The European Citizens’ Initiative & Greek debt: An unlikely combination

Anastasia Karatzia, Lecturer in Law, University of Essex

Introduction

It is not every day that we see CJEU judgments on the European and Monetary Union (EMU). A simple search on Curia with the words ‘Economic and Monetary Policy’ results in relatively few cases including a couple of seminal judgments published in the past five years, such as Pringle and Gauweiler (discussed here), which relate to measures taken for the management of the Eurozone crisis. One of the results of this search is the case of Anagnostakis v Commission, which challenges the refusal of the Commission to register Mr. Anagnostakis’ proposed European Citizens’ Initiative (ECI) ‘One million signatures for solidarity’.

Mr. Anagnostakis submitted his proposed Initiative to the Commission in July 2012. According to the text of the proposal, the objective of the Initiative was the establishment, in EU law, of a principle of ‘the state of necessity, in accordance with which, when the financial and political existence of a Member State is threatened by the servicing of abhorrent debt, the refusal to repay that debt is necessary and justifiable.’ The proposed ECI mentioned Articles 119 - 144 TFEU (the Treaty provisions on EMU) as the legal basis for its adoption. In September 2012, the Commission refused to register Mr. Anagnostakis’ proposal on the ground that the proposal did not fulfil the conditions of Article 4(2)(b) of the ECI Regulation, as it ‘fell manifestly outside the scope of the Commission’s powers to submit a proposal for the adoption of a legal act of the Union for the purpose of implementing the Treaty’.

The letter of refusal sent to the organiser stated that the Commission had examined the Treaty provisions referred to in the proposed ECI, in particular Article 136(1) TFEU ‘and all other possible legal bases’, before concluding that the proposed Initiative should be refused registration. On 11 October 2012, Mr. Anagnostakis challenged the refusal of his Initiative, claiming that the Commission could have registered the ECI on the basis of Article 122(1), Article 122(2), Article 136(1)(b) TFEU, and rules of international law. The General Court found that the Commission had not committed an error in law by refusing to register the proposal and thus dismissed the case. It also ruled that the Commission had complied with its obligation to state reasons, after examining this procedural ground on its own motion.

The applicant appealed the judgment of the General Court, and the European Court of Justice (ECJ) delivered its judgment on 12 September 2017. This commentary, which is the third in a line of posts in ‘EU Law Analysis’ on ECI-cases (see earlier comments on the TTIP/CETA and Minority Safepack cases), will focus on the ECJ’s judgment, which is the first and currently the only ECJ judgment relating to an ECI. Interestingly, the judgment was delivered by the Grand Chamber, possibly because of the novel nature of the subject matter, or (/and) because of the politically sensitive nature of the Initiative.

In addition to this first ECI judgment, the Commission’s Proposal for a new ECI Regulation, was recently published and was presented earlier this week (28 November) by the First Vice President Timmermans to the European Parliament. The commentary will conclude by briefly looking at a specific aspect of the Commission’s Proposal, namely the suggested formalisation of the partial registration of an ECI.

The judgment of the European Court of Justice in Anagnostakis

The appeal consisted of four grounds which were classified into two groups (as suggested by the Advocate-General’s opinion). The first group of arguments concerned the procedure in which the Commission made its Decision. The appellant challenged the finding of the General Court that the contested decision satisfied the Commission’s requirement to give reasons under Article 296 TFEU. The second group concerned the substance of the Decision: the appellant complained that the General Court misinterpreted Article 122 TFEU, Article 136(1) TFEU, and rules of international law in finding that the Commission’s assessment of Article 4(2)(b) of the ECI Regulation was correct.

The Commission’s obligation to give reasons

According to the appellant, the General Court’s assessment of the Commission’s duty to state reasons was faulty. The General Court wrongly held that the Commission’s mere reference to Article 4(2)(b) of the ECI Regulation in its Communication was a sufficient reason for the refusal of the proposed ECI. Simply stating that an ECI proposal was refused on the basis of Article 4(2)(b) of the ECI Regulation did not actually explain why the Commission manifestly lacked the competence to register the proposal.

