Eurozone Politics

Alexandre Klidonas, Associate Editor, Michigan Journal of International Law

As the Greek parliament continues to approve new austerity measures,[1] two political parties have emerged that advocate the abandonment of the euro currency.[2] Formed in May, the Drachma Five party has called for a return to the drachma,[3] the currency replaced by the euro in 2002.[4] Similarly, the Plan B party, which launched earlier this year, has urged that Greece return to its national currency.[5] The Plan B party’s leader, Alekos Alavanos, has opposed the austerity measures and has advocated that Greece depart from the Eurozone,[6] the term that refers to the seventeen European Union member states that have adopted the euro currency.[7] Mr. Alavanos has stated that leaving the common currency would be a “little shock” but through devaluation of the drachma, the country would benefit from the return of its national currency.[8] The formation of these two political parties comes amid declining support for the euro currency in recent months.[9] 59 percent of Greeks support the euro, down from 70 percent.[10] Negative views of the euro have increased to 38 percent as the number of Greeks who believe that the country is heading in the wrong direction has grown.[11] In light of the growing dissatisfaction with the euro and the formation of political parties calling for a return to the drachma, the question of whether Greece will seek to remove itself from the Eurozone becomes more relevant. Without an amendment to the Treaty on the Functioning of the European Union, there is broad agreement among legal scholars that member states “have no unilateral right to withdraw from the Eurozone while staying in the European Union.”[12] A 2009 study by the European Central Bank concluded that a unilateral departure from the Eurozone without a simultaneous withdrawal from the European Union would be “legally impossible.”[13] The European Commission reaffirmed this position in 2011.[14] Article 50 of the Treaty on European Union grants a member state the right to withdraw from the European Union.[15] Additionally, “any withdrawal from the European Union also includes withdrawal from the Eurozone.”[16] A departure from the European Union would be significant because it is membership with the Union that grants access to European markets and provides free movement of workers and capital from one member state to another.[17] With the growing unpopularity of the euro and the recent formation of political parties calling for a return to the drachma, a unilateral withdrawal of Greece from the European Union in an effort to exit the Eurozone may not be far-fetched. The benefits of remaining in the European Union, once seen as too numerous to give up, may no longer be sufficient to deter such a withdrawal.