BREXIT

LONG before the people of the UK voted to leave the EU in the 2016 referendum, before the term Brexit had even been coined, it was Grexit that was preoccupying the minds of Eurocrats.

Greece came close to crashing out of the single currency on at least four separate occasions after a vast black hole opened up in the country’s accounts in 2009.

At one stage in 2012, the British banknote printers De La Rue was asked by the government in Athens to make contingency plans to print new drachma notes (Greece’s pre-euro currency) in preparation for what many called the “Double D” solution to the economic problems Greece was facing: default on the country’s debt and devaluation with the return of the drachma.

Today, Greece remains one of the 17 members of the eurozone – and this fact alone should lift the spirits of the UK negotiators. Armed with her newly acquired Parliamentary majority, Theresa May returns to Brussels seeking at the very least to put a time limit on the Irish backstop deal she signed up to.

Each time a Greek default loomed into view, threatening the stability of the eurozone and raising the possibility that Italy or one of the other member countries might also head for the exit, the main protagonists – the hard-line German-dominated European Central Bank (ECB) in Frankfurt and the European Commission in Brussels – caved in and authorised a bailout.

Last-ditch negotiations, usually conducted over a weekend when the financial markets were closed, would typically go into the early hours of Sunday morning.

Late-night deals were hatched against a backdrop of TV screens showing central Athens on fire and anti-austerity protesters ripping up flagstones in the capital’s Syntagma Square.

The first £38bn bailout was agreed in the dead of the night on April 23, 2010, by the troika of the ECB, the European Commission and the International Monetary Fund. It was one of several rescue packages for Greece, some of which required a change of government to get them over the line.

WHAT happened to Greece is typical of the Eurocrat tendency to fudge, to muddy the waters and eventually to seek compromise in a crisis situation.

Indeed, the history of the EU is littered with examples of Britain locked into eleventh-hour talks with eurocrats as the UK has sought changes in our terms of membership.

John Major worked through the night in 1991 to secure Britain’s opt-out from the social chapter of the Maastricht Treaty which would have dictated working conditions in Britain and could have undermined the labour market reforms pioneered by his predecessor Margaret Thatcher. Indeed, she herself was a fierce negotiator in organising rebates from Brussels from the UK’s oversized contributions to the EU budget. In 1984, in the imperial grandeur at the historic palace of Fontainebleau in France, European leaders painfully conceded the famous British EU budget contribution rebate – or as the French sarcastically called it “le chéque Britannique”.

And let’s not forget that in the teeth of his promise to hold an in/out referendum, David Cameron returned from Brussels in the early hours one day in February 2016 with draft reform proposals agreed by European Council President Donald Tusk which he claimed would give Britain “special status”.

In the event, the pledges made by Brussels were so anaemic that they failed to convince British voters that sovereignty could be maintained by voting remain – a huge mistake by the eurocrats who failed to recognise the strength of anti-EU feeling among large swathes of the UK population.

Both in national negotiations and in commercial transactions, reaching an accord more often or not comes down to the wire.

With the clock now ticking inexorably to March 29, the desperation of the leaders of the other 27 EU countries to avoid an economic and financial crisis at the very moment that Germany and the eurozone are facing the bleak prospect of recession may be Theresa May’s best hope. This is regardless of how unyielding Brussels negotiators have been to date and their willingness to play havoc with business confidence and financial stability by its brinkmanship.

THE potential loss to Brussels of a £39bn one-off payment to a Commission cash starved as it is following years of economic slowdown, could potentially be a bargaining chip for the Prime Minister in the last-chance saloon.

In the final analysis, the anecdotal evidence of what the late-night sessions in Brussels, Nice, Maastricht and other destinations should tell us, is that it’s Germany and, to a lesser extent, France which decide.

Besieged by increasingly hostile populist movements, neither Berlin or Paris will want to make political life tougher than it already is.

The politics of the EU, at their most raw, are little different to those of the bazaar. The natural tendency should be now to relish an aggressive haggle but then, eventually, to compromise.

. See also Should we really despair over Brexit? Europe is in a mess.

BREXIT–EUROPE

THE Brexit debate has plunged British politics into a rollercoaster of agony and self-doubt.

Following a year of political high drama and turbulence, and, given the parliamentary impasse over the Prime Minister’s deal, there are significant anxieties about the consequences of leaving the EU without a withdrawal agreement in place.

Some will ask whether it will plunge us into an economic depression? Others are predicting that prices will rocket and ask whether essential goods will be in short supply? And some doom-mongers even suggest that there will be riots on the streets as the ugly new social divisions opens up as Brexit plays out.

We shouldn’t doubt for one moment that these concerns are wholly understandable, and it is right that we focus on them.

But we are also in a position where we should be counting our blessings. We are not the only country experiencing turmoil – and for many of our European neighbours it is far worse.

Around Europe, many leaders have spent the last few months contemplating chaos and political confusion, widespread public dissatisfaction, growing unrest and even violence. For some, economic winter is already descending.

Indeed, the continent of Europe confronts a growing crisis which could yet cause the collapse of the EU.