The ECJ’s assessment of this ground of review is clear and consistent with the case law on Article 296 TFEU, specifically expressed in the context of the ECI in Article 4(3) of the ECI Regulation. The Court started by referring to Article 11(4) TEU (i.e. the legal basis of the ECI together with Article 24 TFEU), characterising the ECI as one of the instruments related to ‘the right of citizens to participate in the democratic life of the Union,’ (para 24) stipulated in Article 10(3) TFEU. The Court referred to well-established case law on Article 296 TFEU, according to which an EU institution’s statement of reasons must be assessed by reference to the circumstances of the specific case, taking into consideration the wording of the statement as well as the context and all the legal rules governing the matter in question (para 29). It stressed that the purpose of the duty to give reasons is to enable the person concerned to understand why the decision was taken, and to enable the competent Court to exercise its powers of review.

The Court then went on to consider the General Court’s finding that the Commission had complied with its obligation to state reasons (paras 31-43).The main message of the Court here was that a more detailed statement of reasons by the Commission would only be required if the ECI proposal itself was more detailed. The brevity of the proposed ECI, as well as the general reference made to Articles 119-144 TFEU and the lack of an explanation of the link between those Articles and the content of the proposal, justified the brevity of the contested Decision.

In light of the format of the proposed Initiative, the Commission was entitled to assess the proposal predominantly on the basis of Article 136(1) TFEU (a general power to adopt legislation relating to EMU), which was the least irrelevant Article on which the proposed ECI could have relied. Moreover, there is no obligation on the Commission to justify its assessment of all 26 proposed legal bases or to explain why any other provision of the TFEU was irrelevant. In its assessment, the Court took into account the fact that the General Court was eventually able to review the substance of the Commission’s decision, which, as mentioned above, is one of the underlying objectives of imposing on the EU Institutions a duty to give reasons in the first place (para 40).

In line with the General Court ruling in Minority Safepack, the ECJ in Anagnostakis supported the view that that the Commission would have to publish a more detailed statement of reasons only if the organisers had given more detailed information on the connection between the recommended legal bases and the content of the proposed ECI (para 37). Future ECI organisers should therefore be mindful of the fact that the format of a proposed ECI itself – including the details in the text of the proposal and the Annexes attached to it – is a determining factor of the extent of the Commission’s obligation to give reasons for rejecting a proposed Initiative. This approach might refuel concerns regarding the ability of grassroots organisers to put together detailed explanations of the suitable legal bases for their proposals, not least when these proposals have to do with matters that are as complicated as the EMU.

On the substance of the case

With regard to the substance of the case, the appellant argued that the Commission should have registered the proposed Initiative on the basis of Articles 122, 136(1) TFEU, and rules of international law. The latter argument, which was examined last, was the one most swiftly rejected by the Court: a principle of international law cannot be a legal basis for an initiative by the Commission. According to Article 5(1) and 5(2) TEU, the Commission can only act within the limits of the competences conferred upon it by the Treaties, and the existence of a principle of international law ‘would not suffice as a basis for a legislative initiative’ (see paras 95-103).

Interestingly, before delving into the substance of the matter, the Court considered the scope of judicial review that it could carry out in the case at hand. It clarified that a review of the merits of the General Court’s decision can only be made on the basis of the information provided at the time of the request for the Initiative’s registration. As such, the Court would not take into account any clarifications made by the appellant in the appeal at hand. After this preliminary observation, the ECJ examined the appellant’s arguments concerning Articles 122 and 136(1) TFEU.

The Court first examined whether Article 122 TFEU could have been an appropriate legal basis for the proposed ECI. It reiterated that Article 122(1) TFEU allows the Council to decide, ‘in a spirit of solidarity between Member States’, upon measures appropriate to the economic situation, especially if the Member State is facing severe difficulties in the supply of certain products in the area of energy. It confirmed the finding of the General Court in first instance, which had cited Pringle, that Article 122(1) TFEU ‘does not constitute an appropriate legal basis for possible financial assistance from the Union to Member States who are experiencing, or are threatened by severe financing issues’ (para 69). According to the Court, it did not matter that Pringle concerned the European Stability Mechanism, which was not the focus of the proposed ECI; the point remained that Article 122(1) TFEU does not apply to measures aiming to ease a Member State of its financial difficulties (para 70).

