Former finance minister Yanis Varoufakis said that Prime Minister Alexis Tsipras had asked him to draw a parallel currency plan if he could not reach a bailout agreement with Greece’s creditors.
Varoufakis gave an interview on Skai television Tuesday night where he outlined the “Plan X”. According to the former minister, a six-member team of economics experts examined the possibility of a standoff that would eventually leave the Greek government without the necessary funds to meet its finansial obligations, such as loan repayments and the payment of public sector wages and pensions.
Among the potential problems examined by Varoufakis and his advisers were how the country would continue to have access to medical supplies, fuel and food under conditions of bankruptcy.
Varoufakis said he advised Tsipras to default on 27 billion euros in Greek state bonds held by the European Central Bank as soon as he called a referendum at the end of June. The restructuring of the state bonds would be a negotiating tool because of the fear of a market shake up, Varoufakis claimed.
“I thought that if we did what we had decided as a negotiating team… and announced that we would restructure these bonds and implement the parallel payment system, then by the Monday, Tuesday or Wednesday before the referendum the discussion we expected between [ECB president Mario] Draghi and [German Chancellor Angela] Merkel would take place,” he said.
Varoufakis said that Tsipras considered adopting Plan X, but that he was advised against it by Deputy Prime Minister Yiannis Dragasakis.
“The prime minister thought about it very carefully. I saw him puzzle over what he should do and in the end he decided to follow Dragasakis’s recommendation and not mine,” he said.
Varoufakis also spoke about the alternative sources of funding the Greek government was seeking at the time. He said he was against borrowing from Russia as some cabinet members wished. He also said that China was ready to sign an agreement for investments in Greece.
“This agreement was overturned, though, with a phone call from Berlin,” Varoufakis claimed, refusing to comment further.
The former minister said he became frustrated with Tsipras when the prime minister agreed to a primary surplus target of 3.5 percent of GDP for the coming years because he considered it unfeasible. Tsipras told him that he agreed in return for receiving debt relief.
Finally, Varoufakis admitted that he failed in his term in office and that he “would do a lot of things differently.”
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