¹ ‘French and German banks hold just under €80 billion in Greek sovereign debt’, D Oakley, ‘Cost to insure European banks soars’, Financial Times, 7 May 2010, available at www.ft.com/cms/s/0/ec59c598-59f3-11df-acdc-00144feab49a.html.

² These coordinated bilateral loans are made by Eurozone States. They are supplemented by IMF loans as outlined below.

³ See ‘Statement on the support to Greece by Euro area Member States’, 11 April 2010, available at www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113686.pdf.

⁴ See Memo 10/173, 10 May 2010, ‘The European Stabilization Mechanism’, available at europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/173.

⁵ See BBC Online, ‘Greece’s budget deficit worsens’, 15 November 2010, available at www. bbc.co.uk/news/business-11755320.

⁶ W Buiter and E Rahbari, ‘Greece and the fiscal crisis in the EMU’, CEPR Policy Insight No 51, October 2010, 3.

⁷ Hence the global financial crisis was not the cause of Greece’s problem, it just accelerated an already precarious situation.

⁸ See Art 126 II TFEU and Art 1 of the Protocol on the Excessive Deficit Procedure.

⁹ Buiter and Rahbari, above n 6, 3. In the World Bank’s Doing Business report 2010 Greece was ranked 109th out of 183 countries.

¹⁰ See Council Decision of 27 April 2009 on the existence of an excessive deficit in Greece (2009/415/EC).

¹¹ See Council Doc 7900/09, 6 April 2009, available at ec.europa.eu/economy_finance/sgp/pdf/30_edps/104-07_council/2009-04-27_el_104-7_council_en.pdf.

¹² See Council Doc 15766/09, 30 November 2009.

¹³ This step was taken on 16 February 2010.

¹⁴ At the same time the Greek Prime Minister Papandreou was asked to introduce drastic measures at the European Council meeting on 11 February 2010 in order to avert a sovereign insolvency.

¹⁵ Statement by the Eurogroup Action taken by Greece in response to the Council decision of 16 February 2010 and to implement its stability programme, available online at www.consilium.europa.eu/SuMedia/7010/rev1clean-terms_of_reference_on_greece-to_eurogroup_ clean.pdf.

¹⁶ The Economic Times, ‘Fitch downgrades Greek debt rating’, 9 April 2010, available online at economictimes.indiatimes.com/news/international-business/Fitch-downgradesGreek-debt-rating/articleshow/5779502.cms.

¹⁷ Ibid.

¹⁸ Statement by the Heads of State and Government of the Euroarea, 25 March 2010, available online at www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113563.pdf.

¹⁹ C Proctor, ‘The Greek crisis and European Financial Stabilisation Mechanism: the legal implications’, Bird & Bird Briefing 12 May 2010 4; See also Statement by the Heads of State and Government of the Euro area, 25 March 2010, available online at www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113563.pdf.

²⁰ Ibid, 8.

²¹ This figure had to be revised following the decision by the Slovak Republic not to participate in the rescue mechanism. The overall amount paid for by the Eurozone Member States now stands at €79.2 billion.

²² See Annex 1 of the Loan Facility Agreement concluded between the Eurozone Member States and Greece on 8 May 2010.

²³ See ibid.

²⁴ See eg, Euractiv.com, Slovakia turns to FT for comfort over Greek bailout, 18 August 2010, available online at www.euractiv.com/en/euro/slovakia-turns-ft-comfort-over-greekbailout-news-496926.

²⁵ Following a change in government, the Slovak Republic decided not to participate in the rescue mechanism, see ibid.

²⁶ Statement on the support to Greece by Euro area Member States, Brussels, 11 April 2010.

²⁷ EURIBOR is the abbreviation for ‘euro interbank offered rate’. This is, the rate at which a prime bank is willing to lend funds in euro to another prime bank. The EURIBOR is calculated daily for interbank deposits with a maturity of one week and one to 12 months as the average of the daily offer rates of a representative panel of prime banks, rounded to three decimal places’, see www.ecb.europa.eu/home/glossary/html/glosse.en.html#460.

