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Varoufakis admitted he had worked for GREXIT

14 July 2015 / 12:07:49  GRReporter
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"Exiting the euro at a time when we have a deficit would send Greece in the Neolithic era... Suppose the Prime Minister announced that tonight he would submit to parliament an emergency bill to create a new national currency... All ATMs would be empty within 20 minutes... Endless queues would form at banks tomorrow morning and then banks would put up the shutters. The economy would collapse... Poverty would force its way in 80% of households... The culprits would again win and the majority would curse the moment of announcing the suspension of payments after the memorandum."

The analysis belongs to Yanis Varoufakis and Protagon published it in an article in April 2011. Despite his gloomy forecasts, after the announcement of the referendum, he proceeded to radical procedures that would have put the country on the one-way road outside the euro. In an interview with the British magazine New Statesman on occasion of the refusal of the European Central Bank to accept the Greek request for an increase in the financing through the Emergency Liquidity Assistance ELA of 28 June, Varoufakis reveals that he had presented to a closed group of government representatives three acts in response to this refusal. The first was to issue IOUs or to announce that such bonds would be issued, the second was a plan for unilateral cuts in the Greek bonds held by the European Central Bank, and the third was the nationalization of the Bank of Greece.

One such reaction would have made virtually impossible to keep Greece in the euro. According to what Varoufakis said before New Statesman, one government representative in this closed group had supported his proposal. According to the information, except himself this group had involved Yiannis Dragasakis, George Statakis, Efklidis Tsakalotos Nikos Pappas and Spiros Sayas. Having failed to obtain a majority (4 votes against 2 votes) Varoufakis had proceeded to a more conservative solution, namely to a legislative act to restrict the movement of capital and to allow for a bank holiday. However, a week later, after the victory of the NO vote in the referendum and a little before being forced to resign, he repeated the same proposals.

According to the newspaper Kathimerini, on June 27 Varoufakis’ advisors had informed him about the consequences of the imposition of capital controls, the effects of the nationalization of the Bank of Greece and of the return to the national currency. However, his interlocutors had reacted sharply when he had presented the relevant proposal on 28 June, especially Sayas. They had considered the plan to address the rupture with the euro as insufficient. According to a minister who was a member of the small group that was aware of Varoufakis’ plan, nobody had supported him.

The former minister states for New Statesman that, after February, a small group in the ministry had been dealing with what needed to be done in the case of Grexit but it was one thing to do it at the level of 4-5 people and totally different to prepare the country for it. "An executive decision was required to prepare the country and it was never taken," says Varoufakis. As the talkative former minister stated for Real FM yesterday, the Grexit group was formed on 29 January on the instructions of the Prime Minister and Dragasakis.

Prof. James Galbraith, a close adviser to Varoufakis, who says he is aware of the activities of the small group preparing Grexit, states for Kathimerini that it had drawn up no plan, it had just expressed "thoughts."

Varoufakis says in the interview that he had considered the probability of Grexit from his first day in the ministry. With the ease with which he talks about the fate of the country, he admits that he was not sure that the government would be able to cope with leaving the euro. And it is a very convenient explanation for him: on the one hand, he emphasizes his disagreement and on the other, the plan had not been implemented and Greece had avoided a return to the Neolithic era.

Meanwhile, Andreas Loverdos has requested that Varoufakis be called in the parliamentary commission on the memoranda.

Tags: GrexitYanis VaroufakisPlansNationalizationNational currency
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