Monday, May 14, 2012

Greece, euro exit and the drummer in the band

by Luke Baker


May 14, 2012

A year ago, it was nearly impossible to get a diplomat in Brussels to talk about the possibility of Greece leaving the euro zone. Now, it's the opening to most conversations.

But while it may have become commonplace to discuss a Greek exit (or Grexit as many economists call it), the practicalities and implications of it are far more complicated and daunting than many outside observers acknowledge.

It's not even clear Greece can leave the common currency. The EU's Lisbon Treaty doesn't make any such provision - it only considers a country leaving the European Union. And in theory a country can't be forced out of the bloc - it has to decide of its own accord whether it wants to stay.

Yet even that is not entirely set in stone. Asked whether it was legally possible under the EU treaties to force Greece out of the 27-country union, one euro zone diplomat replied:

"In theory it's not, but it's a bit like the drummer in the band - if the band doesn't like the drummer, there are ways of getting rid of the drummer."


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