Show Hide image

If Greece exits euro, the EU will shut its cashpoints

Proposed measures include capital controls and border lockdowns

Reuters is reporting that the EU has started seriously planning for a Greek exit:

European finance officials have discussed as a worst-case scenario limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro. . .

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union. . .

SYRIZA is expected to win or come a strong second on June 17. Alexis Tsipras, the party's 37-year-old leader, has said he plans to tear up or heavily renegotiate the 130-billion-euro bailout agreed with the EU and IMF. The EU and IMF have said they are not prepared to renegotiate.

If those differences cannot be resolved, the threat of the country leaving or being forced out of the euro will remain, and hence the need for contingencies to be in place.

Contingencies do indeed need to be in place – and it would be astonishing if they hadn't actually been in place for a while now, given the possibility of a mechanical trigger for a Greek exit – but some of these seem a tad overzealous. Suspending Schengen implies that the authorities aren't just worried about capital flight from Greece, but literal flight as well. Just how bad do they expect it to be?

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.