It is hard to see how Europe’s political centre can survive the lifespan of the third Greek bailout. If it cannot, Greek exit from the euro will be back on the table.

Europe’s monetary union changed fundamentally on 10 July 2015, when German Finance Minister Wolfgang Schäuble tabled a proposal for Greece to leave the euro, temporarily, while it sorted out its public finances and other related economic reforms.1 Until that moment, Europe’s monetary union had been a system of irreversibly fixed exchange rates. Once this proposal was made – by the powerful finance minister of the only country capable of carrying out the threat – membership of Europe’s fixed-exchange-rate regime became conditional. The euro is still a shared multinational currency with a common European Central Bank (ECB), and the European Union (EU) retains its institutions for coordinating macroeconomic policy across the eurozone. Nevertheless, the shift from ‘irreversible’ to ‘conditional’ was important.

Top European policymakers were quick to recognise the distinction between an irreversible and a conditional euro before, during and after the peak of the Greek crisis in mid-July. In April 2015, the European Commissioner for Economic and Financial Affairs, Pierre Moscovici, used the distinction between irreversible and conditional participation in the euro to explain why a Greek exit from the single currency – no matter how temporary – was unthinkable. Moscovici argued that an irreversible commitment is the defining characteristic of a monetary union. If a country like Greece can leave, he suggested, then the euro would not be a monetary union at all. Instead, it would be a fixed-exchange-rate regime – just like the European Monetary System that preceded it.2 

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Erik Jones is a contributing editor to Survival. He is also Professor of European Studies and International Political Economy at the Johns Hopkins School of Advanced International Studies and a Senior Research Fellow at Nufffield College, Oxford. He can be followed on Twitter at: @Erik_Jones_SAIS. Parts of this article previously appeared in various posts on Politics and Strategy, the Survival editors’ blog (

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Survival: Global Politics and Strategy

October-November 2015

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