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posted by
martyb
on Monday July 06 2015, @08:57AM
from the getting-what-you-asked-for-may-not-be-getting-what-you-want dept.
from the getting-what-you-asked-for-may-not-be-getting-what-you-want dept.
The Greeks voted no to the European Union's terms, despite warnings from the EU that rejecting new austerity terms would set their country on a path out of the Eurozone. 62% voted "No" while 38% voted "Yes".
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If the thunder don't get you, then the lightning will.
(Score: 2) by moondrake on Monday July 06 2015, @01:07PM
Correct. They could do this, but as I said, its their decision, not the EUs decision (I was arguing against the idea that they could somehow be booted out). But if they did, it would not be really leaving the monetary union, just be a stop-gap measure that allows a local economy. These notes will devaluate quickly and nobody outside Greece would accept them. After a year, the people may realize their 100000000 drachma pension is worth far less then the current proposed cuts. Although it might actually improve the economy somewhat in the longer term, I am not sure the headaches of a double economy is worth it.
Interestingly, they could avoid this by printing euros instead, as they probably have the equipment. This would create quite a bit more turmoil as it would amount to basically counterfeiting on a national scale.
(Score: 1, Insightful) by Anonymous Coward on Monday July 06 2015, @01:15PM
They are in blatant and willful violation of fundamental contracts of the Eurozone, and the other Euro countries could dismiss these contracts for cause, which would remove any rights out of these contracts from Greece and thus effectively remove Greece from the Eurozone. Nobody could stop Greece from using the Euro as their national currency, but that's not why they want to stay in the Eurozone.
(Score: 2) by moondrake on Monday July 06 2015, @02:58PM
My point was they cannot dismiss anything. There is simply no legal basis for doing so. They can stop providing money, but they cannot actually remove Greece from the eurozone.
But fair enough, I did not provide sources, so your assertion is as good as mine. Therefore, if you got time (its lengthy) read: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1517760 [ssrn.com]
Failure to honor the contract, as you mention, may have consequences, such as the suspension of some rights under the treaty (like Council voting rights). But expulsion from the union is simply not part of that.
The only legal way to indirectly remove Greece is to convince Greece to voluntarily leave the union.
Its seems you are hinting at "effectively" removing Greece (and "why they want to stay"). I am not sure what that means though. Sure, we can stop providing money for their banks. But as long as they are in the eurozone, their economy (luckily small) will matter for the rest of the eurozone. What's more, Greece may actually try to legally challenge the fact that they are cut off from support. I am not sure how that would pan out, but it is not at done deal for the rest of Europe (they do have some rights, even although they are in "willful violation" as you put it).
(Score: 0) by Anonymous Coward on Monday July 06 2015, @03:50PM
The objections against the possibility of expulsion focus on the lack of applicable provisions in the treaties. That's not what "dismiss for cause" is about. There are no contracts that cannot be undone even if it is no longer reasonable that one party abide by the contract in the face of violations by the other side. If the contract specifies remedies in case of violations, then certainly these remedies must either have been applied or be deemed unreasonable in the face of intolerable violations. The mere fact that the EMU treaties don't specify conditions and procedures for a dissolution of the treaty however does not mean that all parties to the treaties are forever bound by it, no matter how flagrant other parties violate it.
It is actually less likely that Greece can legally decide to exit the EMU on its own, because there are no provisions for that, and unlike the rest of the Eurozone, Greece can not claim that the other side flagrantly and intolerably violated the treaty it wants to leave. On the other hand, nobody is going to go to war over Greece leaving the EMU, so effectively they can leave if they want to. That's politics: If enough people agree, anything is possible.
(Score: 2) by moondrake on Tuesday July 07 2015, @11:01AM
I think you misunderstand the basis on the contracts that gave rise to the EU. It can be more or less described as a voluntary collaboration. Nobody rules, all are equal (well, formally at least). Provisions for violations are usually focused at helping the country to comply, not putting them into a position where they no longer have to comply. Its a fundamental different philosophy. Use of force is inconceivable within this framework. Its a little bit like raising young children. If they fail to honor their contract, you (are supposed to) try again.
If any nation, or group of nations, would impede on another countries right (they have rights under the treaty), it would spell the end of the EU as an institution.
You may also misjudge the willingness of countries to agree with such an action, as its sets a precedent (and they may be next).
But you do not have to take my word for it, just look at the news today of all countries stressing they want to keep Greece in (and even retracting pre-referendum statements). All of that talk is what I would call politics (politics is not about agreeing imho). I predict that there will be a deal, watered down in the eyes of many EU taxpayers, but sold as the best possible solution. An unilateral expulsion is simply not going to happen. They will probably work out some special status for Greece.
