Wednesday, July 6, 2016

Was It "Plan B" Or "Plan X"?

Prof. James Galbraith, advisor to Yanis Varoufakis while the latter was Finance Minister and close friend of his, has published a book titled "Welcome to the poisoned chalice: the destruction of Greece and the future of Europe". It is a collection of his writings, interviews and speeches on Greece from 2010 through the summer of 2015.

The media celebrate this as a major revelation of what happened behind the scenes (and top secretly!) in the first half of 2015 when Varoufakis had commissioned a small group of advisors to develop a Plan B (or Plan X, as Varoufakis allegedly called it) for an exit from the Eurozone. In fact, Galbraith had already reported on that a year ago. Some of the key points of the plan were (allegedly):

* declaring state of emergency
* nationalization of the Bank of Greece and selected other banks
* conversion of bank deposits from Euro to New Drachma
* payment of salaries and pensions in IOU's
* emergency measures to keep public order

Galbraith writes that the plan was developed at the request of Varoufakis to prepare for the risk of Greece's being kicked out of the Eurozone. If true, that would be a remarkable statement because one of Varoufakis' major points, which point he has stressed consistently in his blog for several years, was that no one could kick Greece - or any other country - out of the Eurozone.

Still, it is good to be reminded of what happened a year ago. Greece today seems rather stable politically and SYRIZA seems rather a serious party. The fact, however, is that this party, particularly several of its key proponents like Varoufakis, had recklessly played with the future of their country.

Galbraith concludes that, in his judgement, Varoufakis had carried out his responsibilities with distinction. True, just like Salvador Allende had carried out his perceived responsibility to convert Chile into a Cuba of the South with distinction even though, ultimately, he failed. Failure is a negative word which in the case of Allende and Varoufakis assumes a positive meaning.


  1. I recommend "An Instance of the Fingerpost" by Iain Pears. Great book where you see the same event narrated afterwards by different participants. You see how they entirely misunderstood what was going on at the time, and end up with completely different versions.

    Here, it feels the same, except the many different versions are given by the same peoples with a few months interval.

    Last summer, both Galbraith and Varoufakis explained that their plan X involved an alternative payment system based on tax credits and that the country's official currency would remain the Euro.
    This year, Galbraith comes up with another version...

    I won't read the book. Not interested

    1. In fall fairness, I have a different memory. I remember reading that there was the Galbraith-team which handled the issue described by Galbraith now. And then there was the parallel-currency team (of which Galbraith was not a part). They focused on hacking tax accounts and so forth.

    2. I stand corrected, I searched old posts after your message and indeed Galbraith never spoke of being involved in the tax credit payment system (plan X).

  2. I want to be fair.

    I consider Greece's umpteenth bailout a failure waiting to happen: just the like the previous bailouts failed, so will this one. Greece will simply not achieve the fiscal goals of the new MoU. When that happens, talk of Grexit will resume. That is assuming there still is a Eurozone at that point, i.e. that the Eurozone is going to survive Italy's upcoming constitutional referendum and Marine Le Pen's upcoming election in the French presidency.

    Since talk of Grexit will resume, any responsible Greek government should have a backup plan. Well, that backup plan is going to look remarkably similar to Varoufakis and Galbraith's plan. It's as simple as that.

    So let's be fair here. We have a lot to criticize Varoufakis about, but this isn't one of them.

    The fact remains that the Eurozone isn't functional and as such the most likely scenario is that it will dissolve. The Eurozone used to be a win/ win situation. Germany got Greece's exchange-rate and Greece got Germany's interest rates. This doesn't apply anymore. It's sad because once the Eurozone dissolves, it's going to be a lose/ lose situation for all involved, but since Germany's answer is "nein" to everything, well, what can you do.

    It was good while it lasted.

    1. The eurozone was not good for anyone other than the Germans. This was largely the result of arrogance and stupidity on the part of the founding politicians, and of the Greek governments at the time for not comprehending the need for strategy, effective taxation incentives (and collection) for discouragement of consumer loans and encouragement of credible business loans. They did nothing and also sucked out money for themselves and their buddies.

      Now that there is a discussion about 2015 planning, and scenarios, and serious attempts by government to cope with potential disaster, the Greek opposition parties -- the ones responsible for the Greek mess -- demand inquiries into "how dare Tsipras commission plans!", "how dare Varoufakis consider what would happen if Greece were forced out of the eurozone!", and "how dare a prime minister commission experts to provide serious systematic plans to cope with various possibilities".

      The only possible conclusion? That ND and Pasok show themselves unfit to govern Greece, have no remorse about their own previous corruption and incompetence, and are more concerned to make cheap (and irrelevant) attacks on Tsipras.

      Now, there is much one can criticise Tsipras for. However, it seems very little in comparison with the cretins who are in opposition.