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<nettime> Ekathimerini: Varoufakis claims had approval to plan parallel banking system


http://www.ekathimerini.com/199945/article/ekathimerini/news/varoufakis-claims-had-approval-to-plan-parallel-banking-system

Varoufakis claims had approval to plan parallel banking system

XENIA KOUNALAKI

Former Finance Minister Yanis Varoufakis has claimed that he was
authorized by Alexis Tsipras last December to look into a parallel
payment system that would operate using wiretapped tax registration
numbers (AFMs) and could eventually work as a parallel banking system,
Kathimerini has learned.

In a teleconference call with members of international hedge funds that
was allegedly coordinated by former British Chancellor of the Exchequer
Norman Lamont, Varoufakis claimed to have been given the okay by Tsipras
last December - a month before general elections that brought SYRIZA to
power - to plan a payment system that could operate in euros but which
could be changed into drachmas "overnight" if necessary, Kathimerini
understands.

Varoufakis worked with a small team to prepare the plan, which would
have required a staff of 1,000 to implement but did not get the final
go-ahead from Tsipras to proceed, he said.

The call took place on July 16, more than a week after Varoufakis left
his post as finance minister.

The plan would involve hijacking the AFMs of taxpayers and corporations
by hacking into General Secretariat of Public Revenues website,
Varoufakis told his interlocutors. This would allow the creation of a
parallel system that could operate if banks were forced to close and
which would allow payments to be made between third parties and the
state and could eventually lead to the creation of a parallel banking
system, he said.

As the general secretariat is a system that is monitored by Greece's
creditors and is therefore difficult to access, Varoufakis said he
assigned a childhood friend of his, an information technology expert who
became a professor at Columbia University, to hack into the system. A
week after Varouakis took over the ministry, he said the friend
telephoned him and said he had "control" of the hardware but not the
software "which belongs to the troika." Recorded call

You can find extracts from the conversation below. Varoufakis was
advised that the call was being recorded when it began.

Varoufakis: "I have to admit we did not have a mandate for bringing
Greece out of the euro. What we had a mandate to do was to negotiate for
a kind of arrangement with the Eurogroup and the ECB that would render
Greece sustainable within the eurozone. The mandate went a bit further,
at least in my estimation. I think the Greek people had authorised us to
pursue energetically and vigorously that negotiation to the point of
saying that if we can't have a viable agreement, then we should consider
getting out."

"We don't have a currency which we can devalue vis a vis the euro, we
have the euro"

"[Wolfgang] Schaeuble, the finance minister of Germany, is hell-bent on
effecting a Grexit so nothing is over. But let me be very specific and
very precise on this. The prime minister before he became PM, before we
won the election in January, had given me the green light to come up
with a Plan B. And I assembled a very able team, a small team as it had
to be because that had to be kept completely under wraps for obvious
reasons. And we had been working since the end of December or beginning
of January on creating one. But let me give you if you are interested
some of the political and the institutional impediments that made it
hard for us to complete the work and indeed to activate it. The work was
more or less complete: We did have a Plan B but the difficulty was to go
from the five people who were planning it to the 1,000 people that would
have to implement it. For that I would have to receive another
authorisation which never came."

"But let me give you an example. We were planning along a number fronts.
I will just mention one. Take the case of the first few moments when the
banks are shut, the ATMs don't function and there has to be some
parallel payment system by which to keep the economy going for a little
while, to give the population the feel that the state is in control and
that there is a plan."

"What we planned to do was the following. There is the website of the
tax office like there is in Britain and everywhere else, where citizens,
taxpayers go into the website they use their tax file number and they
transfer through web banking monies from the bank account to their tax
file number so as to make payments on VAT, income tax and so on and so
forth."

"We were planning to create, surreptitiously, reserve accounts attached
to every tax file number, without telling anyone, just to have this
system in a function under wraps. And, at the touch of a button, to
allow us to give PIN numbers to tax file number holders, to taxpayers.
So let's take for instance the case the state owed 1 million euros to
some pharmaceutical company for drugs purchased on behalf of the
National Health Service. We could immediately create a digital transfer
into that reserve account of the tax file number of the pharmaceutical
company and provide them with a pin number so that they could use this
as a kind of parallel payment mechanism by whichever part of that
digital monies to any tax file number for whom they owed money or indeed
to use it to in order to make tax payments to the state. That would have
created a parallel banking system while the banks were shut as a result
of the ECBs aggressive action to deny us some breathing space."

"This was very well developed and I think it would have made a very big
difference because very soon we could have extended it, using apps on
smartphones and it could become a functioning parallel system and of
course this would be euro denominated but at the drop of a hat it could
be converted to a new drachma."

"But let me tell you - and this is quite a fascinating story - what
difficulties I faced. The General Secretary of Public Revenues within my
ministry is controlled fully and directly by the troika. It was not
under control of my ministry, of me as minister, it was controlled by
Brussels. The general secretary is appointed effectively through a
process which is troika-controlled and the whole mechanism within. It's
like the Inland Revenue in the UK being controlled by Brussels. I am
sure as you are hearing these words your hair is standing on end." "Ok,
so problem number one: The general secretary of information systems on
the other hand was controlled by me, as minister. I appointed a good
friend of mine, a childhood friend of mine who had become professor of
IT at Columbia University in the States and so on. I put him in because
I trusted him to develop this."

"At some point, a week or so after we moved into the ministry, he calls
me up and says to me: "You know what? I control the machines, I control
the hardware but I do not control the software. The software belongs to
the troika controlled General Secretary of Public Revenues. What do I
do?""

"So we had meeting just two of us - nobody else knew - and he said:
"Listen, if I ask for permission from them to start implementing this
program then the troika will immediately know we are designing a
parallel system." But I said:  "That won't do, we don't want to reveal
our hand at this stage.""

"So I authorised him - and you can't tell anyone that, this is totally
between us..."

Normal Lamont interrupts: "There are certainly others listening but they
will not tell it to their friends."

Varoufakis (laughing): "I know. I know they are. And even if they do I
will deny I said it, so we decided to hack into my ministry's own
software program in order to be able break it up to just copy just to
copy the code of the tax systems website onto a large computer in his
office so that he can work out how to design and implement this parallel
payment system."

"And we were ready to get the green light from the PM when the banks
closed in order to move into the General Secretariat of Public Revenues,
which is not controlled by us but is controlled by Brussels, and to plug
this laptop in and to energize the system."

"So I am trying to convey to you the kind of institutional problems that
we had, institutional impediments we had to carrying out an independent
policy for ameliorating the effects of having our banks being closed
down by the ECB."

On Schaeuble

"Schaeuble has a plan. The way he described it to me is very simple. He
believes that the eurozone is not sustainable as it is. He believes
there has to be some fiscal transfers, some degree of political union.
He believes that for that political union to work without federation,
without the legitimacy that a properly elected federal parliament can
render, can bestow upon an executive, it will have to be done in a very
disciplinary way. And he said explicitly to me that a Grexit is going to
equip him with sufficient bargaining, sufficient terrorising power in
order to impose upon the French that which Paris has been resisting. And
what is that? A degree of transfer of budget making powers from Paris to
Brussels."


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