Monday, 6 July 2015

Greece Prisoner of Euro, the Treaty Does Not Provide to Exit

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After the landslide victory of the 'No' in the referendum greek, some see the exit from the euro closer. But it is not: the way the euro is a one-way street, and leave the common currency is currently legally impossible. Athens is so, like it or not, 'prisoner' of the euro. To adopt the euro, they explained in Brussels, was a decision "irrevocable" states, and there is no clause in the Treaty that provides the path to leave the single currency. And change the treaties take years.

This means that Greece can not be expelled from the Eurozone, even if negotiations continue to reject offers of creditors. There is, however, 'another risk, closer, renamed' Graccident 'accidental or an exit from the euro. Such an event would occur with an 'accident' (or default) of Greece if events were to get out of hand. For example, if the ECB decides to close the emergency liquidity (ELA) to Greek banks, the reopening would find themselves short of 'cash'. In that case the banking system would collapse quickly, taking with him all over the country. It then would produce a 'default' within the euro zone, never happened before, but that does not automatically entail an exit from the Eurozone. Scenarios, then, are virtually all open: from Greece that is printed by the euro alone to supply the banks, the issue of a parallel currency.

With a default in the eurozone it would be in "uncharted waters", as they were defined by the same Mario Draghi. If there is no possibility to leave the euro area, the Treaty of Lisbon, which entered into force in December 2009, has instead introduced the so-called 'exit clause' that allows you to leave the European Union. The conditions for the release, said the treaty, to be negotiated with partners and then approved by the European Parliament. Athens could then be 'pushed' to make such a decision if the partners of the euro area decided to take a hard line in negotiations, offering aid in return for conditions unsustainable.

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