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Greek loan talks held amid tax data plans claim

Published 28/07/2015

Greek Prime Minister Alexis Tsipras (centre) arrives at Syriza party HQ for a meeting with senior party officials in Athens (AP)
Greek Prime Minister Alexis Tsipras (centre) arrives at Syriza party HQ for a meeting with senior party officials in Athens (AP)

Greece has started talks on a new rescue loan despite the government coming under pressure over claims it had a top-secret plan to prepare for a euro exit that involved accessing citizens' personal tax data.

Representatives from Greece's international creditors held a second day of preparatory talks with Greek officials ahead of higher-level negotiations later this week on the country's new multi-billion euro lifeline.

The talks in Athens aim to thrash out the terms of the deal - worth about 85 billion euro (£60 billion) over three years - before August 20 when Greece must make a debt payment that it cannot afford without new loans.

It will be the country's third bailout in more than five years. So far, Greece has received about 240 billion euro (£169 billion) from the European Union and the International Monetary Fund.

In return, it was forced to implement spending cuts, tax increases and wide-ranging market reforms.

This week's talks will include issues such as pensions and labour market reforms, where the government is being asked to cut early retirement, raise retirement ages, streamline the pension system and ease restrictions protecting workers from mass lay-offs.

Prime Minister Alexis Tsipras has reluctantly accepted the reforms in principle - even though he has repeatedly said he does not agree with them - abandoning the anti-austerity policies that brought his Syriza party to power six months ago.

The u-turn was necessary after talks with bailout creditors came very close to collapse and Greece was threatened with exit from the euro currency union unless it agreed.

Parliament has already approved two batches of reforms, drastically increasing sales tax on key consumer goods and reforming the banking and judiciary systems.

But that caused a rift within Mr Tsipras' party and about a quarter of his lawmakers refused to back the reforms, which were passed with the help of pro-European opposition parties. Early elections now seem likely after the bailout deal is signed.

Adding to Mr Tsipras' troubles, his former finance minister Yanis Varoufakis has claimed he tried to surreptitiously clone his own ministry's tax records with the help of a childhood friend as part of a contingency plan requested by Mr Tsipras before the January elections.

The idea, according to Mr Varoufakis, was to set up a parallel banking system that would allow transactions to continue - in euros but with a provision for immediate conversion to a new currency - were Greek banks to be closed down.

The alleged scheme never received Mr Tsipras' go-ahead and Greek banks did close down for three weeks with severe limitations on withdrawals that remain in force, although domestic transfers were still allowed.

The head of the finance ministry's IT services denied that the ministry systems had been tampered with.

The main opposition New Democracy party has formally asked a parliamentary committee investigating Greece's bailouts to examine Mr Varoufakis, with a view to determining whether Mr Tsipras was aware of his alleged acts.

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