So whatever our Brexit troubles – and there are doubtless more to come – we should remind ourselves that unemployment is at a record low, and that since 2009 the UK has enjoyed continuing economic growth.

Compare this with Spain. Whilst our rate of youth unemployment stands at just 9.3 per cent, the comparable rate in Madrid is just under 35 per cent – and more than a third of young people who are able to work have never had a job. Moreover, this human tragedy is directly linked to Spain’s membership of the EU because the euro has rendered large tracts of the Spanish economy hopelessly uncompetitive.

Economically, Italy’s story is even more harrowing. Its economy is barely any bigger than it was twenty years ago, employment stands at 10.6 per cent and youth unemployment is 32.5 per cent. The national debt stands at almost 2.5 trillion euros – more than 130 per cent of Gross Domestic Product. That money will never be paid back and Italy is heading once more for bankruptcy.

No wonder so much of the country feels total frustration and fury at distant EU bureaucrats whom they believe – and with some justice – have condemned Italy to economic decline and failure, let alone their incompetency on migration, which Italians feel they are now bearing the brunt of.

In Greece, the very birthplace of European democracy, an epic tragedy continues to play out: membership of the eurozone has wiped out businesses, jobs and entire industries that will take generations to recover.

Let’s look, too, at fraud and corruption. We’ve had serious problems on this front here in Britain, not least among scores of MPs who infamously were found to have fiddled their expense claims. And, yes, the occasional business executive is disgraced or imprisoned. But Britain is a remarkably honest country compared with what has been happening throughout the EU.

Take Malta, viewed by most Britons as a holiday paradise. Recently, a dark underside came to light with the murder of a journalist investigating government corruption, including the sale of EU passports to shady figures from the former Soviet bloc. Many believe Malta escapes sanction from Brussels because the country’s deeply compromised ruling elite can be relied on to do what the European Commission tells it to do.

Romania and Bulgaria are two other countries where corruption flourishes. The culture of greed and backhanders in these two former Iron Curtain nations helps explain the poverty and mass emigration to the rest of the EU. The problem is so flagrant that the Romanian government has sacked the EU-backed chief anti-corruption prosecutor.

As for concerns about law and order, well we have no reason to be complacent. London has seen 131 murders during 2018 – an increase of 38 per cent (excluding deaths by terrorism) on 2014.

There is public anxiety about the ability of our police forces to deal with everyday crimes, while the recent events at Gatwick – when the drone scare brought the airport to a standstill – did us few favours by exposing lax security.

Politicians were slow to react, while the police, military and intelligence services were made to look foolish.

But compare that with France, where for more than seven weeks now, the gilets jaunes (yellow vests) fuel protestors took violent unrest to the streets.

The protests are about more than just France; they are of existential importance to the EU because President Macron has become the poster boy for the European project as Chancellor Angela Merkel’s star starts to fade in Germany.

Macron’s response has so far been weak. He has responded with a mixture of police brutality and concessions to rioters which so far have not worked.

As for political stability in Europe, well therein lies the greatest crisis for the EU.

In Britain there have been warnings that the two-party system which has governed us for more than two centuries may collapse – damaged irreparably by the Brexit fallout. And there are menacing signs that the far-Right racist parties are on the rise, all the more so now UKIP employs the thug Tommy Robinson as an adviser.

No one should dismiss the reality of these fears. Only Italy’s government, out of the EU’s Big Four (France, Germany, Spain), has strong support and a clear political majority.

And that is for the so-called “government of change” – made up of two populist parties – which has flouted EU budgetary edicts, and rails heavily against immigration policies.

Consider also the bitter dispute between Madrid and the Catalan separatists, whose leaders either await trial at home or are in exile.

In Germany, social democracy is on the wane and the far-Right poses a menacing threat with the electoral successes of the popular nationalists of the neo-fascist Alliance for Germany party.

Even Belgium, the headquarters and the centrepiece of the EU, is in a political shambles. Prime Minister Charles Michel has resigned leaving a vacuum, while concerns about chronic unemployment and immigration fester.

Further east, the situation is much more threatening with the rise of far-Right parties exploiting popular fears about immigration. Poland and Hungary, both at daggers drawn with Brussels, increasingly present a chilling authoritarian alternative to the EU model of liberal democratic politics.

Brexit confronts Europe with a fresh problem. As one of the biggest financial contributors to the EU, the UK has been essential for balancing the books.

At a time of economic stress, Germany, Holland and the other large contributors will refuse to pay more. However, supplicants such as Bulgaria and Romania will be furious at receiving less.

Elections are due in the spring for the European Parliament and these may prove a shock to the EU elite as Right-wing parties score more significant gains. We will see new populist politicians emerge.

There is no question the EU is about to enter the greatest crisis in its 60-year history – and Brexit is just a small part of it.

This is not a reason for the Brexiteers to gloat. Trouble among our closest neighbours will hurt us badly at home. We are entering truly troubling times, but we should keep a sense of perspective during 2019 and remind ourselves we have every reason to feel some pride in the stability, prosperity and decency of 21st-century Britain.