon, AFTER the basic legal structure of the Eurozone was put in place, and thus that argument possibly fails. It may be arguable that the subsidiarity argument also in the Treaties and the right to self determination would overrule but that is not at all clear. The prevailing legal opinion, as per one scholar, is that there is no legal right to withdraw from the Eurozone. This is also accepted by international law experts.
Some have argued a mechanism to leave the Euro is to withdraw from the EU as per article 50 and reenter immediately with a protocol allowing no Euro. While technically this is possible, it is far from clear that it can be done cleanly and easily. It also opens the door to not just the Euro being an a la carte but the whole EU so being
A final possibility is that under the Vienna Convention on Treaties, Article 44, a country can renounce all or part of treaties, providing in the latter case if these are clearly seperable from the rest. As there are non-Euro using EU members this might be feasible but a twist is that not all EU member states are signatories to the Vienna Convention and thus we could have the situation where e.g. Malta could refuse to allow this to happen in its jurisdiction, Greece then being in a Euro with Malta but not others, and of course that negating the whole point.
Article 352 allows the council to pretty much do anything it thinks right to achieve the aims of the treaty but that would require unanimity – would a greek council member vote to GREXIT if that was forced?
The bottom line is this : there is no legal basis for a withdrawal. That is not to say a political one cant be found but lets not pretend that it is founded in any rules. A teutonified Eurozone has screeched and roared about the need for adherence to the rules but now seems intent on making them up as they go along. Allowing this irredeemably puts the EU on a road away from rules and towards rule by the strongest. Small countries such as ourselves might well consider that a bad thing.