No deal doesn't exist. It's a fantasy politics in which we sail off into the blue having cut all ties with the EU. Even if we flounce off, the crisis will be so bad we will be back asking for a deal within months. The terms will be tougher and we will be weaker than we already are. It will be the start of decades of negotiation with the EU and others, with our reputation shredded, all trust destroyed, and our economy and currency severely damaged. Other nations will not be queueing up to offer us lucrative trade deals, but to pick the carcass. International trade is hard-nosed and we will be desperate.
Why this stupidity then? Why even consider it? Panic is one reason. There is nothing like it for clouding judgement. But the main two reasons seem to be a) to win the Tory leadership contest where the minuscule electorate is similarly deranged, and b) as a negotiating strategy for a negotiation that is over.
As for the strategy, let's call it the Varoufakis strategy. Because it's his. He is an expert on game theory after all. This is where the weakest party to a negotiation spends a few months insulting its partners, then, bolstered by a referendum on whether to accept the terms of a deal that has expired and no longer exists, calls the bluff of people who aren't bluffing by threatening them with an act of self-harm. It didn't work. Are you surprised?
Now read this excellent piece by Viktoria Dendrinou and Eleni Varvitsioti. It's about the end game of the 2015 negotiations.
There is a big difference between us and Greece in 2015. We are the masters of our own destiny. We don't have to do this. We are in an insane trap. At one end is danger, at the other a safe exit. We can revoke, remain, and start to repair the damage we have already done. We continue to walk towards danger and a potential disaster. Why?
Why this stupidity then? Why even consider it? Panic is one reason. There is nothing like it for clouding judgement. But the main two reasons seem to be a) to win the Tory leadership contest where the minuscule electorate is similarly deranged, and b) as a negotiating strategy for a negotiation that is over.
As for the strategy, let's call it the Varoufakis strategy. Because it's his. He is an expert on game theory after all. This is where the weakest party to a negotiation spends a few months insulting its partners, then, bolstered by a referendum on whether to accept the terms of a deal that has expired and no longer exists, calls the bluff of people who aren't bluffing by threatening them with an act of self-harm. It didn't work. Are you surprised?
Now read this excellent piece by Viktoria Dendrinou and Eleni Varvitsioti. It's about the end game of the 2015 negotiations.
...“If Greece left the euro zone, clearly the first thing that would happen would be that the new currency would have no credibility,” an official involved in the discussions says. “No one would want to hold that currency, so you would soon enter into a spiral of devaluation.” This meant the currency would keep losing its value against the euro, a fall that would feed inflation and in turn further currency weakness, making imports more expensive. This would have major implications for Greek debt, as it still would be denominated in euros. A likely immediate depreciation of 50% against the euro would instantly boost the debt-to-GDP ratio, which in June 2015 stood at 180%. The ratio would immediately double to 360% and very soon to 500%, given the impact on the economy. This meant a “very significant debt restructuring would be necessary,” the plan said.Given this situation, Tsipras had little option other than negotiate a new bailout. This describes no-deal Brexit precisely. We would need a deal to counter the consequences of not having a deal. The conditions of getting a deal would be the conditions that we walked away from a deal to avoid.
The paradox was that the only sure thing about a Grexit would be that the country would immediately need another bailout. It felt almost absurd, going through all this trouble to avoid a bailout, only to enter a situation where another one would be needed.
There is a big difference between us and Greece in 2015. We are the masters of our own destiny. We don't have to do this. We are in an insane trap. At one end is danger, at the other a safe exit. We can revoke, remain, and start to repair the damage we have already done. We continue to walk towards danger and a potential disaster. Why?
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