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EU Court denies Varoufakis access to ECB decision that led to capital controls

The European Union’s top General Court denied access to a European Central Bank (ECB) document which underpinned its decision to freeze vital funding to Greek banks in 2015, that resulted in forcing Athens to impose capital controls.

Former Greek finance minister Yanis Varoufakis and German left-wing parliamentarian Fabio De Masi(Die Linke) sued the ECB in December 2017 and asked the court to force the ECB to disclose a legal opinion that informed that decision. Varoufakis and De Masi said that the ECB decision might be unlawful.

“By restricting liquidity to the Greek banking sector to force cuts in pensions, tax increases and fire-sale privatisations, the ECB overstepped its mandate,” De Masi had said.

After their request was rejected by the ECB, Varoufakis and De Masi are turnedto the General Court of the European Union to obtain the document.

On Tuesday, the General Court ruled the ECB was right to withhold the document in order to protect its “space to think”.

“Contrary to the applicants’ claim, the ECB could legitimately take into account the hypothetical effects that the disclosure of the contested document could have on its space to think in 2015 and also after 2015,” the three judges said.

The ECB decision to freeze the amount of emergency cash it was providing to Greek banks forced Alexis Tsipras’ government to temporarily close them and impose capital controls, sinking the Greek economy and weakening his negotiating position during heated talks with international lenders.

Eventually, hard-liner Varoufakis resigned and Tsipras struck a deal with the EU that gave Greece cash in return for austerity measures and reforms.

De Masi said he and Varoufakis would challenge the verdict, which could now go to the European Court of Justice, the highest court in the EU, reuters reports.

“The ruling…stinks,” De Masi said in a statement, adding “transparency should not prevent the ECB from thinking.”

A spokesman for the ECB declined to comment to Reuters.

The document requested by Varoufakis and De Masi relates to the power of ECB’s Governing Council to intervene in decisions made by the euro zone’s 19 national central banks, such as the supply of Emergency Liquidity Assistance (ELA).

After their request was rejected by the ECB, the pair turned to the EU’s General Court.

The ECB said at the time the case was filed that the legal opinion preceded the decision to withhold Greek funding by at least two months, adding it was not disclosed due its “validity for future deliberations on ELA” and other matters.

The ECB’s Agreement on ELA, published in 2017, prohibits national central banks from providing emergency cash if it threatens price stability or payments in the euro zone’s monetary system.

PS No matter what the court ruled, disclosing the ECB decision document is in public interest, not only of Greeks.

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