Varoufakis: China was ready to support Greece, but Berlin killed the deal

Yanis Varoufakis [Valerij Ledenev / Flickr]

Athens had secured a funding deal with China during the crucial negotiations with its creditors last summer. But a phone call from Berlin to Beijing killed it, Yanis Varoufakis disclosed on Tuesday (19 January). EURACTIV Greece reports.

In an interview with Skai TV, Varoufakis admitted that there was a “Plan X” in the event of a standoff with the country’s international lenders, and pressure by Germany’s Wolfgang Schäuble for a Grexit.

The ex-finance minister said that there was a team of six people who were seeking ways for the country to continue to have access to medicines, fuel and food under such circumstances.

Varoufakis stressed that he advised the Greek Premier, Alexis Tsipras, to put the plan, which would see Greece defaulting on €27 billion in Greek government bonds held by the European Central Bank, into action as soon as he called a referendum at the end of June.

“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.

“The prime minister thought about it very carefully,” said Varoufakis. “I saw him puzzle over what he should do, and in the end he decided to follow Dragasakis’ [Deputy Prime Minister of Greece] recommendation, and not mine.”

China’s role

Varoufakis added that he was against efforts to secure funding from Russia, but that there had been an agreement with China regarding investment in Greece, including in Greek bonds.

“This agreement was overturned, though, with a phone call from Berlin,” he claimed.

The crucial referendum

Asked about the critical days of the referendum, Varoufakis stated that it was a decision made by the Greek premier after negotiations reached a deadlock in Brussels in late June.

In a referendum on 5 July 2015, the vast majority of Greeks (61%) rejected the bailout conditions jointly proposed by the European Commission, the IMF and the European Central Bank.

>>Read: Greek ‘No’ inflicts heavy blow on EU

He noted that he was skeptical about the referendum, because he saw the possibility of “going to a referendum asking for a ‘No’, but eventually accept the claims of creditors.

The outspoken former finance minister stressed that his participation in the government was over, when, on the night of the referendum, Alexis Tsipras decided to back down and accept the proposals of the institutions.

The former Italian premier, Mario Monti, recently said that by disregarding the resounding ‘No’ of the recent Greek referendum, Alexis Tsipras clearly violated democracy.

>>Read: Monti: Ignoring the Greek referendum was a violation of democracy

“Many of us praised Alexis Tsipras for going directly to the public with a referendum. He had a huge majority for the no, and then he decided, I believe very wisely for the interest of the Greek people, but very undemocratically, to throw away the result of the referendum and to accept for Greeks heavier conditions,” Monti noted. 

"We are waiting with great interest the response of Mr. Prime Minister," center-right New Democracy spokesman, Giorgos Koumoutsakos, said in a statement. 

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