Expert View

Brexiters are crazy to take lessons from Varoufakis

by Pavlos Eleftheriadis | 26.10.2017

Pavlos Eleftheriadis is a professor of public law at Oxford University.

David Davis is the latest hardliner to praise Yanis Varoufakis, telling MPs yesterday to read his recent book. Doesn’t he know that the former Greek finance minister’s antics nearly destroyed the country?

Sadly, the UK’s current position towards the EU has come to resemble Greece’s strategy of 2015. At that time the newly elected Greek government was seeking a total renegotiation of the bailout deal of 2012. The Greek plan has been described in detail in Varoufakis’ book Adults In the Room: My Battle with Europe’s Deep Establishment. It reveals two striking analogies between Greek Prime Minister Alexis Tsipras and Theresa May.

First, a mistaken perception of the underlying balance of power. Tsipras entered the negotiations thinking he held a winning hand. He believed “Grexit” would be very damaging to the rest of the eurozone. He also thought that if Athens threatened to create a parallel electronic currency and default on loans held by the European Central Bank (ECB), the EU would cave in.

These calculations were entirely misguided. Neither Tsipras nor Varoufakis understood the eurozone’s legal architecture. A parallel currency would have violated the EU treaties, which provide that monetary policy is an “exclusive competence” of the EU for eurozone members. The new currency would thus have brought legal chaos, without affecting the eurozone in the least.

Meanwhile, defaulting on the bonds held by the ECB would not have had the domino effect Varoufakis expected. The other countries were well protected from contagion because the ECB had a contingency bond-buying plan that the European Court of Justice declared legal, contrary to the former Greek finance minister’s wishful thinking. 

Similarly, May triggered Article 50 negotiations appearing to believe that a “no deal” Brexit would be so damaging to the EU’s exports that it would bend over backwards to do a deal. That’s why she kept saying “no deal is better than a bad deal”.

Like Tsipras, she miscalculated. As confirmed at last week’s EU summit, the other countries are fairly relaxed about “no deal”. It would not be ideal, but they can live with it. So the EU is still refusing to open negotiations on a future trade deal until the position of EU citizens, the UK’s financial obligations and the Irish border are resolved.

The second striking similarity between Tsipras and May concerns their expectations of what they could achieve. The Greek prime minister entered the talks believing his interlocutors were “illegitimate” and “undemocratic” bureaucrats. He also thought that they would offer him a novel deal, unlike anything that had been done before.

Tsipras was again mistaken. His interlocutors were not undemocratic bureaucrats but elected politicians from other countries, looking out for their own voters’ interests. Nor did they have the power to make up the rules as they went along. Varoufakis and Tsipras appear to have been surprised that the EU is a community based on the rule of law.

May is going through the same process of discovery. Her talks are not with “overpaid bureaucrats”, as the Brexit media likes to describe them. She is negotiating with other countries’ elected representatives, who are accountable to their own parliaments or, as in the case of Jean-Claude Juncker, are accountable to the European Parliament.  

Brexiters, just like Greek populists, have been so blinded by ideology that they did not care to understand how the EU works. And just as in Greece, their encounter with reality may be happening too late. Having wasted six months, the UK government is now calling for urgency, flexibility and creativity to get a unique “bespoke” deal. Fat chance of that.

Although the radical left Varoufakis is a strange bedfellow for right-wing Tories, there is one lesson Britain could usefully take from Greece. At the height of his showdown with the eurozone, Tsipras called a referendum to back his decision to say “no” to the bailout terms offered by the other countries. The people backed him resoundingly.

Just a few days later, realising the havoc a total default would cause, Tsipras did a flip flop – or what the Greeks call a “kolotoumba” – and sued for peace with the eurozone. Given the chaos as May struggles with the impossible task of finding a good Brexit, might the UK do its own kolotoumba?

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    Edited by Hugo Dixon

    14 Responses to “Brexiters are crazy to take lessons from Varoufakis”

    • there is another lesson for May and Davies too :

      Tsipras is still in power, while Varoufkis has exiled himself for fear of his life, so much is he reviled back in Greece.

      • ‘Tsipras is still in power, while Varoufkis has exiled himself for fear of his life, so much is he reviled back in Greece.’

        Why lie?

        And why lie so blatantly?

        He was in Greece this week talking about DiEM25.