²⁸ Statement on the support to Greece by Euro area Member States, above n 26.

²⁹ Signed by the European Commission on behalf of the Euro area Member States.

³⁰ The Euroarea Loan Facility Bill, Speech by the Irish Finance Minister Brian Lenihan on 18 May 2010, available at www.finance.gov.ie/viewdoc.asp?DocID=6309.

³¹ See Preamble No 4 to the Loan Facility Agreement of 8 May 2010 which provides: ‘Representatives of the Member States of the European Union have decided on 5 May 2010 to entrust the Commission with the tasks in relation to coordination and management of the Pooled Bilateral Loans as set out in this Agreement’. Preamble No 5 of the Intercreditor Agreement is also instructive in that respect. It provides: ‘The Lenders in all their functions, rights and obligations under this Agreement act through and are represented by the Commission. The Lenders have agreed to act in a coordinated manner and to channel communications to the Commission through the Euro Working Group Chairman.’

³² Statement by the Heads of State and Government of the Euroarea, 25 March 2010, 1, available at www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113563.pdf (emphasis added).

³³ Art 125(1) TFEU (emphasis added).

³⁴ C Proctor, ‘Greece and the euro: New dimensions in currency risk?’ Bird & Bird Briefing, 31 March 2010, 4 (emphasis added).

³⁵ For instance I Pernice, ‘Rettung statt Rausschmiss’, Frankfurter Allgemeine Zeitung, 26 March 2010, ‘Niemand, nicht der Schuldner und schon gar nicht die Gläubiger können also mit einem Eintreten der anderen rechnen, noch gar die Solidarität einfordern. Anders als nach Art 123 und 124 AEUV ist nach Art. 125 Abs. 1 AEUV aber nichts ausdrücklich verboten’.

³⁶ See also M Herdegen, ‘Was die EU-Verträge wirklich zum Bail-out sagen’, Handelsblatt, 17 March 2010, 7: ‘Der AEU-Vertrag spricht die Europäische Union und die anderen Mitgliedsländer von jeder Pflicht zum Finanzausgleich … frei … Mit der Freiheit der EU und ihrer Mitgliedstaaten zum Beistand oder seiner Versagung setzt das EU-Recht auf die therapeutische Kraft der Ungewissheit.’

³⁷ See K Faßbender, ‘Der europäische Stabilisierungsmechanismus im Lichte von Unionsrecht und deutschem Verfassungsrecht’ (2010) Neue Zeitschrift für Verwaltungsrecht 800.

³⁸ See eg, Khan, D, in Khan, Geiger and Kotzur, , EUV/ AEUVKommentar (München, Beck, 2010) 522 Google Scholar.

³⁹ See Hahn, H and Häde, U, Währungsrecht (München, Beck, 2010) 312 Google Scholar.

⁴⁰ Ibid, 313.

⁴¹ Ibid, 313.

⁴² Pipkorn, J, ‘Legal arrangements in the Treaty of Maastricht for the effectiveness of the economic and monetary union’ (1994) 31 CML Rev 275 Google Scholar.

⁴³ Unless explicitly authorised under the treaties such as in the case of Art 143 TFEU or Art 125(I)2, 2 TFEU.

⁴⁴ See L Knopp, ‘Griechenland-Nothilfe auf dem verfassungsrechtlichen Prüfstand’ (2010) Neue Juristische Wochenschrift 1779.

⁴⁵ Or to put it differently—argue for a comprehensive prohibition.

⁴⁶ See Hahn and Häde, above n 40, 314.

⁴⁷ See Häde, U in Calliess, and Ruffert, , EUV/ EGV Kommentar (München, Beck, 2007) 1422 Google Scholar.

⁴⁸ See ibid, 1422.

⁴⁹ In case of balance of payment crises.

⁵⁰ See W Frenz and C Ehlenz, ‘Der Euro ist gefährdet: Hilfsmöglichkeiten bei drohendem Staatsbankrott?’ (2010) Europäisches Wirtschaftsund. Steuerrecht 67.