Subsequently, the ECJ also dismissed the appellant’s argument that, contrary to the General Court’s decision, Article 122(2) TFEU could be an appropriate legal basis for the ECI. The provision allows the Council to authorise financial assistance from the EU to a Member State which is experiencing severe difficulties or a serious threat of severe difficulties caused by natural disasters or exceptional circumstances beyond its control. Once again, the ECJ referred to the case of Pringle where it had ruled that Article 122(2) TFEU cannot be used as the basis for the establishment of a general and permanent mechanism of non-repayment of debt (para 75). Since the ECI proposal suggested the deletion of debts owed by the Member States to both the EU and to public and private, natural or legal persons, it could not fall within the meaning of Article 122(2) TFEU, which concerns only financial assistance provided by the EU and not by the other involved persons (paras 76 and 77).

Finally, the ECJ confirmed the finding of the General Court that Article 136(1) TFEU cannot be used as a legal basis for the establishment of the principle of the state of necessity in EU law. According to the Court, the adoption of a measure such as the one suggested by the proposed Initiative cannot be seen as ‘economic policy guidance’ as envisaged by Article 136(1)(b) TFEU. To the contrary, the mechanism proposed by the ECI would replace the free will of contracting parties by allowing for the unilateral writing-off of sovereign debt (paras 90-91).

Overall, it is notable that the ECJ dismissed a number of the applicant’s arguments under each ground of appeal because of the limited scope of review in the context of the case at hand. On appeal, the ECJ can only review the findings of law on the case put forward by the parties in the case before the General Court. As such, a number of the arguments put forward by the appellant were not assessed on their merits, leaving a number of questions unanswered by the Court in this occasion. The first question is whether a Member State facing severe financing difficulties can invoke the so-called ‘state of necessity’ to receive debt relief not unilaterally, but subject to conditionality laid down by the Commission (paras 71-73). The second question is whether the Initiative could be adopted on the basis of Article 136(3) TFEU in conjunction with Article 352 TFEU (the ‘residual powers’ clause). Besides the procedural point concerning the inability of the ECJ to rule on the above two questions on appeal, one might also wonder whether the ECI-case of Anagnostakis would have been an appropriate occasion for the ECJ to make any bold declarations on the issue of a Member State’s debt relief.

The third question left open was whether the Commission should have partially registered the proposed Initiative only to the extent that the proposal suggested the relief of the debt owed by a Member State to the Union. The ECJ did not examine whether the Commission should have registered this interpretation of the proposal. As a more general observation, we should note that the procedural question of whether partial registration by the Commission is possible has now become redundant. Earlier this year, the Commission partially registered the Minority SafePack ECI while, as we will see below, the Commission’s Proposal for a New ECI Regulation specifically refers to the possibility for the Commission to allow partial registration of a proposed Initiative.

Partial Registration of an ECI under the Commission’s Proposal for a New ECI Regulation

Five days after the ECJ’s decision in Anagnostakis, the Commission published its ‘Proposal for a Regulation of the European Parliament and of the Council on the European Citizens’ Initiative’, which suggests the adoption of a New ECI Regulation to replace Regulation 211/2011. In the proposed ‘New ECI Regulation’, the legal admissibility test has been moved from Article 4 to Article 6. The newly suggested provision retains the essence of the current procedure: organisers may only start collecting signatures supporting their ECI after they have submitted their request through the register (Article 6(2)), and the Commission has checked that the proposal satisfies certain legal and procedural criteria (Article 6(3) and (4)) and has registered the proposal (Article 6(1)).

