Some voices in EU capitals claim the only response for Greek bankruptcy is for the country to leave the eurozone yet this ignores the legal basis for the EU and the single currency area.

While leaving the EU is clearly regulated in Article 50 of the treaty there is no similar article for leaving the eurozone.

Student or retired? Then this plan is for you.

Montenegro, Kosovo, Vatican City, Monaco, San Marino and Andorra prove the established practice of non-EU states using the euro. (Photo: Moyan Brenn)

The treaty says the euro will replace the domestic currency when the convergence criteria are met. The relevant treaties regulate access to and membership in the eurozone in detail but there is no provision in any treaty or protocol that provided for an expulsion mechanism in case a member declared bankruptcy.

Even the European Central Bank confirms in a 2009 paper “Withdrawal and Expulsion from the EU and EMU: Some Reflections” that “a member state's expulsion from the EU or EMU, would be legally next to impossible“.

But if there is no legal obligation to leave the eurozone and no EU institution has the legal ability to force Greece out of the Euro-zone, why is there talk of a 'Grexit'?

Drachma

If Greece ends up bankrupt, the Greek government would be unable to pay its domestic expenses such as the salaries of public servants and could not satisfy creditors any longer either.

Some then argue that the only option for Greece would be to resort to its former currency as it could print as much of it as necessary.

Those in favour of this option say the Drachma would increase competitiveness by devaluation which would lead to economic growth and therefore the ability to pay back loans.

But others warn the Drachma would be an obstacle in trading with the eurozone, make imports much more expensive and make it impossible to ever repay any of the debt in euro with the devalued Drachma.

Keeping the euro

Instead of discussing the pros and cons on these two options, a more rational response would be for Greece to keep the euro as legal tender - even after bankruptcy.

Montenegro, Kosovo, Vatican City, Monaco, San Marino and Andorra prove the established practice of non-EU states using the euro.

These are not isolated cases limited to the euro. Using foreign currency as domestic legal tender is a common phenomenon.

Currently the US Dollar is used as official currency in East Timor, Ecuador, El Salvador, several microstates and Zimbabwe and US Dollar banknotes are used in Panama.

If Greece cannot legally be forced out of the eurozone, it is only logical that a bankrupted Greece cannot be put into a worse position than any of those non-EU states that use the euro without having ever been members of the eurozone or possibly never having met the convergence criteria.

Instead, the eurogroup and Greece could agree on a suspension of voting rights in euro-related fora and a ban on the right to mint coins and print paper money until Greece meets the convergence criteria again.

This is probably the only way to ensure that the treaties are not violated; that expenses around the re-introduction of the Drachma are avoided; and that Greece maintains unrestricted access to the markets of the EU and maintains the chance to pay back some of its debt.

The only parties losing in this constellation are those who already bet on Greece losing the euro and on the unavoidable devaluation of the Neo-Drachma.

In return, the EU would be acting in the spirit the treaty, according to which the EU's aim is to promote peace, its values and the well-being of its peoples.

Rule of law

Based on the rule of law, it shall work against discrimination, achieve economic growth, price stability, full employment, and social progress.

The treaty also spells out that the activities of the member states and the Union shall include the adoption of an economic policy, including a single currency.

Keeping Greece in the eurozone is as close as the EU can get to fulfilling its own goals as defined in its own treaties. Not discriminating against Greece vis-a-vis those states using the euro without being members of the eurozone would be an important first step.

Oliver Pahnecke is a PhD candidate at Middlesex University, London, where he is researching on odious debt from a human rights perspective