The Right to Leave the Eurozone

Abstract

The Eurozone is facing an existential crisis. Greece has been teetering on the verge of national insolvency. Repeated interventions by the European Union and the International Monetary Fund have so far allowed Greece to avoid this fate, but no one can predict for how long. Portugal, Ireland, and Spain have also had to rely on rescue packages by the European Union, and it remains unclear to what extent their economies will weather the crisis.

One of the options discussed in this context is for individual countries to leave the Eurozone. Initially, this option was brought into play solely for countries like Greece that were at the center of the economic crisis. Some believe that such countries could profit from leaving the Eurozone because a subsequent devaluation of their national currencies would make it easier for their economies to become competitive again.

More recently, however, it has been suggested that some of the more stable EU Member States — most notably Germany — might also want to leave the Eurozone. The chief attraction of such a move would be to avoid being caught by mountainous liabilities generated by ever-new rescue packages

Against this background, a crucial question is whether the Member States have a unilateral right to exit the Eurozone while staying in the European Union. In the existing literature, this question has so far been answered with a resounding, “no.” By contrast, this Article takes the opposite position. More specifically, my argument has two steps: First, I show that, as a doctrinal matter, the case against a right to withdraw from the Eurozone is far from compelling. Second, I demonstrate that, under certain conditions, a right to leave the Eurozone is desirable as a matter of legal policy.

Keywords: Eurozone, euro, European Central Bank, Eurocrisis, euro crisis, exit, Grexit

JEL Classification: E00