Bill Jamieson: Dark warning from Greece over Brexit

Former minister says there could be trouble ahead if UK gets caught up in negotiations it cannot win writes Bill Jamieson

Yanis Varoufakis, former finance minister of Greece, paints a harrowing picture of what it was like to negotiate with Brussels. Picture: Getty Images

Across the bright and ever-rising star of Conservative leader Theresa May falls the shadow of Greek tragedy. A strong Left wing voice has piped up which is being given widespread support beyond the boundaries of the Corbynistas. Indeed, many on the Right as well as Left would be delighted if a person of this stature and resonance was leading Labour today.

Step forward Janis Varoufakis, the former Greek finance minister and motor-cycling pin-up boy for Labour’s ultra-Left Momentum campaigners.

This was the man who fought in vain to spare his country from the ignominy and ruin of German-led austerity. His latest book, Adults in the Room, recounting in gruesome detail his marathon battle with the European Commission to spare Greece from Draconian spending cuts, earned him a prominent interview slot with BBC Newsnight’s Evan Davis on Tuesday evening, and was given saturation coverage in, of all places, the Daily Telegraph.

Varoufakis’ stark warning is that the UK should not be drawn into detailed Brexit negotiations - a path that can only end in humiliation and defeat.

Drawing on his own experience at the height of the debt crisis, he paints a harrowing picture of what it was like to negotiate with Brussels.

There are lessons for Brexit in this sad saga. Professor Varoufakis, a specialist on economic “Game Theory”, says Britain must not let itself be captured by the EU’s negotiating net.

If the UK succumbs to that fate, it will be beaten down by one humiliating defeat after another in a slow campaign of attrition. The EU will exploit Britain’s political divisions, playing off regions and parties against each other.

“My advice to Theresa May,” he says, “is to avoid negotiation at all costs. If she doesn’t do that she will fall into the trap of Alexis Tsipras (Greece’s prime minister), and it will end in capitulation,” he told The Telegraph.

His book is a chilling account of his brush with “a back-stabbing and treacherous EU system”.

“The parallel with Brexit,” he says, “is the tactic of stalling negotiations. They will get you on the sequencing. First there is the price of divorce to sort out before they will talk about free trade in the future. They will give you the EU run-around. You won’t always know exactly who to talk to and that is deliberate.”

And the UK, he insists, cannot win because the EU cannot allow a departing member state to gain any advantage lest it encourage other members to follow suit.

“What they are trying to do is to reduce any benefit that Theresa May will get out of the election and downplay her democratic mandate.” The only way to avoid being caught in the spider’s web is to seize the initiative and take away their ability to create mischief.

He advises filing an immediate request to join the European Economic Area for a seven-year transition.

A chorus of Nobel Prize winners has broadly agreed with his critique of the German austerity plan for his country. The “fiscal water-boarding” of Greece, writes the Telegraph’s Ambrose Evans-Pritchard, “with its medieval policies of blood-letting, was counter-productive even on its own cruel terms”.

But the UK is not Greece. And surely the EU would adopt a different approach? But as if on cue, the Financial Times reported this week that the EU’s divorce demand could now rise to 100 billion Euros (£84 billion) with EU chief negotiator Michel Barnier insisting that “its accounts must be settled”.

And as if this was no enough to fan the flames came reports from senior sources in Brussels this week that “the bloody difficult woman” Theresa May would not be allowed to take part in Brexit negotiations.

It certainly seems to fit the Varoufakis account of how the EU deals with country dissent – ‘hard ball’ leaks and briefings designed to undermine the confidence and determination of those who take issue with it.

This may well have the contrary effect in Britain to that intended in Brussels: a strengthening of support for Theresa May and an increasing loss of patience with a ‘negotiating’ process of intimidation and bullying that could last two years or more. Limitless UK patience should not be counted on.

All this presents as much a dilemma for the Corbynista Labour Party as for the Conservatives. Varoufakis remains a strong Corbyn supporter and makes no secret of his Left wing views. At this point the eyes of Telegraph readers will have quickly rolled away to the obituary columns for more agreeable reading. But the warnings about being drawn into self-defeating negotiations would appear to apply as much to a Labour government as to any other, and many Labour supporters will take note.

Could all this be a template for negotiations between Scotland and the rest of the UK in the event of independence? What a ferocious boomerang that would be.

For many in the SNP, the prospect of a UK government becoming trapped in a long and messy trench warfare with the EU may cause a frisson of schadenfreude. This, they would lose no time in pointing out, is the inevitable consequence of pushing for a hard-line Brexit – something an SNP administration would never countenance.

But be mindful of that boomerang. Could all this be a template for how negotiations might proceed between Scotland and the rest of the UK in the event of a second independence referendum and a ‘Yes’ vote?

What a ferocious parallel that would be – and it is not inconceivable considering the similar issues that would arise on ‘Scoxit’ negotiations. Just taking the recent Commons Foreign Affairs Committee report on outstanding Article 50 negotiations as a guide, this would require agreement on the institutional and financial consequences of leaving the union, resolving all budget, pension and other liabilities; the status of UK agencies currently based in Scotland; border arrangements between Scotland and England; the status of Scottish citizens living in the rest of the UK (and vice versa); Scotland’s ongoing relationship with UK-wide regulatory bodies and agencies; the status of ongoing police and judicial co-operation; participation in ongoing foreign and security policy missions; a clear framework for Scottish rUK trade, and clarity on location of former UK powers with an independent Scottish government.

There was much talk during the last referendum campaign of a “velvet divorce”. But opinion south of the Border has hardened significantly since then as a result of First Minister Nicola Sturgeon’s relentless criticism of the UK government. And that opinion would almost certainly harden further on a ‘Scoxit’ vote.

Agreement on these and other issues over two years would be ambitious. And who dares predict who would be the winner after such a bitter and corrosive negotiating war?

As for the current stand-off between the UK and Brussels, the Varoufakis option of EEA membership to enable a seven-year transition is beginning to look like a credible and least ruinous settlement for both. But even here, the wrangle over who pays to the EU and for what will ensure, as it has done for most of the UK’s EU membership, a fractious stand-off.