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Alexis Tsipras defends Yanis Varoufakis over secret Grexit plan

Alexis Tsipras, the Greek prime minister, has launched a staunch defence of his former right-hand man Yanis Varoufakis following revelations that the ex-finance minister drew up secret plans to ditch the euro if bailout talks failed.

Varoufakis, who was a controversial figure during his tenure in Athens, courting publicity and provoking his eurozone counterparts, has admitted he formulated a scheme for leaving the euro, which involved hacking into the Greek tax system.

Some Greek politicians have suggested that Varoufakis, who left his post in the wake of the Greek public’s no vote in the referendum on a new bailout for the country, should face criminal charges for drafting the plan.

However, speaking in the Greek parliament, where Varoufakis appeared in jeans and a patterned shirt, Tsipras spoke up for his former colleague.

“You can blame him all you want for his comments, for his political plans, for his bad taste in shirts, for his holidays on the island of Aegina. But you can’t say that he is a crook, you can’t say that he stole the money of the Greek people, you can’t say that he had a secret plan to lead the country on to the rocks.”

Varoufakis has continued to be a controversial figure since stepping down from his post, issuing a stinging critique of the deal Tsipras went on to sign with his fellow eurozone leaders, comparing it to the Treaty of Versailles.

Tsipras’s defence came as Varoufakis’s successor, Euclid Tsakalotos, began talks with Athens’ “quartet” of creditors over the conditions that will be attached to a third bailout for the stricken country, expected to be worth €86bn (£61bn).

Tsakalotos said the tentative talks, which were held at the Hilton hotel in Athens, had taken place in a “positive climate”.

His interlocutors included the head of the International Monetary Fund mission to Greece, Delia Velculescu. On Thursday, the Washington-based lender said it would refuse to contribute to a new rescue package until the eurozone makes a “detailed and concrete” offer of debt relief, although it will continue to take part in talks.

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Alongside Velculescu at Friday’s discussions were representatives from the European commission, the European Central Bank, and the eurozone’s bailout fund.

Between them, these four institutions have been dubbed the “quartet”, taking over from the hated “troika” that negotiated Greece’s previous bailouts.

Tsipras, who has already passed a slate of controversial austerity measures since clinching an outline deal with fellow eurozone leaders in mid-July, will have to rely on a bridging loan from the EU until a new bailout can be finalised. Greece is due to make a €3.2bn repayment to the ECB on 20 August.

Mina Andreeva, spokeswoman for the European commission, played down the IMF’s refusal to contribute more funds up front. “It is clear the IMF has a different set of procedures and a different timetable,” she told reporters, adding that its approach was “fully compatible with the EU agenda”.

However, analysts said that the lack of IMF involvement could make it more likely that other eurozone parliaments will raise objections to any new deal.

“On a good day, this dispute as to who needs to move first, the IMF with a contribution to a new bailout programme or Europe with more debt relief, could be solved by wily diplomats in an hour. On a bad day, it could potentially scupper a deal,” said Holger Schmieding, chief economist at Berenberg Bank.

Among the demands reportedly tabled by the quartet at the start of talks were several that could prove controversial, including an abolition of the so-called “solidarity tax” imposed on the wealthiest Greeks, and the removal of tax exemptions for farmers.

The Greek stock market, which has been closed since the country’s banks were shut down in late June, is expected to reopen on Monday, in the latest sign that a semblance of normality is being restored to the troubled country.

Separately, official figures showed that unemployment across the eurozone remained at 11.1% in June. That’s more than twice the rate in the UK: a sign that while many eurozone members are chalking up strong economic growth, the price of the crisis is still being felt in the labour market.

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