Greece crisis: Yanis Varoufakis admits 'contingency plan' for euro exit / GUARDIAN

Varoufakis’s plan B … B for barmy

At a push, one might say the government in Athens was duty-bound to work on a plan B in case bailout talks collapsed, liquidity from the European Central Bank was cut off, and Greek banks remained shut. But former finance minister Yanis Varoufakis’s idea to set up a parallel payment system suffered from two obvious flaws.

First, it required a crack team to hack into the public revenue office’s software to copy individuals’ tax codes. Varoufakis’s explanation is that the plan had to be kept quiet in case the dreaded troika of lenders got wind of it. OK, but the idea that a few individuals could design a robust new payments system from scratch, and in secret, is simply not credible. Payments technology and smartphone apps are not cheap or easy to develop – just ask any UK bank.

The second problem is even more fundamental. If the payments system had been launched, the creditors might have declared that Grexit had already happened on the ground. That would not have helped a Greek government still hoping for a deal.

Regard the tale, then, as a strange subplot to the Greek crisis, of which the oddest part is Varoufakis’s apparent belief that his secret plan could remain secret even after he had related it on a conference call to a bunch of hedge fund managers earlier this month.

Nils Pratley

Monday 27 July 2015 20.02 BST / http://www.theguardian.com/world/nils-pratley-on-finance/2015/jul/27/stock-market-china-analysis-nils-pratley

Greece crisis: Yanis Varoufakis admits 'contingency plan' for euro exit

Politicians react angrily to ‘dark narrative’ of former finance minister’s plans for parallel currency

Helena Smith in Athens

Monday 27 July 2015 19.34 BST / http://www.theguardian.com/business/2015/jul/27/greece-crisis-yanis-varoufakis-admits-contingency-plan-for-euro-exit

Greece’s former finance minister, Yanis Varoufakis, has been thrust back in the spotlight as he vigorously defended plans to launch a parallel payment system in the event of the country being ejected from the euro.

Saying it would have been “remiss” of him not to have a “plan B” if negotiations with the country’s creditors had collapsed, the outspoken politician admitted that a small team under his control had devised a parallel payment system. The secret scheme would have eased the way to the return of the nation’s former currency, the drachma.

“Greece’s ministry of finance would have been remiss had it made no attempt to draw up contingency plans,” he said in a statement.

But Varoufakis, who resigned earlier this month to facilitate talks between Athens’ left-led government and its creditors, denied that the group had worked as a rogue element outside government policy or beyond the confines of the law.

“The ministry of finance’s working group worked exclusively within the framework of government policy and its recommendations were always aimed at serving the public interest, at respecting the laws of the land, and at keeping the country in the Eurozone,” the statement said.

Earlier on Monday the Official Monetary and Financial Institutions Forum, which had organized a conference call between Varoufakis and investors, released a recording of the conversation held between the former minister and financial professionals on 16 July . Varoufakis is heard saying that he ordered the ministry’s own software programme to be hacked so that online tax codes could be copied to “work out” how the payment system could be designed.

“We were planning to create, surrepticiously, reserve accounts attached to every tax file number, without telling anyone, just to have this system in a function under wraps,” he says, adding that he had appointed a childhood friend to help him carry out the plan. “We were ready to get the green light from the PM when the banks closed.”

The plan was denounced by Greek opposition parties, which in recent weeks have called for Varoufakis to be put on trial for treason. The academic-turned-politician has been blamed heavily for the handling of negotiations with Greece’s creditors – the European Central Bank, European commission and Internatonal Monetary Fund – which saw Greece come close to leaving the eurozone.

The small centre-left Potami party said the scheme was “reminiscent of a bad thriller.” The main opposition New Democracy party demanded that the government “come up with convincing answers for the Greek people … so that light can be shed on this dark narrative.” Slovakia’s finance minister Petar Kazimar went further, savaging Varoufakis’ “two faced games.” In a series of tweets he wrote: “Unveiled plans by #Greece ex-FinMin Varoufakis to return to drachma during ongoing talks with us show how unpredictable he was as a partner”. “We need to make sure such two-faced ‘games’ will be avoided when debating&drafting the third bailout package for #Greece#ECB#Eurozone”.

Varoufakis, who once proposed wiring up tourists in a bid to clamp down on tax evasion, denounced media accounts of skullduggery as far-fetched.

In a tweet responding to a report revealing the plan in Sunday’s conservative newspaper, Kathimerini, he tweeted: “So, I was going to ‘hijack’ Greek citizens’ tax numbers? Impressed by my defamers’ imagination.”

In the statement on Monday the politician insisted that under his stewardship the Greek finance ministry had not only served the public’s interest “against many odds” but managed to change economic debate “throughout the continent.”

Since the Greek prime minister, Alexis Tsipras, caved into creditor demands at an EU summit on 12 July, more than a quarter of the 149 MPs in Tsipras’s Syriza party have refused to endorse the sweeping austerity measures demanded by Greece’s creditors in exchange for up to €86bn (£61bn) in fresh bailout loans.

Forced to push the policies through parliament with the help of the “pro-European” opposition, Tsipras’s leftwing Syriza party is not only divided but bears little resemblance to the one he was catapulted into office with in January.

Addressing Syriza’s governing parliamentary secretariat late on Monday, the leader threw down the gauntlet challenging dissidents to come up with a better plan than the one he had been forced to accept to keep Greece in the euro. Rebels have refused to resign arguing they represent the true spirit of a party elevated into power to eradicate austerity.

Insiders said Tsipras hoped to close negotiations with auditors – who formally launch an inspection tour of Greek finances on Tuesday – on a €12bn package of spending cuts and tax hikes Athens has agreed to enforce by 18 August, two days before a crucial ECB debt repayment.

Once the bailout programme is sealed, he will tackle party infighting with an emergency conference that will attempt to purge Syriza of those who disagree with the policies before holding fresh elections in early November. Though increasingly at odds with his own MPs – starting with Varoufakis – Tsipras remains popular among Greeks who admire what is perceived as his robust defense of their rights. A second election victory in a year would give Tsipras the mandate to implement the controversial reforms he had once so stringently opposed.