How can Brussels imagine there is any good outcome to destabilising Europe's second largest economy?
When Yanis Varoufakis was appointed finance minister in the first weeks of Syriza’s radical Left government in Greece, it was not just for his neo-Marxist views, but also because of his supposed expertise in game theory. These skills would be vital, it was thought, in negotiating with the EU and the International Monetary Fund over debt forgiveness.
The sensible, economically rational and humane thing to have done with Greece’s mountainous debts would have been to cancel them, as occurs in any normal bankruptcy, not confine the country to the fiscal imprisonment of repayment. It was not to be. As Varoufakis discovered, there is no such thing as a genuine two-way negotiation, aimed at a mutually beneficial outcome, when it comes to the EU.
"If you cannot imagine walking out of a negotiation, you should never enter it."Yanis Varoufakis
Brussels adopted a take it or leave it approach; given the potentially calamitous economic costs of the “leave it” option, Greece quickly capitulated. Game theory dictates that, to succeed, the other side has to believe you are serious about your threats. The EU never thought Greece would quit the single currency, and in any case had taken steps to insulate itself from the fallout even if it did. Greece found itself with no cards to play.
Exactly the same strategy is being adopted by the EU over Brexit. For Varoufakis, the main lesson from his own confrontation with the EU is to avoid at all costs being drawn into a negotiation about the right to negotiate. That is precisely the trap that Theresa May, the British Prime Minister, finds herself in. As a result, the terms of Britain’s departure – if it happens at all – are ever more likely to be dictated by Brussels, with only marginal input from London.
As someone who backed Remain – albeit with some reluctance – I take no pleasure in pointing out that the current, increasingly fraught state of affairs was both predictable and predicted. The bespoke “cake and eat it” relationship with Europe that Britain seeks was never going to be on offer, even though from an economic perspective it is the approach which would best suit not just Britain but Europe.
As with Greece, the European Commission continues to put its own self-preservation above the interests of the ordinary citizens it is meant to serve. Ask not what the EU can do for you, only what you can do for the EU.
In my experience, there is nothing inherently evil about those who run the EU; on the whole they are smart and relatively well-meaning people. But they are also prisoners of assumed institutional destiny. Perversely, this leads them to reject a mutually advantageous arrangement for fear that it might encourage others to ask for the same.
The integrity, not to say sanctity, of the single market must therefore be defended at all costs, like some deity whose original purpose has long since been forgotten. Such niceties as economic advancement must take second place. This was true with the eurozone debt crisis; it’s now true of Brexit.
Even those who were never part of the EU are subjected to the same thumbscrew. Switzerland, with its multitude of bilateral treaties, is sometimes cited as a potential model for Brexit Britain, but in truth suffers many of the same dilemmas as now confront the UK.
In order to preserve current arrangements, the Swiss parliament has in effect been forced to repudiate the referendum of four years ago which resulted in a vote for immigration controls. For many years prior to this vote, Switzerland was able to co-exist with the EU as a kind of forgotten parasite on the pig’s belly. Brexit has brought an unwelcome degree of attention, undermining the exceptionalism Switzerland enjoyed by virtue of history and relatively small size; determined to stop the supposed cherry picking, Brussels is clamping down hard.
Slowly but surely, the Alpine realm is being drawn into the EU’s embrace. In effect, it is already an example of the vassal state hardline Brexiteers fear for the UK if forced to stay in the single market and customs union, conforming to an acquis communautaire it has no say in creating.
Consciously or otherwise, the EU is making it impossible for Britain to leave on decent terms, increasing the chances of a messy exit that will be damaging to all. It beggars belief that otherwise sane policymakers such as Michel Barnier could think that destabilising Europe’s second largest economy, with powerful spillover effects into Europe itself, the right way of approaching the British mutiny.
The Irish border issue provides the latest example of overreach. Has the Commission no understanding of Northern Ireland’s poisonous history? Does it honestly believe that the peacekeeping purpose of the Good Friday Agreement will be furthered by imposing a border between Northern Ireland and the rest of the UK? By what right does it threaten the breakup of a sovereign nation?
Barnier and his puppet masters play a dangerous game in gambling that May will be forced to abandon her red lines. Britain is not Greece, Norway or Switzerland. It cannot so easily be swatted away. As the two sides dig in, the risks of a bad outcome grow steadily higher.