The three lessons Brexit Britain can learn from Greece
In the summer of 2015 I moved to Greece. Well not actually, but I might as well have done. Throughout the time between January 2015’s election of a Syriza government and July 2015’s final deal on Greek membership of the euro I was BBC Newsnight’s economics reporter and, with the exception of the small matter of a UK general election, Greek matters came to dominate my job. During the crucial period of late May to early July 2015 I was more often to be found in Athens than London. During that time I racked up a fair few Aegean air miles, became overtly familiar with the room service options in the Novotel Athens (I recommend the kebab, avoid the pizza) and learned a great deal about the European Union reacts in a standoff.
Much of that experience has felt eerily familiar over the past 16 months or so as the Brexit process has unfolded. Of course there are important differences. The outlook for the UK economy has darkened recently and, once again, inflation is running ahead of wage growth squeezing real incomes. But the UK’s position is nowhere as precarious as Greece’s was, either in terms of the pain already suffered or the potential consequences of the talks going wrong.
Differences aside though, the fundamentals do induce a sense of déjà vu. Like the Syriza government in 2015 the UK position is best summarised as “having our cake and eating it.” In 2015, Alexis Tspiras won on a platform of “ending austerity” and “staying in the euro.” Given the institutional setup of the eurozone—and where the balance of power lay—that combination proved impossible and eventually he was forced to back down and choose one or the other. Similarly, the UK began the process with aspirations to maintain as close a trading relationship as currently with the EU whilst also reducing payments, ending free movement of labour and gaining the ability to strike trade deals with third parties. As in the Greek case, the final outcome will differ.
The process itself, marked by arbitrary timelines that seem to always slip and constant briefing, counter-briefing and leaking by both sides is enough to give me flashbacks.
But the biggest similarity is the nature of the problem itself. I was an economics correspondent but the real issues in the Greek-eurozone standoff were essentially political. The issues raised might be economic or financial but the solution would always be coloured by domestic and international politics. Coalition building, both between and within countries, was crucial to the Greek outcome and will be crucial to the remaining 18 months of the Brexit talks.
In that spirit, the three main lessons I’d drawn are as follows.
First, “red lines” matter less than might be assumed to both sides. The Syriza government eventually crossed most of its declared “absolute” red lines in the final deal and the rest of the eurozone (more quietly) shuffled over a few of its own too. We are still at a point in the EU27/UK talks when many of the demands from both sides need to be taken with a pinch of salt—especially in the case of the weaker party, the UK.
Second, there’s no straightforward relationship between economic outcomes and political realities. As the eurozone tightened the financial screws on Greece, the economy lapsed back into recession, the banks were closed and unemployment ticked upwards. But the worsening of the economic outlook did not (at least in 2015) really dent Syriza’s domestic popularity. The government managed to blame the problems on European intransigence. 2018 looks set to be a tough year for the UK economy but I’d be wary of forecasting the political implications of that—too much is contingent on how politicians and the public react. It may be that a grimmer economy leads to some rethinking of Brexit, but it could just as easily not.
Finally, not only do domestic politics matter to the outcome but internal party politics are absolutely crucial. The so-called Left Platform of Syriza was a noisy voice in 2015—it called for a harder line approach to the EU, for preparing to leave the euro and for the need to honour Syriza’s democratic mandate. Partially because of the fact it that it was filled by articulate, English speakers it got, perhaps, more attention than it served in foreign coverage of the standoff. But in the end, Tspiras’s domestic position—and his standing in his own party—was strong enough that he could marginalise those voices and strike a deal with Europe over their heads. Indeed, even after much of Left Platform abandoned Syriza post-deal, he was strong enough to win re-election in September 2015 without them.
The contrast with the UK is stark. The Jacob Rees-Moggs of this world that make up the Tory Right Platform are as vocal and articulate as any member of Left Platform and just as intransigent on their views about a future deal, but they hold a much stronger position in the Conservative Party than Left Platform ever did in Syriza.
In theory it should be relatively straightforward to agree a transitional post-Brexit deal that avoids the “cliff edge” outcome of reverting to trade on World Trade Organisation terms in early 2019. Such a deal is in the interests of both parties. But the biggest risk is domestic politics. Left Platform had a lot of bark but in the final analysis no bite, the Tory Right Platform look to be a position to follow through on their threats.
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