⁵¹ See U Häde, ‘Die europäische Währungsunion in der internationalen Finanzkrise—an den Grenzen europäischer Solidarität?’ (2010) Europarecht 858.

⁵² This argument is, of course, based on the (questionable) hypothesis that Art 122(2) TFEU constitutes an exception to Art 125 TFEU. For further details on the complex relationship between these two Arts, see ch IV.B.

⁵³ Another systematic argument can be derived from Art 125(1)2. ‘In accordance with this provision, Member States shall not be liable for or assume the commitments of central governments … without prejudice to mutual financial guarantees for the joint execution of a specific project.’ (emphasis added) Given this phrasing it is clear, that financial guarantees are generally not allowed under the Treaties (so-called argumentum e contrario). Only under the exceptional circumstances mentioned in Art 125(1)2, ie mutual financial guarantees for the joint execution of specific projects, are such measures allowed.

⁵⁴ See K Faßbender, ‘Der europäische Stabilisierungsmechanismus im Lichte von Unionsrecht und deutschem Verfassungsrecht’ (2010) Neue Zeitschrift für Verwaltungsrecht 800; W Frenz and C Ehlenz, ‘Der Euro ist gefährdet: Hilfsmöglichkeiten bei drohendem Staatsbankrott?’ (2010) Europäisches Wirtschaftsund. Steuerrecht 65 ff; L Knopp, ‘Griechenland-Nothilfe auf dem verfassungsrechtlichen Prüfstand’ (2010) Neue Juristische Wochenschrift 1777 ff.

⁵⁵ See M Brück, C Schalast and K-M Schanz, ‘Finanzkrise letzter Akt: Die deutschen Zustimmungsgesetze zur Griechenlandhilfe und zum Europäischen Stabilisierungsmechanism us’ (2010) Betriebsberater 2525.

⁵⁶ See eg, W Buiter and E Rahbari who argue: ‘A justification to provide Union financial assistance based on this article [ie 122(2) TFEU] truly is a bit of a stretch.’ W Buiter and E Rahbari, ‘Greece and the fiscal crisis in the EMU’, CEPR Policy Insight No 51, October 2010, 7.

⁵⁷ H Kube and E Reimer, ‘Grenzen des Europäischen Stabilisierungsmechanismus’ (2010) Neue Juristische Wochenschrift 1912.

⁵⁸ Ibid, 1912.

⁵⁹ Pars pro toto is for ‘(taking) a part for the whole’ where a portion of an object or concept represents the entire object or context.

⁶⁰ Kube and Reimer, above n 58, 1912.

⁶¹ See Hattenberger, D in Schwarze, J (ed) EU-Kommentar (Baden-Baden, Nomos, 2009) 1188 Google Scholar. See also Khan, D, in Geiger, R, Khan, D and MKotzur, (eds), EUV/ AEUV (München, Beck, 2010) 520 Google Scholar.

⁶² See ibid, 520.

⁶³ See K Faßbender, ‘Der europäische Stabilisierungsmechanismus im Lichte von Unionsrecht und deutschem Verfassungsrecht’ (2010) Neue Zeitschrift für Verwaltungsrecht 800; W Frenz and C Ehlenz, ‘Der Euro ist gefährdet: Hilfsmöglichkeiten bei drohendem Staatsbankrott?’ (2010) Europäisches Wirtschaftsund Steuerrecht 65 ff; L Knopp, ‘Griechenland-Nothilfe auf dem verfassungsrechtlichen Prüfstand’ (2010) Neue Juristische Wochenschrift 1777 ff.

⁶⁴ See ABC News, ‘Euro Partners Agree on $145 billion Greek Bailout’, 2 May 2010, available online at abcnews.go.com/Business/wireStory?id=10531471.