Under the New ECI Regulation, Articles 6(3)(d) and (e) maintain the two legal criteria of the current ECI Regulation: a proposed Initiative will not be registered if it is manifestly abusive, frivolous or vexatious, or if it is manifestly contrary to the values of the EU (see Article 4(2)(c) and (d) of the current ECI Regulation). Perhaps the most notable changes are included in Articles 6(3)(c) and Article 6(4) of the New ECI Regulation compared with the current Article 4(2)(b) of the ECI Regulation. Article 6(3)(c) states that the Commission shall register a proposed initiative if ‘none of the parts of the initiative manifestly falls outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties’. This Article should be read in conjunction with Article 6(4), which allows for the partial registration of an ECI by the Commission.

To put it simply (or, at least, as simply as possible), if the Commission considers that only parts of a proposal fall within its competence to propose a legal act, it has to send the proposal back to the organisers within one month, together with the reasons behind its assessment. The organisers then have the possibility – and the responsibility – to change and resubmit, to maintain, or to withdraw their initial proposal. It is not very clear why organisers might want to maintain a rejected proposal, which in all likelihood will simply be rejected again by the Commission. In case the organisers decide to change their proposal, however, they would have the responsibility of submitting the necessary amendments to the Commission. After receiving the amendments, the Commission would have one month to assess the new information and to either register, partially register, or reject the ECI (Article 6(4)).

Partial registration of an ECI would thus be formalised in the sense that the Commission would have to check if ‘a substantial part of the initiative including its main objectives’ does not manifestly fall outside the framework of the Commission’s powers to submit a proposal for a legal act. The proposed Regulation does not define what is to be considered ‘a substantial part’ of a proposed Initiative. Not only that, but the proposal shifts the burden on the organisers to re-consider their initiative and re-submit to the Commission, instead of obliging the Commission to specify which parts of the initial ECI proposal it can maintain for the purposes of registration. It will be interesting to see how the European Parliament will react to this, and the rest of the changes to the ECI legal framework proposed by the Commission in the New ECI Regulation, especially since MEPs have been advocating for a more user-friendly ECI in their contributions to the review of the current ECI Regulation.   

Photo credit: CNBC

The European citizens’ initiative and EU competence over Greek debt ‘haircuts’

Professor Daniel Sarmiento, Professor of EU Law at the University Complutense of Madrid*

EU competence is a touchy area of EU law. It has become very complex, together with the also intricate case-law on legal bases, which, after several decades of case-law, is not always easy to follow. After the entry into force of the Lisbon Treaty, EU competence has become a major domain for EU constitutional lawyers and it deserves very careful attention. The fact that the Treaties now include a typology of EU competences and enumerate them is a sign that many future battles in EU law will be fought in this terrain.

Furthermore, cases like Pringle, Gauweiler (discussed here) or Vodafone prove that issues of competence and legal bases are not the exclusive domain of institutional litigation, but areas that can be brought to the courts by private parties too. The Court of Justice has always been sensitive to these cases and it has dealt with them with utmost care, mostly in Grand Chamber formation.

Last week a rather surprising route for EU competence litigation came under the radar. In the case of Anagnostakis (no English version available, I’m afraid), the General Court ruled on an action of annulment brought by a private party against the decision of the Commission to reject, on the grounds of lack of competence, a European citizens’ initiative (ECI). Mr. Anagnostakis, together with more than a million supporters, brought a proposal pursuant to Article 11.4 TEU (which provides for the existence of ECIs) and Regulation 211/2011 (which sets out the detail of the ECI process), demanding that the Commission introduce in EU legislation “the principle of state of necessity, according to which, when the financial and political subsistence of a State is at stake due to its duty to comply with an odious debt, the refusal of payment is necessary and justified”. According to the promoters, the legal base of the initiative was to be found in Articles 119 TFEU and 144 TFEU.

The Commission did not seem very impressed and, pursuant to Articles 4(2)(b) and (3) of Regulation 211/2011, it refused to register the proposal, based on a lack of competence.

