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IPE Views: ​Can the EU avoid both Brexit and Grexit?

A lot of fresh thinking is needed to resolve the European Union’s existential crisis, writes Joseph Mariathasan

The battle lines for the future of the EU are being drawn up as we watch. The news that Nigel Lawson, the UK’s former finance minister under Margaret Thatcher, has stepped forward to lead a campaign to leave the EU is an indication that nothing is certain and there is everything to play for. The interests of Great Britain and of Greece lie at opposite ends of the continuum of possibilities of what the EU should be. The challenge for the EU is to be able to avoid both a Brexit and a Grexit simultaneously.

In September, Lawson announced his new initiative to lead a cross-party movement that would advocate the UK’s exiting the EU before the referendum due to take place by the end of next year. In doing so, he expressed the frustrations of many in the UK – that the EU was simply a development of the European Coal and Steel Community established in 1951, just a few years after World War II, whose prime purpose was to prevent another European war.

That political objective was achieved to the great satisfaction of everyone, but moving on from a trade organisation to one that seeks to establish a united states of Europe does not have majority support within the UK, or, arguably, in many other European countries.

A key objective of Lawson’s conditions for the UK to remain within is to have a British opt-out from the EU’s historical commitment to create an “ever-closer union” of the peoples of Europe. He has also argued for ensuring that national parliaments have the right to club together to block EU legislation. But those demands are completely at odds with the direction of change within the EU, whereby every crisis has been used to establish closer links within states. 

For my Greek friends, though, the EU represents something else – it represents hope. Hope that individuals can escape from the burdens imposed on them by a dysfunctional state, beholden to special interests, no matter which party governs. Moreover, as part of the EU, they see Greece’s security as enhanced against what it perceives as aggressive and unstable neighbours surrounding it. For them, the EU’s institutions and rules represent an escape route from the craziness of a country that aspires to be a developed Western European democracy but remains wedded to practices dependent on patronage and privilege.

Greece has endemic problems its post-war governments have never been able to solve, such as corruption, tax evasion and so on, which makes it closer to an emerging market than a developed one. Its population has been let down for decades by a political class that failed to develop a modern European state. 

Yet an ever-closer union of the peoples of Europe is exactly what would revitalise Greece. Each step following on from membership of the euro gives the psychological assurance the country is moving closer to the Western European countries within the EU. For local entrepreneurs, as well as investors in the country, acting under the protection of EU law while minimising interactions with a dysfunctional Greek government has been a priority. As long as they are clear in all their dealings with the Greek state – on taxation, national insurance contributions, etc. – it is membership of the EU that can provide a route to success.

The pro-EU Greek sentiment and the anti-EU British sentiment now being expressed represent an existential challenge to the EU. Producing an acceptable fudge successful in avoiding both a Brexit and a Grexit is the challenge. It can and should be done, but it may ultimately prove impossible without a lot of fresh thinking.

Joseph Mariathasan is contributing editor at IPE

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