⁶⁵ And constitutional courts, see eg, the German Bundesverfassungsgericht, BVerfGE 89, 155, 204 (Maastricht decision). In its famous Maastricht decision the Court held: ‘The Union Treaty governs the monetary union as a community which is permanently obliged to maintain stability and, in particular, to guarantee the stability of the value of the currency. Although it cannot be predicted whether the stability of an ECU currency on the basis of the arrangements made in the Treaty can be permanently ensured, the fear that efforts towards stability will fail to materialise, with the consequence that the member-States could make further concessions on financial policy, is insufficiently plausible to ground the conclusion that the Treaty is legally uncertain. The Treaty sets up long-term targets which impose the objective of stability as the standard for monetary union, which seek to achieve that objective through institutional arrangements, and which finally, as the last resort, do not prevent withdrawal from the Community in the event of the community based on stability failing to materialise’. (emphasis added) Manfred Brunner and Others v The European Union Treaty, (Cases 2 BvR 2134/92 and 2159/92) Before the Bundesverfassungsgericht (2. Senat) (Federal Constitutional Court, 2nd Chamber), 12 October 1993 translation reprinted, in Common Market Law Reports (1994), 101. The German original reads as follows: ‘Der Unions-Vertrag regelt die Währungsunion als eine auf Dauer der Stabilität verpflichtete und insbesondere Geldwertstabilität gewährleistende Gemeinschaft. Zwar lässt sich nicht voraussehen, ob die Stabilität einer ECU-Währung auf der Grundlage der im Vertrag getroffenen Vorkehrungen tatsächlich dauerhaft gesichert werden kann. Die Befürchtung eines Fehlschlags der Stabilitätsbemühungen, der sodann weitere finanzpolitische Zugeständnisse der Mitgliedstaaten zur Folge haben könnte, ist jedoch zu wenig greifbar, als dass sich daraus die rechtliche Unbestimmtheit des Vertrages ergäbe. Der Vertrag setzt langfristige Vorgaben, die das Stabilitätsziel zum Maßstab der Währungsunion machen, die durch institutionelle Vorkehrungen die Verwirklichung dieses Ziels sicherzustellen suchen und letztlich - als ultima ratio - beim Scheitern der Stabilitätsgemeinschaft auch einer Lösung aus der Gemeinschaft nicht entgegenstehen, Bundesverfassungsgericht, BVerfGE 89, 155, 204.

⁶⁶ Albeit a heavily restricted right. In contrast, Art 50 of the revised EU Treaty provides for an unfettered, unilateral right to withdraw.

⁶⁷ For instance Art 123(4) EC Treaty.

⁶⁸ The Protocol on the transition to the third stage of Economic and Monetary Union, which militated strongly against a right to withdraw from EMU, was also repealed by the Lisbon Treaty, see Fischer, K, Der Vertrag von Lissabon: Text und Kommentar zum Europäischen Reformvertrag (Baden-Baden, Nomos, 2008) 491 Google Scholar.

⁶⁹ In popular referenda held in May/June 2005, for details see Amato, G and Ziller, J, The European Constitution (Cheltenham, Edward Elgar, 2007) 56–60 CrossRefGoogle Scholar.

⁷⁰ ‘Tailoring a compromise’, The Economist, 24 June 2007. See also H Raabe, ‘Zur Metamorphose des Europäischen Verfassungsvertrags’ (2007) Neue Juristische Wochenschrift 3153.

⁷¹ This can be translated as ‘A partnership for a certain phase in one’s life’.

⁷² See CIG 4/2003, Regierungskonferenz 2003—Redaktionelle und juristische Anmerkungen zu dem Entwurf eines Vertrages über eine Verfassung für Europa- Basisdokument, 126.

⁷³ See eg Heinegg, W Heintschel von, in Vedder, C and Heinegg, W Heinschtel von (eds) Europäischer Verfassungsvertrag, Handkommentar (Baden-Baden, Nomos, 2007) 256 Google Scholar.

⁷⁴ See Art 50(II) EU.

⁷⁵ It must be emphasised that this agreement is not obligatory.

⁷⁶ ie as a ‘contrary act’ to the accession agreement.

⁷⁷ Art 49 EU.

⁷⁸ Art 50(2).

