Galbraith sheds light on Varoufakis working group

Plans by former Finance Minister Yanis Varoufakis to access Greeks' online tax codes and set up a parallel banking system were made without consulting the working group he oversaw, Kathimerini has learned.

According to economist James K. Galbraith, the coordinator of a working group set up by Varoufakis at the behest of Prime Minister Alexis Tsipras, the team concluded its deliberations in early May, several weeks before a referendum on proposals by Greece’s creditors. Varoufakis, however, in a statement issued on July 27, following the leak by Kathimerini of his plans to set up a parallel banking system, indicated that the group continued its work “until the day of the referendum,” on July 5.

Galbraith told Kathimerini that in early May the group “summed up our work and presented it to the finance minister."

Asked whether Varoufakis showed the summary to Tsipras, Galbraith said he did not know. Galbraith also said Varoufakis did not consult the working group before proposing to Tsipras a set of radical actions just hours before a decision to impose capital controls.

Galbraith has repeatedly said that the idea of accessing the data of the General Secretariat for Public Revenues was not one that emerged in the working group. He told Kathimerini that the idea of a parallel payment system was not linked to an exit from the eurozone and would simply be a more efficient way of offsetting debts between the state and third parties.

“The government faced a choice between a tough line and a strategy of concessions, both of them entirely within the euro… a tougher line would not have led ineluctably out of the euro,” he said.

“We took note of many problems,” he added.

Varoufakis also appears to have disregarded the advice of Lazard, the firm which advised him against him nationalizing the Bank of Greece and other precursors of a return to the drachma, Kathimerini has learned. Lazard, hired by the ministry, sent its advice to Varoufakis in writing on June 27, a couple of days before the decision to close Greek banks.

In a speech to Parliament on Friday, Tsipras confirmed that he authorized Varoufakis to draft a contingency plan. “Of course, I personally gave the order to the finance minister to set up a team and draft a plan of defense in the case of emergency,” he said, noting that it was not an “exit plan” but an “emergency plan.” “If our partners and lenders had prepared a Grexit plan, shouldn’t we as a government have prepared our defense?”