For a post-Brexit lesson, look what happened after the Greek referendum

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European markets columnist

Athens is a useful vantage point from which to reflect on the surreal nature of European plebiscites. After Britain’s 52%-48% vote against European Union membership on June 23, the lesson of history — especially the bizarre referendum U-turn over Greek austerity a year ago — is that a complete British divorce from Europe is highly unlikely.

Much more probable is a flexible “halfway house” relationship, far from the absolutist or apocalyptic predictions of Leave or Remain campaigners. The U.K. and its EU partners will still carry out substantial trade and investment. Britain will make reduced payments into the European budget. And restrictions, but no swinging clampdown, will be in place on free movement of people between the U.K. and the EU.

Almost nothing any protagonist said before the referendum — whether the “in” or “out” camp, or pontificating foreign government or business leader — holds true in the new post-referendum world. The circumstances embody a touch of fantasy. David Cameron, the U.K. prime minister, has lost a referendum he probably never believed would take place and that his opponents (led by Boris Johnson, the now somewhat baffled-looking former mayor of London) never really expected to win.

The punitive post-Brexit emergency budget threatened by George Osborne, the chancellor of the exchequer, will probably remain a piece of dark fiction. Formal exit talks under Article 50 of the European treaty, promised before the referendum and demanded by EU partners, won’t start quickly and may be bypassed by other negotiating mechanisms that Britain believes are more propitious and less threatening.

A second referendum on the issue, universally ruled out before June 23, may take place in the next few years. Equally, the U.K. may decide to hand back sovereign decision-making to where it resides, with parliament, possibly after an early general election that lawmakers would have to engineer (with difficulty, under Britain’s new fixed-term parliamentary system) for later this year.

Read: The Brexit vote wasn’t democratic at all

Over the past 25 years Denmark and Ireland have held referendums rejecting aspects of their countries’ EU relationships, but accepted modified terms later. France and the Netherlands both turned down the European constitutional treaty in 2005, but the Lisbon treaty was accepted four years afterward.

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Anti-immigration sentiments have fueled political movements around the globe, from the Brexit vote to the rise of Donald Trump in the U.S. WSJ chief economics columnist Greg Ip explains why national identity, not economic concerns, may be primarily fueling frustrations. Photo: AP

Almost a year ago, Greece voters decided 61%-39% to reject a deal with creditors on a bailout loan package designed to keep the Greeks in the euro.

A week later, Alexis Tsipras, the left-wing Greek prime minister who had railed against creditors’ “ultimatums” and “blackmail,” signed into law the exact measures he had fought, including tax increases, privatizations, and pensions and pay cuts. One year later, despite many unresolved problems, Greece looks set for a modest recovery in the next two years. Creditors are working discreetly on a landmark debt restructuring deal that could be unveiled this autumn to fix ultralow interest rates on around €150 billion of Greece’s foreign debt for up to 30 years.

Greek bankers praise Tsipras for pro-reform policies reminiscent of Margaret Thatcher, the U.K.’s free-market 1980s prime minister. Euclid Tsakalatos, the softly-spoken Marxist Greek finance minister who took over from Yanis Varoufakis, his firebrand processor, has earned praise from the German government (and damaged his domestic left-wing credentials) for rebuilding relations with European finance ministers.

Greece is one of the many countries in no hurry to see Europe’s political map redrawn. By going slow on exit procedures, Britain can turn the political timetable in Europe to its advantage.

Read: Brexit is just the beginning of a popular revolt against elites

Both France and Germany have elections next year. Anti-immigrant groups are gaining ground in both countries and could capitalize on homegrown frustration with the EU. While Francois Hollande is so unpopular as France’s president that he is unlikely to reach the final round of voting, German Chancellor Angela Merkel is expected to win but will likely to need a new coalition partner, given the weakness of the rival Social Democrats. Add to that any breakdown in negotiations with the U.K., and critics could argue those leaders can’t competently handle a crisis.

The bottom line: Paris and Berlin could find it difficult to take a tough line to counter British political demands.

Also read: People in ‘Brysterics’ over Brexit need to answer these 10 questions

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