Most people sit up and take notice whenever the words, secret plans and conspiracies, are mentioned. Not necessarily because these things could be true, but because it always makes a change from the routine hum-drum of boring news.
Now I do not wish to spread malicious rumours around or to be the purveyor of conspiracy theories on my blog. However…….sometimes, where there is smoke, there is fire!
My regular readers will know that I do not hold the central banking system in the Eurozone in very high regard, at present. So it will come as no surprise that when I stumbled onto the following story, my political geiger counter starting clicking very fast!
There is also another reason why this story interests me. Here we have a perfect example of the conflicts that can arise between a nation’s government and its central bank.
Yannis Stournaras is the Governor of the Bank of Greece, the central bank of Greece, and he has held this position since June 2014.
Prior to June 2014, Stournaras was the Greek Finance Minister. In March 2014, the leader of the main opposition party, Alexis Tsipras, described Stournaras as “the main executor of the death contract against Greek society and Greek citizens”. (http://failedevolution.blogspot.gr/2014/03/breaking-motion-of-no-confidence-by.html)
It is also worthy to note that Stournaras, who has always been very willing to adopt the destructive neoliberal policies that the Troika lenders imposed on Greece, had previously worked as a financial advisor to the Greek Ministry of Finance, and participated in the negotiations for Greece’s entry into the European Monetary Union, under the Simitis administration. It is speculated that Stournaras was put into this key position at that time in order to undermine any possible Leftist government that came into power which would choose to stand against any further catastrophic policies imposed by Greece’s lenders. So everything seems to indicate that Stournaras is Berlin’s and Draghi’s man in Greece. (http://failedevolution.blogspot.gr/2015/03/tsipras-european-conservative-forces.html)
During Syriza’s tenure as the ruling party in the Greek parliament, tensions often arose between Stournaras and Syriza MP’s. By mid May 2015, the situation had reached boiling point.
And then it got worse!
On 9 May, an independent on-line newspaper “Journal of Journalists” (efsyn.gr) published an article that revealed that they had obtained a copy of an e-mail titled “Account of 100 days” that was sent from the office of the governor of the Bank of Greece, to a journalist of a particular newspaper. Efsyn described the contents of the e-mail as a “subversive leak” with the aim to present the image of the country as being already bankrupt “before even the start of the discussion for bankruptcy…”.
Efsyn went on to suggest that the e-mail also showed that in Greece, as in Brussels, targeted leaks of inside information to journalists was being done by the office of the governor of the Bank of Greece in order to place the first government of the Left “in a parenthesis” (ie. to undermine the government).
The Efsyn article ended by demanding a response from the central bank governor about ‘his colleague’s’ e-mail, implying that the governor himself might be involved in the attempts to damage the government.
On close examination, the information contained in the e-mail seems to be rather less contentious than it was made out to be by Efsyn.
However, the Efsyn article touched off a firestorm within the government who then released a statement in which it said that, if the paper’s allegations were true, then “it was a blow to the independence of the Bank of Greece”. The government statement called on the BoG to investigate the matter and initiate disciplinary proceedings “in order to stop some people inside the bank from harming the government at such a critical moment for the country.”
In response, the Bank of Greece issued the following statement:
“Regarding today’s front page of the “Journal of Journalists”, the Bank of Greece announces that no e-mail was ever sent with the content described in that publication either from the office of the governor, Yiannis Stournaras, nor from the Communications Department of the Bank”.
In a subsequent article published on 11 May, Efsyn went one step further and directly named The Times of Change (TheTOC) as being the recipient of the e-mail and accused them of involvement in the alleged conspiracy to actively discredit the government.
Of course, TheTOC blew a fuse and in an article titled “TheTOC responds to accusations of conspiracy to undermine government” the newspaper went on a rampage discussing illegal wire-tapping, theft and the principles of a free press, amongst other “grand conspiracies”. It is interesting to note that in the response from the president of TheTOC, I get the impression that TheTOC indirectly acknowledged receiving the e-mail in question, which would contradict the statement made earlier by the BoG.
Well, all of this was just like pouring petrol on a fire!