Mr. Anagnostakis introduced an action of annulment before the General Court, attacking the Commission’s Decision for breach of Articles 122(1) and (2) TFEU, 136(1) TFEU and rules of international law.

The General Court dismissed the action, but it did not limit itself to scrutinizing the Commission’s duty to state reasons. Instead, the Court went into some detail in order to ascertain if haircuts in government debt are not only a competence of the EU, but also in conformity with EU Law. In a rather surprising format and procedural context, the General Court dealt quite openly with one of the Union’s hottest potatoes at the time: the unsustainable Greek public debt.

It is true that the judgment is quite laconic in its reasoning, but it relies several times on Pringle and Gauweiler when interpreting Articles 122 and 136 TFEU. But no matter how laconic it may be, the judgment makes an assertion that will probably not go unnoticed when the Greek public debt becomes politically toxic again. In paragraph 58 of the judgment, the General Court states that “the adoption of a legislative act authorizing a Member State to not reimburse its debt, far from being a part of the concept of economic policy guidelines in the sense of Article 136.1.(b) TFEU […] it would have the effect of substituting the free will of the contracting parties by a legislative instrument allowing for a unilateral abandonment of public debt, which is clearly not what the provision allows” (free translation).

The assertion might be formally correct in light of the limited scope of Article 136(1)(b) TFEU, but the language of the judgment is politically explosive. Even in legal terms, one wonders if Pringle was openly precluding any kind of haircut of government debt by any means. After reading the General Court’s decision in Anagnostakis, it seems that haircuts will be mission impossible in the future, despite the circumstances, the consensus among Member States (the IMF has been explicitly positive about a future Greek haircut) and, above all, the terms and scope of the haircut.

But of course, this judgment could be just a superficial decision undertaking a superficial degree of scrutiny due to the peculiar procedural context of the case. It could be argued that highly contested issues such as the EU’s competence in the area of EMU is something should be left to the Court of Justice, but not to the General Court in the circumstances of a case like Anagnostakis. The General Court might be aware of this and thus the brief and straight-forward reasoning of the decision. However, after reading the judgment several times, the more I read it the more explosive it sounds to me.

*Reblogged from the Despite our Differences blog

Barnard & Peers: chapter 5, chapter 19

Photo credit: www.thenation.com

The law of Grexit: What does EU law say about leaving economic and monetary union?

Steve Peers 

A Greek referendum on whether to accept its creditors’ offer is currently scheduled for next week. It’s not clear at this point whether the Greek voters’ refusal to accept the offer would necessarily lead to Greece leaving the EU or EMU, or at least defaulting on its debts. In fact, it is not clear what would happen if Greek voters decided to accept the offer, since it was still under the process of negotiation when the referendum was announced, and may no longer be on the table at the time of the referendum.

However, since a wide range of outcomes are possible, it’s useful at this stage to look at the legal framework for departure from economic and monetary union (EMU) – and in particular whether Greece would have to leave the EU if it left the single currency. (See also my previous blog posts, before and after the last Greek election, and Ioannis Glinavos’ recent analysis of whether Greece could be forced out of the euro).

The starting point is that the EU Treaties contain detailed rules on signing up to the euro, which apply to every Member State except Denmark and the UK. Those countries have special protocols giving them an opt-out from the obligation to join EMU that applies to all other Member States. (I’ll say that again, more clearly, for the benefit of those who claim otherwise: there is absolutely no way that the UK can be required to sign up to the single currency. That would not change in any way if British voters decided that the UK should stay in the EU).

But there are no explicit rules whatsoever on a Member State leaving the euro, either of its own volition or unwillingly, at the behest of other Member States and/or the European Central Bank (ECB).  There’s an obvious reason for this: the drafters of the Maastricht Treaty wanted to ensure that monetary union went ahead, and express rules on leaving EMU would have destabilised it from the outset. Put simply, legally speaking, Greece can’t directly jump or be pushed from the single currency.

