Greece's debt saga took an unexpected turn on Sunday, when Greek media reported that former finance minister Yanis Varoufakis had surreptitiously made plans throughout the year for the nation's potential exit from the eurozone.
In a July 16 call with investors at the Official Monetary and Financial Institutions Forum, a financial policy discussion platform, Varoufakis detailed a secret scheme to set up a parallel banking system that "at the drop of a hat" could be converted from the euro to the drachma. The OMFIF and the former finance minister on Monday approved the release of the recording.
"That's truly terrible, shocking," the Official Monetary and Financial Institutions Forum moderator on the call told Varoufakis in response to hearing of the secret plans.
Varoufakis said in the call he had brought together a five-person Working Group to devise preparations for a so-called "Plan B" for the country's debt crisis -- a possible Grexit. The team first assembled in December 2014, months before Greece's Syriza party came into power.
"We decided to hack into my ministry's own software program in order to be able to copy the code of the tax system's website onto a large computer in his office so that he can work out how to design and implement this parallel payment system," Varoufakis told the moderator during the call, The New York Times reports.
The hacking was necessary to access what Varoufakis said was creditor-controlled software at the ministry, and so he authorized a childhood friend who was member of the Working Group to hack into the system. Asking for permission for access would have alerted the creditors that the group was coming up with a "Plan B" in case of Grexit, he said.
"You can't tell anyone that, this is totally between us," Varoufakis said on the call of the secret plan.
Greek newspaper Kathimerini reported some of the content of call on Sunday, in an account Varoufakis disputed as "media-induced disinformation."
News of the secret "Plan B" caused a considerable stir among Greek politicians, with opposition members in the country's New Democracy party calling for an investigation into the former finance minister.
Varoufakis defended his actions in a blog post on Monday, in which he asserted that the so-called troika of creditors (the European Central Bank, European Comission and International Monetary Fund) all had similar plans in place for what to do in case of a Greek eurozone exit.
"Greece’s Ministry of Finance would have been remiss had it made no attempt to draw up contingency plans," Varoufakis states.
In a separate blog also posted to Varoufakis' website, American economist and coordinator of the Working Group James K. Galbraith similarly justified the planning.
"At no time was the Working Group engaged in advocating exit or any policy choice. The job was strictly to study the operational issues that would arise if Greece were forced to issue scrip or if it were forced out of the euro," Galbraith wrote.
He added that the plans played no part in Greece's bailout negotiations, and that his work was pro bono and based on his friendship with Varoufakis.
Attempts to reach Galbraith and Varoufakis for comment for this article were unsuccessful.
The revelations come at a time when Greek Prime Minister Alexis Tsipras is facing significant political opposition from within his Syriza party, as he pushes through the harsh austerity measures demanded by creditors in return for debt bailout discussions.
Tsipras has relied on pro-Euro opposition for votes in passing those reforms, but in the wake of the Varoufakis tape, members of those parties are now demanding to know how involved the prime minister was in the potential Grexit plans. Varoufakis' blog post states that the Working Group was formed at his behest.
Varoufakis also said in the call that the tentative "Plan B" measures were authorized by Tsipras.
The call between the OMFIF and Varoufakis took place 10 days after the latter resigned from his post as finance minister at request of the prime minister. It was thought that removing the cantankerous Varoufakis from negotiations would make creditors more willing to strike a deal.
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