Yes to the Greek drachma–ultimately

Keith Hudson

I was right in suggesting some weeks ago that Alexis Tsipras was probably formulating Plan B to re-establish the Greek drachma.  It has now been revealed that, in fact, it had been decided long before then — even before . . . Tsipras led his Syriza Party to success in January’s election — when he asked Yanis Varoufakis, who become his finance minister, to organise it.

Notionally, it was to establish a parallel euro currency rather than the drachman per se because it was a very dangerous (and thus courageous) decision to take.  It had to be doubly secret — both from the Eurozone and from Greece’s own finance ministry — because if it had been found out at any time, then Tsipras and Varoufakis could have been liable to attack by their political  enemies — including the very powerful Eurozone authorities themselves — and even possible prosecution for treason.  Disguising the plan as for a ‘parallel euro’ might possibly have been some sort of defence but it really amounted to the same thing as re-establishing the drachma.

Apparently Varoufakis recruited a specialist from Columbia university who then hacked into the all the accounts of the ministry of finance.  This was even more sensitive because these also contained all the income tax details of everybody in Greece.  Varoufakis and a small tram wouldn’t have needed to know these so much as to gain an exact knoweldge of how banknote money was distributed throughout the country so that banks would have sufficient liquidity for their ATMs, normal withdrawals and so on, and thus perhaps how many extra banknotes might have been needed to be printed.

As it happens, because Tsipras actually carried out the instructions from the Eurozone finance ministers meeting in the all-night session on 11 July and duly supervised the passage of legislation through the Greek Parliament — and sacking Varoufakis to boot — then Tsipras himself has virtually sterilised himself from prosecution.  But now the plan has leaked to the Greek newspaper, Kathimerini, then Varoufakis is now in danger of court action, not so much from the Eurozone authorities themselves but from private investors, sovereign wealth funds and pension funds who bought Greek bonds under the assumption that their loans were guaranteed by the Eurozone.

All the above has been taken from Ambrose Evans-Pritchard’s account in today’s Daily Telegraph and he seems to have gained the knowledge from  Mr Varoufakis himself who is probably now in state of acute apprehension.  Evans-Pritchard doesn’t say or imply that Tsipras has now thrown Varoufakis to the wolves. Although high politics is a very nasty game even in the best of times, my guess is that Tsipras hasn’t done so because he cannot totally absolve himself from Plan B just by subsequently obeying the European leaders.

In retrospect, it was probably foolish of Tsipras and Varoufakis to have started Plan B before the January General Election — when, of course, Syriza might not have become successful — rather than at a much later stage when they could have reasonably justified themselves in a court of law that they were acting in the best interests of Greece as a whole when negotiations with the Eurozone could only have had dire results.  Many international jurists would have agreed with them, as has certainly been the case of most public intellectuals and even some European leaders since then.

Anyway, Plan B is wrecked now and there will be no possibility of  resurrecting it as long as the Greek ministry of finance is under the control of the Eurozone authorities.  If — and almost certainly, when — social and political circumstances in Greece become unstable and some new cgvovernment will have to come into existence by force majeure then a Plan C — this time openly for the restitution of the drachma — will have to be devised.

This time, because of lack of preliminary planning, the institution of Plan C will be a great deal untidier than Plan B would have been.  We can only watch with fascination as the Greek tragedy deepens although, in the meantime, the Eurozone itself crumbles either from its own monetary instabilities or from appears to be a deepening world-wide recession.

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