Reshuffle for Tsipras after vote rebellion
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THE Greek bailout took two big strides forward yesterday as German lawmakers overwhelmingly gave their backing to another financial rescue and the European Union confirmed it would get Athens enough money to avoid an imminent debt default.
The twin developments capped a week in which the proposed bailout agreed by the 19 eurozone leaders on Monday has cleared a string of hurdles.
As a result, expectations have risen that Greece will secure a three-year financial bailout which will allow it to get back toward some sort of economic normality following weeks of crisis that has seen banks shut and withdrawals at ATMs limited to just 60 euros (US$65) a day.
The first big development yesterday was the news that German lawmakers, following more than three hours of debate, voted 439-119 in favor of opening detailed discussions on the bailout package, after Chancellor Angela Merkel warned that the cash-strapped country would face chaos without a deal.
That was later followed by confirmation that the European Union had worked out the mechanism it would use to get Greece 7.16 billion euros in short-term cash by Monday, when it has a 4.2 billion euro payment due to the European Central Bank.
“What we’re witnessing is European solidarity in action,” said Valdis Dombrovskis, the EU Commission’s vice president for the euro, who revealed the news of the short-term bridging loan.
“Politicians across 27 countries have invested their own political capital to speed through national decisions to shoulder Greece at this difficult time for the country,” he added.
Without the so-called bridge financing, which will come from funds remaining in a long-dormant EU program called the European Financial Stabilization Mechanism, Greece would not have been able to make the payment.
Though the broad outlines of the Greek bailout were agreed on Monday, specific terms will now be thrashed out between Greece and its European creditors.
The process is expected to last around four weeks and to lead to Greece getting around 85 billion euros to help it pay off upcoming debts.
Germany has been the largest single contributor to Greece’s bailouts and has taken a hard line, insisting on stringent spending cuts, tax hikes and wide-ranging economic reforms in return.
“The principle ... of responsibility and solidarity that has guided us since the beginning of the European debt crisis marks the entire result from Monday,” Merkel told a special session of Parliament.
The alternative to an agreement, she added, “would not be a time-out from the euro that would be orderly ... but predictable chaos.”
Merkel will have to return to Parliament to seek approval for the final deal when the negotiations are concluded.
“I know that many have doubts and concerns about whether this road will be successful, about whether Greece will have the strength to take it in the long term, and no one can brush aside these concerns,” she said. “But I am firmly convinced of one thing — we would be grossly negligent, even irresponsible, if we did not at least try this road.”
Merkel’s finance minister, Wolfgang Schaeuble, who has talked particularly tough on Greece, said Germany will do its utmost to “making this last chance a success” — provided Greece does its part.
Bailing out Greece hasn’t been popular in Merkel’s conservative bloc and 60 of its lawmakers failed to back her yesterday, with another five abstaining.
In Athens, Greek Prime Minister Alexis Tsipras is widely expected to reshuffle his Cabinet following a rebellion in his party over a parliamentary vote to approve the measures demanded for the bailout talks to start.
A little more than a quarter of the 149 lawmakers from Tsipras’ Syriza party either voted against or abstained in Wednesday’s vote. Tsipras still won an overwhelming majority as three opposition pro-European parties backed the proposals.
The legislation, which includes tax increases and pension cuts, was demanded as a precondition to the launch of negotiations on a third bailout. Elements of the bill are being implemented immediately, with changes to consumer tax coming into effect Monday. The ECB also raised emergency liquidity assistance to Greek banks.
The first visible sign of economic healing in Greece will emerge when the banks open their doors again.
On Thursday, the government said they would reopen on Monday for limited transactions for the first time in three weeks after capital controls were imposed on June 29 ahead of a referendum Tsipras called on previous creditor proposals.
Tsipras has acknowledged that the package he signed up to went against his election promises to repeal austerity imposed over the past five years in return for Greece’s two international bailouts. But he has insisted he had no other choice, as the alternative would have seen Greece forced out of the euro.
Tsipras has criticized the hardliners who voted against him, saying their decision was “in conflict with the principles of comradeship and solidarity and at a crucial time creates an open wound,” an official said.
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