GREEK SOVEREIGN DEBT CRISIS AND COMPETENCES OF THE EUROPEAN UNION

By Yordan and Isabel

Contents
I. European Competence and Greek sovereign debt crisis II. Infringement of Maastricht Treaty? III. Conclusion

PIGS Sovereign Debt Crisis

Maastricht Treaty
Maastricht Criteria
The ratio of gross government debt to GDP must not exceed 60% at the end of the preceding fiscal year.

Infringement?

The Great Contradiction

Greece's economy has struggled since the country joined the euro in 2001. In 2004, it admitted its budget deficit was higher than allowed under rules of entry.

Greeces debt to GDP was 103.7% at the time, compared to the Maastricht Treaty cap set at 60%.

European Unions Competence

Is it illegal to drop Greece from EU?

The Eurozone stick to explicit fiscal rules.

The principle rules are: the annual deficit must be kept below 3 per cent of GDP over the medium term the budgetary position of each member of the eurozone should be close to balance or in surplus overall public debt must not be larger than 60 per cent of GDP.

Is it illegal to drop Greece from EU?

Article 103 of the Maastricht Treaty stipulates that neither the Community nor any Member State is liable for or can assume the commitments of any other Member State.

The Community shall not be liable for or assume the commitments of central
governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.

Is it illegal to drop Greece from EU?

Article 100, section 2 (bail-out clause):

Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council, acting by a qualified majority on a proposal from the Commission, may grant, under certain conditions, Community financial assistance to the Member State concerned. The President of the Council shall inform the European Parliament of the decision taken.

Is it illegal to drop Greece from EU?

The Lisbon Treaty formally introduced a new exit clause under Article 50 TEU

The Treaties are silent on exit from the Euro.

Greece could not exit the Euro without exiting the EU as a whole.

Thank you for your attention