The council of EU finance ministers said Athens must comply with austerity demands by March 16 or lose control over its own tax and spend policies altogether. It if fails to do so, the EU will itself impose cuts under the draconian Article 126.9 of the Lisbon Treaty in what would amount to economic suzerainty.
This could get interesting.
If Greece fails to implement the imposed EU austerity measures, then what? Will Greece be allowed to secede from the EU? Will the EU attempt to somehow enforce its austerity measures?
My favorite mainstream economist, came pretty close to seeing these kinds of problems developing.
In an article, "EMU and International Conflict," published in the November 1997 issue of Foreign Affairs, Feldstein recognized the many destabilising factors surrounding the EU construct. Here's part of a summary by Joel Meeker of Feldstein's paper (The paper itself is not online):
Feldstein believes that the transition to the Euro may well bring about two unexpected results: an increasingly contentious and perhaps only short-lived union among European participants, and conflict between Europe and other countries, including the United States. He presents the following scenario: Existing disagreements on goals and methods of monetary policy among European Monetary Union (EMU) participants would be aggravated when normal business cycles raise unemployment in any given country...This would cause a rise in inter-European distrust, which would be compounded by unrealized expectations about power sharing, as well as both domestic and international policies...