The president of the European Commission,
Jean-Claude Juncker, has told Greeks that saying 'No' to a bailout deal
would be a vote to ditch the euro. Greece's Finance Minister Yanis
Varoufakis has said Greece had no intention of quitting and cannot be
forced out.
The conflict is driving the European Union into legal limbo and no one has a clear answer as to what could happen next.
The government in Greece, where a majority of people say they want to retain the euro currency and their 35-year-old membership of the European Union, correctly points out that neither the treaty creating the now 19-member Eurozone nor the agreement binding the 28 member states of the EU contain provisions for expelling any country.
Only the European Union treaty that came into force in 2009 imagines any departure, and that only when a state asks to leave.
In constructing the euro, European leaders were anxious to underline the message that the new currency was forever. The question that has now arisen is what happens if member state breaks the rules.
Even determining such a breach is problematic.
On Monday a senior European Central Bank official said that a Greek exit from the euro could not be ruled out, especially if voters backed the government in a referendum on Sunday and rejected creditors' offer of cash in return for budget cuts.
The leftist government in Greece, elected in January with a mandate to end austerity imposed as a condition for bailout funds, has infuriated its partners by refusing to accept new terms. That means its programme runs out on Tuesday, just when an International Monetary Fund loan matures. Athens now says it will not make the payment.
The prospect of default has jeopardized Greece's access to euros under the control of the ECB in Frankfurt. Officials speculate that the Washington-based IMF and the ECB will delay actions that could trigger an abrupt cut-off of euros to the Greek banking system, at least until after Sunday's referendum.
On Monday, Greece imposed capital controls to stem the flow of cash out of the country as it looks for short-term monetary stability. If the situation persists, however, notably beyond July 20 when Greece must repay bonds held by the ECB itself, Eurozone institutions may find it even more difficult to keep supplying Greece with cash
The conflict is driving the European Union into legal limbo and no one has a clear answer as to what could happen next.
The government in Greece, where a majority of people say they want to retain the euro currency and their 35-year-old membership of the European Union, correctly points out that neither the treaty creating the now 19-member Eurozone nor the agreement binding the 28 member states of the EU contain provisions for expelling any country.
Only the European Union treaty that came into force in 2009 imagines any departure, and that only when a state asks to leave.
In constructing the euro, European leaders were anxious to underline the message that the new currency was forever. The question that has now arisen is what happens if member state breaks the rules.
Even determining such a breach is problematic.
On Monday a senior European Central Bank official said that a Greek exit from the euro could not be ruled out, especially if voters backed the government in a referendum on Sunday and rejected creditors' offer of cash in return for budget cuts.
The leftist government in Greece, elected in January with a mandate to end austerity imposed as a condition for bailout funds, has infuriated its partners by refusing to accept new terms. That means its programme runs out on Tuesday, just when an International Monetary Fund loan matures. Athens now says it will not make the payment.
The prospect of default has jeopardized Greece's access to euros under the control of the ECB in Frankfurt. Officials speculate that the Washington-based IMF and the ECB will delay actions that could trigger an abrupt cut-off of euros to the Greek banking system, at least until after Sunday's referendum.
On Monday, Greece imposed capital controls to stem the flow of cash out of the country as it looks for short-term monetary stability. If the situation persists, however, notably beyond July 20 when Greece must repay bonds held by the ECB itself, Eurozone institutions may find it even more difficult to keep supplying Greece with cash
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