8th Dec 2023

Greece to start third bailout talks, amid secret drachma revelations

  • Greek protest against the troika early July - the creditors are once more in Athens. (Photo: desbyrnephotos)

Greece is expected to start talks with its international creditors on a third bailout on Tuesday (28 July) amid delays and revelations of a secret Syriza drachma plan.

Talks were supposed to begin Friday, two days after the parliament passed the second of a package of wide-ranging reforms asked for by creditors, but were stalled as both sides argued over the logistics of the negotations.

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  • Varoufakis has revealed there was a drachma plan. "The prime minister ... had given me the green light to come up with a Plan B" (Photo: Òme deu Teishenèir)

"It is fundamentally more of the same," a senior official told the Financial Times. "They don't want to engage. "There are some logistical issues to solve, notably security-wise," a European Commission official told Reuters.

The difficulties come amid a general breakdown in trust over the six months the left-wing Syriza government has been in office.

One of the major sources of frustration for the Greek government was having representatives of the creditors - the so-called Troika - actually present in ministries in Athens checking the books and asking for particular reforms. They became the focal point for the dislike of the harsh austerity measures demanded by creditors.

These on-the-ground visits were stopped soon after the Syriza government took office and negotations continued only in Brussels.

However, part of the 13 July agreement between eurozone leaders for Greece to get a third bailout of up to €86 billion was that officials from the European Commission, the European Central Bank, the International Monetary Fund and the European Stability Mechanism are once more in Athens.

"The reasons for the delay are neither political nor diplomatic ones,” an official told Reuters, adding that “negotiations are going as planned.”

He also denied that the Greek government is trying to keep creditor representatives away from government ministries.

Meanwhile, revelations by former finance minister Yanis Varoufakis about secret plans for a parallel currency have added to the pressure on Greek prime minister Alexis Tsipras.

Greek newspaper Kathimerini over the weekend published extracts of a teleconference Varoufakis took part in on 16 July, in which he explained that he had hired an IT expert to set up a parallel banking system based on IOUs.

In the call, he explained to investors the expert had hacked into the General Secretariat for Public Revenues in order to get the information needed to set up a parallel payment system.

"The prime minister, 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," said Varoufakis.

The revelations have prompted opposition parties to call for more information on the Varoufakis plan as well as supposed plans by ex-Energy Minister Panayiotis Lafazanis to raid central bank reserves.

Tsipras' Syriza party is due to meet on Monday to discuss the developments of the last few days, with the Greek prime minister already under pressure as he presides over the passing of more austerity measures - measures he pledged to reject when he came to power in January.

Greece needs to agree the third bailout before 20 August when a payment on bonds held by the European Central Bank comes due.

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