A new government is elected with a substantial mandate to renegotiate the relationship with European institutions. Hardliners insist that no compromises are acceptable. This government believes it holds a strong negotiating hand because exit is a disaster for the rest of the EU. It suggests its vision of a new Europe is in the interests of all members, not just its own. And it reinforces its hand by suggesting a domestic referendum to decide the merits of any negotiated deal.
I am describing Greece’s relationship with the eurozone since electing Syriza to lead its government in January. Tragically, David Cameron’s Conservatives appear to be following the same script. Before Britain dives in, ministers should consider four important lessons it can learn from the Greeks.
Understanding the concept of political contagion is the first. After the financial crisis, everyone knew the dangers of financial contagion. And, in capitals as far apart as Madrid and Dublin, moderates today see political contagion as just as dangerous as the financial kind. EU concessions to extremes in one country simply encourage the ejection of centrist governments in others. This fear of moral hazard has motivated Spain’s hardline stance in talks with Greece, and it appears to be working. The popularity of Podemos, the Spanish leftwing populists until recently riding high in the polls, is sinking fast.
The French stance towards Britain’s EU renegotiation will follow the same script. Granting the UK additional domestic rights without corresponding obligations looks like a terrible deal in Paris, where the mainstream left and right are facing a difficult battle against the anti-EU National Front in the run-up to the 2017 presidential election.
Syriza’s second lesson for Britain is not to overestimate your hand. Greece has repeatedly shown signs of thinking the rest of the eurozone could not imagine life without Athens only to discover that the public in the other 18 eurozone members find granting deep concessions much less palatable than the alternative. So it is vital for a UK government that wants to stay in a “reformed EU” not to repeat this error, touring Europe with warnings of the dire consequences of Brexit for Europeans. No one wants Britain to leave; but the alternative of British membership of the club without playing by the rules is worse.
Domestic rhetoric is just as important; and here the third lesson is to keep expectations in check. Athens was ill advised to promise to end austerity in Greece since — whether the country secures a deal, defaults or exits the euro — that cannot be delivered.
Britain would be equally crazy to suggest it can overturn any of the EU’s four freedoms, applied reciprocally across the union, of movement of goods, services, capital and people. Mr Cameron must publicly limit his ambitions to the achievable — say, seeking to rewrite technical rules in specific areas such as foreigners’ rights to claim benefits.
Most important is the need to embrace fudge. Syriza sought a victory over rapacious creditors but instead is moving towards a compromise that was on the table before the government was elected in January. So the fourth lesson for Britain is to avoid demanding fundamental treaty changes, as the prime minister appeared to do shortly after the election. Such changes are not possible by the end of 2017, before which the referendum is promised; but, as Denmark showed in 1992, alternative legal avenues exist.
Following these four principles will not satisfy Tory eurosceptics but they offer a way towards modest EU reform that can be put to a referendum.
If the Yes vote wins, all well and good. If Britain votes to leave, Mr Cameron can be sure of one thing. The forthcoming negotiation will be simple and harmonious compared with attempting to negotiate an orderly Brexit.
© Financial Times
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