British economists and commentators split over Varoufakis’s ‘Plan B’

British economists and commentators split over Varoufakis’s ‘Plan B’

London, August 1, 2015/ Independent Balkan News Agency

By Thanasis Gavos

Probably nothing in the whole Greek crisis saga has split politicians and commentators as much as the personality and actions of the debt-stricken country’s former Finance Minister Yianis Varoufakis.

Was his notorious ‘Plan B’ a responsible parallel liquidity fallback scheme by an economist who could see what was being cooked in the murky corridors of Brussels and Frankfurt or a treacherous plot to ignore the wish of the majority of the Greek people and have the country return to the drachma no matter what?

Judging by the mainstream reaction in Greece, Germany and Brussels Mr Varoufakis has irrevocably transformed in the minds of many from a man of principle to a potentially dangerous joker.

But the UK, where the eurozone’s insistence on austerity policies that have been proven to be calamitous has kept economists and commentators scratching their heads in disbelief, has reserved a somewhat milder verdict for the acts and intentions of the self-proclaimed ‘erratic Marxist’.

As soon as reports from Greece started pouring in about Mr Varoufakis potentially facing criminal charges, a number of distinguished economists and financial analysts came out in support; people other than the perhaps obvious supporter that would be Paul Krugman.

Philippe Legrain, economic adviser to the President of the European Commission until February 2014, wrote that it was only right for Greece’s Finance Minister to be prepared for all eventualities. “One hopes that Whitehall has plans for dealing with a nuclear winter or a catastrophic epidemic. Varoufakis was right to prepare for how to cope with an outcome that wasn’t just possible, but likely,” notes in his article for The Guardian.

Furthermore, he believes that “in principle, the idea of setting up a parallel payments system involving people’s tax numbers is ingenious.” As for the secrecy of it all, “desperate times call for desperate measures.”

Then came Ambrose Evans-Pritchard of the Daily Telegraph, the man who first reported on the pilloried plans of Messrs Lafazanis and Varoufakis as early as the night of the Greek referendum, without any of us taking any particular notice.

“It has come to this. The first finance minister of a eurozone country to draw up contingency plans for a possible euro exit is under investigation for treason,” he lamented in his column. The criminalisation of any Grexit debate which shuts off the option of an orderly return to the drachma, even though there is a high probability of such a scenario returning soon, is, he says, “as a matter of practical statecraft, sheer madness.”

An ideological adversary of Mr Varoufakis, Mohamed El-Erian, formerly of PIMCO, intervened as well in support of the flamboyant economist: “Greeks and others may fault him for pursuing his agenda with too little politesse while in office. But the essence of that agenda was – and remains – largely correct.”

Having said all that, the self-righteousness and perceived narcissism with which Mr Varoufakis has been promoting his views have caused some dismay in the UK as well.

Two much respected UK economists of Greek roots have definitely made up their mind about their colleague. “I had said long before he decided to run for the parliament that he was a dangerous, dangerous man,” the first one told a London roundtable discussion on Greece.

“He is not a narcissist. He suffers from what I would call the ‘know all’ certainty. He genuinely believes that he is levels above anyone else in intellectual prowess. He does not think there is anything to gain from really listening to other people’s views,” the second economist told IBNA.

In an article the Financial Times dismissed Varoufakis’s ‘Plan B’ as something “between the revolutionary zeal of Vladimir Lenin and the Bolsheviks in 1917 and the zany capers of Rufus T Firefly, leader of the bankrupt state of Freedonia in ‘Duck Soup’, the 1933 Marx Brothers’ film”.

In the end, it all boils down to whether the preparation for a return to the drachma at “a drop of a hat” was in fact the beleaguered former Finance Minister of Greece’s rogue ‘Plan A’, or a product of toil by an enlightened economist facing significant practical restraints in a battle against immensely superior forces.

From the British point of view, the jury is still out.