In practice, though, its continued existence in the single currency could be made very difficult, as Ioannis Glinavos pointed out, either by the ECB restricting or ending emergency assistance (ELA) to Greece, or by the ECB limiting or removing Greek access to payment systems. It’s possible that any such moves would be legally challenged by the Greek government, and perhaps by other litigants too. It could be argued that they are in breach of EU monetary law as such, and/or that they breach an implied rule that Member States cannot be forced out of monetary union.

But let’s imagine that some sequence of events leads to Greek departure from the official legal framework for EMU nonetheless. This could lead to the fully-fledged introduction of a national currency (the ‘New Drachma’, or somesuch). It could instead lead to some informal link with the single currency – for instance a Greek ‘version’ of the euro, or the use of the euro as Greek’s official currency in practice without participating in the legal framework of EMU. Several countries outside the EU (such as Montenegro) take the latter approach. None of these actions are legal (for a Member State) as a matter of EU law.

For that matter, the less extreme possibility of Greece defaulting on Greek debts without leaving EMU (if that were feasible in practice) is not provided for in the Treaties either. Moreover, other Member States and the EU institutions are arguably legally obliged to refuse debt relief for Greece, in accordance with the Treaties’ no bail-out rule: as the CJEU said in Pringle, this rule allows Member States to loan money to Greece in return for conditions and an appropriate rate of interest. But they cannot simply assume responsibility for Greek government debts. Forgiving those debts would have the de facto result of assuming them – although it might be possibly argued that the letter (but surely not the spirit) of EMU law would allow this as long as the Greek debts were not formally transferred to the EU institutions or Member States. It might also be argued that a Greek default on such debt would be a situation of force majeure, which could be accepted by creditors without this amounting to a breach of the no bail-out rule.

However, the no bail-out rule does not apply to the private sector, which explains the ‘haircuts’ already imposed on private banks, or to international bodies or third States. So Greece could default on its loans to the IMF without infringing the no bail-out rule (although that would surely breach some other legal rule). Thanks to the gods of irony, the IMF is the biggest supporter of Greek debt relief. And equally, without infringing that rule, Greece could refuse to pay back any loans that Putin might be foolish enough to give it.

Of course, the reason we got to this position in the first place was a series of legal breaches: Greece joined the single currency on the basis of allegedly inaccurate economic data (for the debate on that issue, see here), and was not punished (as EU law provides for) when it started to run debts and deficits well above the legal limits of EU law.

So if Greece does leave the EMU framework, and/or default on its debts in violation of EU law, is it obliged to leave the EU, as some have suggested? On the face of it, it’s certainly illegal for a Member State to leave EMU unless it also leaves the EU. But having said that, there would still be no legal obligation for Greece to leave the EU if it defaulted or left EMU.

Why is that? The main legal reason is that the Treaties have a specific legal regime on withdrawing from the EU: Article 50 TEU, as discussed in detail here. Article 50 says that a Member State ‘may decide to withdraw from the Union, in accordance with its own constitutional requirements’. This is manifestly a voluntary choice. There are no rules in the Treaty stating that a Member State ‘shall’ withdraw from the Union in any particular circumstances.

Nor is it possible to throw a Member State out. Article 7 TEU allows a Member State to be suspended for breaching key principles such as human rights, democracy and the rule of law. But there is no provision allowing a Member State to be fully expelled from the Union against its will.

So implicitly but necessarily, the Treaties rule out any expulsion from the EU and any requirement to leave it, in any circumstances.  But the Treaty drafters didn’t provide for States to leave EMU and/or default on debts either. If those States can’t be forced to leave the EU in such circumstances, what is the legal way forward?

Solutions to the tragedy

Classical Greek tragedies often ended with a ‘deus ex machina’ (‘god out of the box’). The playwright had manoeuvred the characters into an impossible situation, and the only way to resolve the plot was by the introduction of a radically new plot element – a god or goddess who could use his or her divine powers to resolve all of the problems which the characters faced. The normal rules of narrative are suspended.

In my view, this is where we stand with Greek participation in the EU’s single currency. Whether or not Greece stays in EMU, a new approach to the legal framework is necessary to try and address the Greek position.