        He regularly gives lectures and presentations.

        • what are my lies ?

          1) I said that Yanis Varoufakis doesn’t live in Greece anymore (Athens to be precise). that is true.
          2) I said that he is reviled in Greece. that is true too (reason why he left the country)
          3) I said he exiled himself … well, that pretty much is explained by 1) and 2). you might have preferred a less charged adjective. no biggie.

          now, he may come back for a day or a few hours to enjoy the spotlight, here and then, but he still doesn’t live in Greece, nor is he much liked by Greeks, wide and large.

    • Adults in the Room addresses eurozone membership, not Grexit.
      This raises entirely different legal issues to Brexit. Any direct link between
      the two is irrelevant, because the UK wants to leave the EU, and the EU has
      outlined conditions for doing so which are entirely reasonable. David Davis
      has problems understanding that the conditions need to be met. Alexis
      Tsipras agreed to conditions that were not reasonable, against the advice
      of Varoufakis. Unfortunately for the UK, its government lacks an intelligent
      negotiator with common sense.

    • That is quite an unfair comparison, Prof Eleftheriadis.

      Both Tsiprias and Vanoufakis ‘legitimacy’ came from the voting Greek public, who wanted the destructive and failed policy of “Austerity” to end. This was their mandate. They hoped that cross-EU public pressure would be enough to help them see their way to a rational solution – ie, a solution that wasn’t making the original conditions worse, in a never-ending spiral.

      As Varoufakis has described (although i haven’t read his books), the central opposition to this came from the technocratic body controlling the Eurozone. Calling this body “democratic” because far down the chain someone was elected is a similar argument to claiming the House of Lords is democratic because the peers put there are put there by an elected PM.

      Its an argument political philosphers can make, but the hoi p find it strange.

      IF common-sense had prevailed, and the Greek debt written off so the economy could recover so SOME of the debt could be repaid; then Tsiprias and Varoufakis would have been the Davids beating the Goliath, and would be feted and respected.

      I’m a pro-European, but in no way blind to the real faults within the EU structures. After all, the Goldman Sachs ‘experts’ who cooked Greek books so Greece could enter the Euro have not been even remotely charged with fraud. Why not?

      For the same reason banksters were not punished in the UK for 2008, either.

      Varoufakis is a very intelligent and erudite individual, the only economist that i have seen who ripped apart the fabulist screed of Piketty being worshipped by the global Blairites.

      I don’t agree with him on everything, nenetheless its a TAD harsh to blame him personally for all Greece’s ills, especially as had he succeeded, then the EU would be far more popular.

      And the Greeks far less depressed.

      • well, if the hard left get exercised everytime one of their sinners (Tsipras & Varoufakis) get to face reality, something is certainly being done right

        when I read your post describing eurozone ministers, presidents and chancellors as “unelected technocrats”, I couldn’t suppress a big LOL at the sheer stupidity of your claims.
        pretty much like the heavy trip that constitutes the rest of your ramblings

        well, have a good day. and stop the meds.

    • Professor at Oxford?! It seems parochial Greek political infighting may have determined your opinions more than scholarship. The “parallel currency” was euros, so there were no legal issues; and it was not a “threat” but a precaution. The bond default threat was not “contagion”, but a loss on a national loan that would jeopardize the legal basis of the ECB bond-buying scheme used to prop up the euro. When you have arguments against reality rather than a faux version of it, write another article.

    • The author conveniently leaves out the fact that the UK funds the EU whereas the Greeks were completely broke and under the control of the euro Troikans. He also fails to mention that the UK is the EUs biggest importer, a nuclear power, has its best intelligence centres and has Europe’s biggest financial centre.

      You’re comparing apples with pairs. Davis was pointing to Varoufakis’ book not as a blueprint for negotiation, but to show how devious the corrupt, anti-democratic and unaccountable EU is.

    • One important difference between the Greek situation and the UK’s is that Britain is a net contributor to the EU budget, the second biggest net contributiot after Germany.

      Many people who voted for ‘Brexit’ were concerned by the EU’s continually expanding powers over (once) sovereign nations, with the end game purportedly being a European Superstate, run by UNELECTED BUREAUCRATS, with Junkers as its UNELECTED President. Not many people who truly believe in democracy can be happy with that scenario.

      No matter how seemingly benign, a dictatorship will always be a dictatorship.