⁷⁹ See eg, W Heintschel von Heinegg, in Vedder and Heinschtel von Heinegg above n 75, 256–57.

⁸⁰ R Friel, ‘Providing a Constitutional Framework for Withdrawal from the EU’ (2004) International and Comparative Law Quarterly 425. (emphasis added)

⁸¹ See eg, Herdegen, M, Völkerrecht (München, Beck, 2010) 426 Google Scholar.

⁸² This fear was also expressed by Brok et al on behalf of the EEP Convention Group: ‘A right of a member state to pick and choose the rights and duties stemming from Union Membership (single market: yes, rest: no) must be explicitly excluded’, available at european-convention.eu.int/docs/treaty/pdf/46/46_Art%20I%2059%20Brok%20EN.pdf.

⁸³ ie between the withdrawing and the remaining states.

⁸⁴ By a state which is not yet a member of the Eurozone.

⁸⁵ ‘Such a genuinely unilateral right of withdrawal [ie withdrawal without an agreement] would be unthinkable in the context of EMU … because of the complex network of rights and obligations that EMU entails for its participating Member States and their NCBs and which cannot easily (and certainly not automatically) be unwound through a unilateral act of withdrawal.’ P Athanassiou, ‘Withdrawal and expulsion from the EU and EMU’, ECB Legal Working Paper Series, No 10 (December 2009) 28.

⁸⁶ See also Beutel, J, Differenzierte Integration in der Europäischen Wirtschafts- und Währungsunion (Berlin, De Gruyter, 2006) 336 CrossRefGoogle Scholar: ‘Damit wird ein Austritt aus der Wirtschafts- und Währungsunion möglich, wenn ein Mitgliedstaat die Union verlassen sollte. Ein Austritt nur aus der Wirtschaftsund Währungsunion bleibt aber gleichwohl nicht möglich. Art I-60 EUVerf. [ie Art. 50 EU] ermöglicht einem Mitgliedstaat nur, die Union vollständig zu verlassen.’

⁸⁷ See also Proctor, above n 35, 8.

⁸⁸ Subject to the conditions laid down in Arts 60 and 62 of the VCLT, a state could thus be expelled from EMU.

⁸⁹ See eg, Hilf, M, in von der Groeben, H, Thiesing, J and Ehlermann, C (eds) Kommentar zum EU/EG-Vertrag 5th edn (Baden-Baden, Nomos, 1997) Art 240, 9Google Scholar; Ipsen, H, Europäisches Gemeinschaftsrecht (Tübingen, Mohr Siebeck, 1972) 101 Google Scholar.

⁹⁰ See also the ECJ’s ruling in Costa v ENEL: ‘By contrast with ordinary international treaties, the EEC has created its own legal system which on the entry into force of the Treaty became an integral part of the legal systems of the Member States and which their courts are bound to apply. By creating a community of unlimited duration, having its own institutions, its own personality, its own legal capacity and capacity of representation on the international plane and, more particularly, real powers stemming from a limitation of sovereignty or a transfer of powers from the states to the Community, the Member States have limited their sovereign rights, albeit within limited fields, and have thus created a body of law which binds both their nationals and themselves’, Case 6/64, Costa v ENEL, Slg. 1964, 1251, 1259.

⁹¹ See Hilf, above n 91, Art 240, 9; Ipsen, above n 91, 101.

⁹² See Kempen, B, in Streinz, R (ed), EU Kommentar (München, Beck, 2003) Art 122, 31.Google Scholar

⁹³ See Becker, U, in Schwarze, J (ed), EU Kommentar (Baden-Baden, Nomos, 2009) 2191 Google Scholar.

⁹⁴ This view finds support in Art 5 of the Vienna Convention on the Law of Treaties, which explicitly provides that, ‘[the VCLT] applies to any treaty which is the constituent instrument of an international organisation … without prejudice to any relevant rules of the organisation’. See also on this aspect Calliess, C, Die neue Europäische Union nach dem Vertrag von Lissabon (Tübingen, Mohr Siebeck, 2010) 98 Google Scholar.

⁹⁵ For example, Estonia.