Theresa May’s Poisoned Chalice

Adults in the Room is the title of the memoirs written by Greece’s former finance minister, Yanis Varoufakis. In the book, Varoufakis describes the negotiations he conducted with the Eurogroup and the institutions in order to try to secure a new agreement on how to solve Greece’s debt crisis and to secure debt relief. While this post is not a review of Adults in the Room, it can be said that Varoufakis wrote a page-turner; although some scenes are described in a level of detail that evokes suspicion about the dramatising of the events, the book is by and large a believable, well-written account of the events of 2015.

And should the book be believed, it should inspire a degree of worry. Varoufakis portrays an inflexible, undemocratic EU where much power is concentrated in the hands of unelected technocrats, but with ultimate control resting with the chancellory of Germany. Often in private, ministers and officials alike freely admit that the austerity programme and rescue packages that the troika have been imposing on Athens will not rave her, and that only major debt restructuring along with economic programmes to boost investment could be used as a long-term solution: precisely Varoufakis’ proposals. Yet his proposals were summarily rejected due to a combination of political cowardice and myopia. Negotiations dragged on forever, nevertheless, and towards the end the book becomes more repetitive and dreary: a reflection of the state of the negotiations themselves. Eventually, the process culminates with the surrender of the Greek government and Varoufakis’ resignation.

What, then, does that mean for the Brexit negotiations that the UK, led by Theresa May and chief negotiator David Davis, are about to enter? Varoufakis has an answer for that as well. In The Guardian, Varoufakis outlines ‘six Brexit traps that will defeat Theresa May‘. From delaying tactics to ignoring proposals to a media disinformation campaign, he makes clear that negotiations with Brussels are unlikely to yield much beneficial for the UK; either May will be forced to a humiliating climb down from her demands, or the UK will crash out of the EU in a mutually disadvantageous scenario. In other words, the the institutions will be keen to make an example of the UK. And what of the democratic mandate that May is now seeking for her negotiations? Varoufakis, who was similarly empowered with a democratic mandate, says that this is void in the eyes of the EU; European ministers have democratic mandates they must respect as well, they claim. Varoufakis writes:

For all their concerns with rules, treaties, processes, competitiveness, freedom of movement, terrorism etc, only one prospect truly terrifies the EU’s deep establishment: democracy. They speak in its name to exorcise it, and suppress it…as May is about to discover.

It has always been clear that negotiations with Brussels will be difficult; Varoufakis is only a clear demonstration of the degree of difficulty. We can see, then, that victory in the upcoming British snap election is a poisoned chalice for the Conservative party. Jeremy Corbyn’s Labour Party is almost certain to lose the election, probably by a historic margin. (Even if Labour were to miraculously win, Corbyn and his cabinet are more than likely to be so incompetent at handling the negotiations that Brexit would be more likely to be a disaster). Therefore, Theresa May will be charged with delivering a hard Brexit (which she chose herself, by rejecting a soft Brexit due to the need to control immigration) that must work for Britain. A tall order indeed.

Unlike many ardent Remainers in the UK, I do not believe that Brexit is a wholly disadvantageous deal for the UK. The European Union is, after all, a deeply flawed institution. The eurozone is, more probably than not, destined to collapse under the myopic and undemocratic decision-making of the Brussels technocrats, and while the goal of ‘ever-closer union’ is simply unfeasible, not pursuing it would result in the collapse of the European project. In short, the EU is a disaster waiting to occur. Although a better outcome would have been a narrow majority in favour of remaining, with the UK leading the charge for further reforming the EU, that ship has sailed with the result of the referendum. Now May has to try to make the best out of Brexit. The issue, as we have illustrated, is that it is unlikely the EU will be dealing in good faith.

And should May and Davis fail to deliver a deal, the consequences are unlikely to be benign. What to do, then, were the worse case scenario to occur? Chancellor Philip Hammond has proposed essentially turning Britain into a giant Singapore off the coast of Europe if the EU decided to squeeze the UK economically; the UK’s neighbours are unlikely to appreciate a tax haven right off their coasts. In fact, Hammond has already moved to begin this Singaporisation of Britain: the Conservative manifesto for this election pledges that “corporate tax will fall 17% by 2020- the lowest rate of any developed country”. This, of course, is likely only to benefit the rich and would exacerbate the already existing inequality between rich and poor in Britain. No wonder, then, that Jeremy Corbyn blasted Hammond’s plan as a scheme to build a ‘bargain basement Britain’.

Another option is one that Varoufakis proposes: to agree to a Norway-style deal for a little over half a decade, where Britain leaves the EU but remains in the single market. This would soften the economic blow to Britain, while giving both the UK and the EU more time to work things out and give a full attempt at arriving at a mutually advantageous deal. However, in my view, this is unlikely to happen because it would be politically unfeasible in the UK. When so much of the population is utterly committed to reducing immigration, and the Conservative manifesto makes it clear that they too are committed to reducing immigration, there is no way the UK can remain in a single market where freedom of movement is a prerequisite.

So the options for May, once she wins the election, are as follows: she can try to implement a Norway-style arrangement at the risk of a revolt by the Conservative faithful and hardline Brexiteers; it is a choice likely to be fatal to her government. She could try to leave with no deal and attempt to turn Britain into a tax haven to sustain the British economy, at great cost to her own people. Or she must arrive at a deal with a European technocracy unwilling to give her concessions. What a poisoned chalice.