I see four main possibilities. First of all, the Treaties could be amended to try to regulate the situation, if necessary with some degree of retroactivity. There could, for instance, be a new general power for the Eurozone States in the Council and/or the European Council to adopt measures to address the legal consequences of Greece departing EMU. Legally, this is the tidiest solution; but politically, it’s the most difficult one, since the Greek issues would get bound up with the British ones. It’s possible that the Treaty amendment process would fail due to issues related to Greece, rather than the UK – or the other way around.

Secondly, it could be argued that the implied powers of the EU (most obviously, Article 352 of the TFEU) could be used to address the situation. This is a difficult argument since the Treaty drafters considered EMU to be ‘irrevocable’. However, the CJEU has taken a generous approach to measures aimed at saving EMU that many people believed were clearly ruled out: financial assistance in Pringle, and the ECB’s bond purchasing programme in Gauweiler (discussed by Alicia Hinarejos here). It might equally take a generous approach to the legality of any measures aiming to clean up the enormous mess that a ‘Grexit’ would make.

Thirdly, some Greek law-makers have suggested that the Greek debts might be illegal, on the basis of a theory of ‘odious debts’ that violate human rights. As noted above, though, the CJEU has insisted on the conditionality of financial assistance, and it has also repeatedly refused to answer questions from national courts about the legality of those conditions. So at first sight, it looks difficult for this argument to succeed as a matter of EU law, although the Court has not ruled on this issue as such yet.

Fourthly, there’s a novel argument that I haven’t seen suggested before: Greek participation in the euro was invalid in the first place, because of the allegedly inaccurate economic statistics used at the time. The CJEU could declare in the same ruling that all of the legal commitments relating to Greek participation in EMU in the past remain legal, so as not to disturb legal certainty (there’s plenty of precedent for CJEU rulings like that). There are two possible variations here: a) if Greece is still participating in EMU, its participation must be retained for the same reasons of legal certainty; or b) if Greece has left EMU, its departure is legal because the original participation was invalid.

But in either case, a crucial exception to the ‘legal certainty’ rule can justify debt relief for Greece. It’s arguable that due to the essential illegality of the legal framework in which Greek debts were incurred, the no bail-out rule did not fully apply, leaving the creditors and Greece free to negotiate a realistic amount of debt relief. (True, the no bail-out rule does apply to non-Eurozone States too; but Greece borrowed far more than it would have done due to its illegal participation in the euro). If Greece has left the euro already, it could in future benefit from the slightly different regime for financial assistance to non-Eurozone States.

Although Greece would still be formally required to try to join the single currency in future, the EU tends not to pressure countries (like Sweden) which have no real intention of joining. Realistically, no one would pressure it to join for a very long time.

All of these solutions provide, in one way or another, that ‘it was all a dream’: either the debt or the euro participation never existed in the first place, or the Treaty or EU legislation retroactively apply to address the issues, or the Treaty means something quite different from what it was generally thought to mean. It is always preferable to avoid such an approach to the law, but it’s hard to see how any other type of solution could work in this case. Legally, simply put: Greece allegedly should not have joined the euro; it should not have been allowed to run up huge debts; it cannot leave EMU; and it cannot be forced to leave the EU. Economically and politically: Greeks have suffered more than enough; Greece can never pay its accumulated debts while taking austerity measures which depress its economy; but taxpayers of other Eurozone States understandably would like to see their money back.  

These illegalities and economic and political conflicts cannot be resolved within the current framework, so we need to revise it radically. Of the suggestions considered here, the fourth solution has the most appeal: it is consistent not only with the classical tradition of Greek tragedy, but disturbs the current legal framework as little as possible while offering solutions (a fully legal Grexit, effective debt relief) that aim to resolve the situation as best it can be managed. It is impossible to find any solution that would satisfy every legitimate demand, but in my view this approach is the least bad alternative.

Barnard & Peers: chapter 19

Cartoon: Peter Schrank, Independent on Sunday