About leaving on its own: There are provisions for exiting the EU, and, it can be argued, by extension the EMU. But I think its unlikely for them to do that.
(Score: 0) by Anonymous Coward on Tuesday July 07 2015, @11:42AM
I didn't say it's desirable, just that it's possible. The Eurozone can not perpetually tolerate an unwilling member being in flagrant violation of the treaties. Expulsion by law or by coercion is a possibility, whether Greece or anyone else likes it or not. Consider the situation: Seeing the "success" of Syriza's referendum, Podemos will try the same in Spain (election later this year) and Hollande will want less pressure on France (election in 2017). Italy already has a left-leaning government and is looking for an opportunity to relax the pressure on its finances as well. So it's open season on all fiscally responsible countries, but mostly on Germany due to its size and current economic power. This is not going to work. Germany can not bail out Greece, Spain, France and Italy. The tensions will tear the EU apart.
What are the options? a) Greece stops its tantrum, abides by the rules, reforms its state apparatus and becomes a good European citizen. The other countries take note and don't try anything funny themselves. b) Greece does not come to its senses, the Eurogroup does not give in, and Greece exits. The other countries take note and don't try anything funny themselves. c) Greece gets away with it, the Eurogroup grants a haircut and agrees to more money for empty promises, open season on Germany, EU breaks apart, everybody loses.
Option c isn't acceptable, so a haircut is not an option and neither is more money without reforms (not just promises of reforms). So it's option a or b. How likely do you hold option a? That leaves b, Grexit. If it has to be possible, it is possible.
(Score: 2) by cafebabe on Saturday July 18 2015, @08:43AM
Currency union without full political union never works. Regardless, from the present situation, a viable solution might be a currency union for the Southern European tourist economies of Portugal, Spain, Italy and Greece. However, even that may only delay revolution or war.
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(Score: 2) by theluggage on Monday July 06 2015, @02:14PM
Correct. They could do this, but as I said, its their decision, not the EUs decision
Its a decision that the EU could force upon Greece by pulling the plug on the Greek banks' life support. Greece could then "decide" between reverting to a barter economy, declaring the leaf as the unit of currency or printing
IOUsnew currency (easier to regulate and less seasonal than leaves).Also, so say a critical mass of EU politicians decide to chuck Greece out of the Euro. OK, so its against the treaty, but who ya gonna call? The Euro wouldn't have got started if the EU had actually followed their own rules on the entry conditions.
But if they did, it would not be really leaving the monetary union
That's probably how the Germans would spin it, yes...
(Score: 2) by moondrake on Monday July 06 2015, @03:06PM
>Also, so say a critical mass of EU politicians decide to chuck Greece out of the Euro. OK, so its against the treaty, but who ya gonna call?
There are courts in Europe. And they will probably act. Apart from that, blatantly disregarding their own treaty is not going to do wonders for the already mediocre EU reputation. Disregarding court orders would be enough to simply forget about the EU everywhere. I think its not a reasonable way for the EU to go.
Interestingly, printing (or picking) and using an alternative currency is, under the EMU treaty, illegal. But in this case, I do not think Greece politicians would care overly much.
An interesting opinion I read a couple of days ago is that the EU could claim Greece was actually never legally part of it (as they cheated to pass the requirements many years ago). Even although this is true, courts generally do not fall for such beautiful arguments though.
(Score: 2) by mojo chan on Tuesday July 07 2015, @10:33AM
Like any lender, the EU doesn't want Greece to default or switch to another currency or do anything that will result in its debts being written off. If Greek banks collapse then other EU countries will have to pay out to their citizens to compensate them (in the UK the scheme protects you up to £75k per bank). There are all sorts of very negative consequences, so they will try hard to find a deal that doesn't screw themselves.
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(Score: 0) by Anonymous Coward on Monday July 06 2015, @02:22PM
Greece has the equipment to print 10 EUR notes and mint the Greek variants of the coins. Other denominations are printed in other countries. Printing money without the ECB's permission would be dealt with swiftly.
(Score: 0) by Anonymous Coward on Monday July 06 2015, @08:21PM
The obvious is that everybody else leaves together.
Better yet, first rename the old currency to "Greeko" or similar, then leave and create a new Euro.
The traditional way is simply war. It's been done numerous times throughout history. Drop the arrogant "this time is different" and realize that all parts of the world are destined for repeated wars. They might as well start one while they have a good reason.
Europe can form a new nation w/o Greece. This was treason when the USA was formed, both ditching the king and again later when the constitution was signed, but that didn't stop anybody. It can work for Europe too.
Europe can declare an emergency, convict Greek politicians of crimes, and send in German or French commandos to arrest/kill the politicians.