The following day, the Syriza MP’s were in an uproar. The “Avgi” newspaper, which is affiliated with the Syriza party, featured a front page article under the headline “Stournaras is answerable” in which it described the Bank of Greece as operating as an “organ against the government”. The article speculated that Stournaras, “possibly has not gotten over his previous role as Samaras and Venizelos’s minister”.
In an article commenting on the controversy, the German newspaper Handelsblatt described all these actions as part of a wider plan on the part of the Greek government to install an individual loyal to Syriza in the central bank. In the article, titled “Tsipras attacks his central banker”, it was suggested that “Tsipras wants to replace Stournaras with a person he trusts at the head of the Bank of Greece”.
Shortly afterwards, on 14 May, the government must have realised that the situation was getting way out of control and they issued an official statement stating that “the government fully respected the independence of the central bank and that it had no problem with the leadership of Yannis Stournaras”. In the government statement, it was also mentioned that the recent criticism of Stournaras by Syriza officials, concerned his acts during his previous role as Finance Minister and not during his time that he was the central bank governor.
The truce did not last very long. A few weeks later in mid June, Stournaras and the government were again at each others throats after the Bank of Greece published its Report on Monetary Policy 2014-2015.
The contents of the report caused a furore amongst many Syriza members of parliament, and the on-going controversy that ensued also dragged members of the opposition into the discussion as well. Prominent amongst Stournaras’ detractors was the parliamentary speaker, Zoe Konstantopoulou, who threatened to refuse to accept the report and accused the central bank governor of working to undermine the government.
The final chapter in this remarkable story is really the cherry on the top!
A Greek magazine called Crash and its website crashonline.gr, published the following story on 16 August 2015. The story seems to have gone largely unreported in the media perhaps because the “facts” given cannot be substantiated. In the story, reference is made to a so-called “report”. However, no details are given regarding the whereabouts of this “report” or how Crash obtained knowledge about the contents of the “report”. We are only told that the information was received from a “whistleblower”.
A secret project called “protection of the country’s currency” for the country to stay in the euro, was compiled and quietly executed by the Greek President, Prokopis Pavlopoulos, and the governor of the Bank of Greece, Yannis Stournaras, at the same time that Yanis Varoufakis and the Left Platform of SYRIZA were planning a return to the drachma. Indeed, as has been revealed by a “whistleblower”, Hollande, Juncker, Draghi and Schultz also participated in this project.
According to the report, although the two men’s relations have been strained in the past because of criticism from Stournaras during the period of the Karamanlis government, the threat posed by Varoufakis caused them to work together again.
According to the same reports, the plans of former Finance Minister Varoufakis for a Plan B was known to both of them, since they were in constant contact with all people concerned and they were kept updated on developments.
The dramatic warning of the central banker
After the fiasco of the Eurogroup meeting in Riga, Stournaras contacted President Pavlopoulos and said to him, “President, they are jeopardizing the country, we must do something.”
They then put into effect the plan, to maintain monetary stability and to recover the credibility of the country, with a barrage of phone calls to their counterparts and European officials.
The President had frequent telephone contacts with both French President Francois Hollande and with Jean-Claude Juncker. Stournaras was in contact with the head of the ECB, Mario Draghi, with Messrs Moskovisi and Sapen (French Commissioner for Economic and French Finance Minister respectively) and also with several central bank governors of the eurozone.
They decided, on the one hand, not to endorse any decision that would endanger monetary stability (due to the potential bad impact if it was done), and on the other hand, the governor of the Bank of Greece would secure its liquidity through the mechanisms of the ELA.
Disarmament of Varoufakis
But to achieve success with this plan, Varoufakis needed to be neutralised. The day after the referendum, the finance minister was dismissed and a few days later, the dark Plan B was revealed.
President Pavlopoulos has not stopped with his efforts. He has continued to communicate with all the concerned parties in order to insure that the agreement of July 12 would go through the Greek parliament with more than 220 votes, as it did.
At the same time he promised that Francois Hollande would be granted an honorary doctorate from the University of Athens and invited him to visit Athens in September, which the French president accepted.”