Jeremy Warner:

As Greece discovered, Brussels is prepared to ignore democracy when it serves its interests

The other day, Yanis Varoufakis, Greece’s one time finance minister, posted one of those self-satisfied “As I wrote some time ago … the same holds true today”-type observations on Twitter. He was talking about the hopelessness of Theresa May’s task in attempting to negotiate a mutually beneficial trade deal with an intransigent Brussels. Drawing on his own experience during the Greek debt crisis, he had said that she was running at a brick wall, and so far he’s been proved absolutely correct.

Mrs May is notionally sticking with her doomed Chequers plan – but there are in truth only three options left, all but one of which breach her red lines in some way or another.

First, there is the Norway option: only worse, because for a large economy such as the UK, the EU would insist that continued membership of the single market should also require membership of the customs union. Second, there is a conventional Canadian style, free trade arrangement. And third, there is an acrimonious departure with no-deal on World Trade Organisation terms. All three are sub-optimal for the UK, politically and economically.

There is no fourth way; Mrs May’s advisers have been deluding themselves in believing there is. The Prime Minister’s fallback is no deal, which gets her off the hook of the Irish backstop commitment but would be unlikely to pass parliament; other Cabinet ministers favour Canada, which would also struggle in parliament. Either way, there will be a medium term economic cost.

The parallels with Varoufakis’s own failed attempt to negotiate with the EU, backed by the same democratic mandate as May claims for Brexit, are indeed striking. “Even though the EU has evolved a great deal, and acquired many of the trappings of a confederacy”, Varoufakis wrote in The Guardian last year, “it remains in the nature of the beast to treat the will of electorates as a nuisance that must be, somehow, negated … 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.”

In 2015, the Greek people voted in a referendum to reject the EU’S usurious bail-out terms. Armed with this mandate, the Greek Government demanded a better deal. Brussels refused, and within weeks Greece had surrendered on all fronts. It was a moment of unsurpassed national humiliation. The EU was never going to agree anything else, if only because the demands of one country’s democratic mandate will inevitably clash with the democratic mandates of others. Thus by pitting one mandate against another does the EU manage to overrule the national democracies of its member states.

But there are important differences between Greece then and the UK now. The biggest is that Greece never had any intention of leaving the single currency, let alone the EU. It therefore had no cards to play, a fact underlined by its trivial size as a proportion of the wider European economy.

Happily, the UK isn’t part of the euro, making it much easier to leave the EU without blowing up the whole train set. Furthermore, I get no sense that the EU is any longer interested in making it impossible for the UK to leave; the difference may seem marginal, but instead it is saying that if you want to leave, your new relationship with us will be on our terms, not yours.

Like Varoufakis, the UK has adopted a divide-and-rule approach by attempting to persuade individual countries that, never mind the sanctity of the single market, continued unfettered trade with the UK is in their own national interests. Some governments have given Britain reason to hope. But in the end, a combination of loyalty to club and petty greed has prevailed. Everyone knows that to remove nearly 20 per cent of the single market’s combined GDP will inflict significant overall damage, but individually everyone expects to gain from Britain’s departure, capturing some of the business the UK leaves behind. Just as Germany’s supposed self-interest denied Greece its debt write-off, an unseemly scramble for UK jobs has scuppered Mrs May’s chances of an economically rational, grown-up deal.

Beware the EU’S love of sequencing, warned Varoufakis – or of saying that, before we can agree the new relationship, we must first agree the preliminaries. The UK ignored his advice and fell straight into the mantrap of the Irish backstop, making Canada Plus a potentially fatal blow to the unity of the United Kingdom.

So we are where we are, stuck deep in the mud. Eventually, things will shift. Ten years from now, after the dust has settled, we’ll look back and wonder what all the fuss was about. Some kind of new equilibrium with Europe will have established itself, but – and I’m not sure who will be most disappointed by this, Leavers who hope for freedom to flourish or Remainers who predict disaster – whether much will have changed fundamentally is an open question. Somehow I doubt it.