Greek parliament approves bailout plan

Greek parliament approves bailout plan

Greek politicians have approved their country’s draft third bailout in a parliamentary vote that relied on opposition party support and saw the government coalition suffer significant dissent.

Friday morning’s vote came after a marathon all-night session marked by procedural delays and acrimonious debate over the three-year, about €85 billion rescue package that includes harsh spending cuts and tax hikes.

Greek parliament approves bailout plan

The country’s prime minister Alexis Tsipras has come under intense criticism from hardliners within his own radical left Syriza party for capitulating to creditor demands to introduce the austerity measures, many of whom voted against the bill.

The discord is threatening to split his party and could lead to early elections.

Greece needed to pass the bill ahead of a meeting of eurozone finance ministers’ meeting in Brussels this afternoon.

The deal will also need approval from the parliaments of several other countries, including that of Greece's harshest critic, Germany, before any funds can be disbursed. Some nations, such as Finland, have already given their approval.

Unable to borrow on the international markets, another bailout is all that stands between Greece and a disorderly default on its debts that could see it forced out of Europe’s joint currency.

The vote was passed with 222 votes in favour, 64 against, 11 abstentions and three absent in the 300-member parliament.

Dissenters in Mr Tsipras’s own party angrily challenged the government, accusing it of reneging on anti-austerity promises it made before winning elections last January.

“I feel ashamed for you. We no longer have a democracy ... but a eurozone dictatorship,” prominent party member and former energy minister Panagiotis Lafazanis said ahead of the vote. Mr Lafazanis on Thursday co-signed a declaration along with another 12 left-wing politicians declaring they would start a new anti-austerity movement. He stopped short of quitting Syriza outright, however.

Mr Tsipras’s radical left party won elections in January on promises to repeal similar budget austerity imposed in return for Greece’s two previous bailouts. His about-face, agreeing this week to tough terms with creditor negotiators from the European Central Bank, European Commission and International Monetary Fund, has led to outrage among hardliners that now threatens to split the party.

Greek parliament approves bailout plan

“We took a painful decision of responsibility, and took a step back,” Mr Tsipras said in his defence of the bailout. “Our position cannot be served by escape or by fantasy. We took the decision to remain alive instead of committing suicide and complaining how unfair it was.”

Mr Tsipras said Germany, and in particular its finance minister, Wolfgang Schaeuble, was attempting to undermine Greece and its position in Europe’s joint currency, and would rather see Greece kicked out of the euro.

“In a few hours ... using unfair arguments and unfair demands, there will be an effort from the side of Mr Schaeuble to take back what has been agreed,” he said, referring to the finance ministers’ meeting scheduled for later in the day. “That would not be a defeat for (Greek finance minister Euclid) Tsakalotos, or for Greece, but for Europe.”

Greece is anxious for the deal to be completed in time for it to receive funds ahead of a big debt repayment to the European Central Bank due on August 20. Without the money, it would default.

Mr Tsakalotos insisted Greece does not want an interim loan, which some creditors have proposed as a solution if the main bailout deal cannot be finalised with all creditors in time.

However, senior EU finance officials overnight tasked the European Commission with drawing up a “contingency plan” for a new interim loan as a safety net, said an EU official.

Such a loan would take care of Greece’s August 20 debt payment and buy more time for eurozone members to tweak the plan.

Germany has so far maintained a cautious stance.

German deputy finance minister Jens Spahn stressed the importance to Germany of getting a clear signal from the International Monetary Fund, which participated in Greece’s two previous bailouts, that it will remain a part of the rescue programme.

The IMF, however, insists Greece needs debt relief of some sort as it calculates that the country’s debt, currently at 180% of GDP, is unsustainable.

“We look forward to working with the authorities to develop their programme in more detail and for Greece’s European partners to make decisions on debt relief that will allow Greece’s debt to become sustainable,” said Delia Velculescu, the IMF’s negotiator on Greece in this round of bailout talks.

The IMF “will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities’ programme and debt relief have been taken, expected at the time of the first review” of the third bailout, which would occur three months after it begins.

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