ECB sued over decision to freeze help to Greek banks

Former Greek finance minister Yanis Varoufakis and a German parliamentarian are suing the European Central Bank to gain access to a document underpinning the ECB’s decision to freeze vital funding to Greek banks in 2015.

That move left Alexis Tsipras’ government with little choice but to shut down banks and impose capital controls, weakening his negotiating position with the country’s international lenders during bailout negotiations.

Eventually, hard-liner Varoufakis resigned and Tsipras made a deal that gave Greece cash in return for austerity measures and reforms.

Varoufakis and a German leftist parliamentarian, Fabio De Masi, are asking the European Union’s top court to force the ECB to disclose a legal opinion that informed that decision, which they say might be unlawful.

“By restricting liquidity to the Greek banking sector to force cuts in pensions, tax increases and fire-sale privatizations, the ECB overstepped its mandate,” De Masi said.

After their request was rejected by the ECB, Varoufakis and De Masi are turning to the General Court of the European Union to obtain the document.

An ECB spokesman said the legal opinion preceded the decision to withhold funding by at least two months. The ECB decided not to disclose it to protect its legal advisers and its internal deliberations, he said.

The ECB’s Agreement on Emergency Liquidity Assistance (ELA), published earlier this year, prohibits national central banks from providing ELA if it “interferes with the objectives and tasks” of the Eurosystem, such as maintaining price stability and safeguarding payments.

“There is an overriding public interest in knowing how far the ECB … weighed different goals against each other and how they themselves and their legal experts have interpreted the legal framework in this respect,” the complainants’ lawyer, Andreas Fischer-Lescano, said in the appeal.

[Reuters]