Given the surreal decision by the Greek prime minister to call an unwinnable (and uninterpretable) referendum, it’s time to start looking at plan C. If this is the way things are going, it’s fair to say that Greek membership of the euro is numbered. We just can’t have a reckless rogue state in the EU. Yet we haven’t the ability under treaty law to expel a member state, right? On paper, that’s probably correct. However, does a legal entity not have a right under natural law to defend itself from an unforeseen threat which is threatening to destroy that entire entity? Could the rest of the union not argue before the European Court of Justice that Greek membership is now a clear and present danger to the union, indeed a threat to the very treaty itself?
But even that won’t be enough. It’s one thing to neutralise the Greek threat, but would that be enough for the bond markets, enough to reassure them that Greece was the exception to the rule, and the eurozone is now secure? What’s to stop them turning to Italy, now that the concept of departure from the eurozone is an option on the table?
That’s where Paris and Berlin have to be ready, with a new treaty creating a fiscal union, with tough centralised budgetary rules and membership open to any eurozone member or aspiring member. I’m not talking about a convention that will drag on for years, I’m talking about a treaty outside the EU that can be ready to go live with a few tweaks, based around eurobonds and German fiscal leadership. The clock is ticking down.