Greek Parliament to Approve Bailout, Ruling Party Split

Greek lawmakers approve measures demanded in return for financial aid but many leftwingers rebel.

Greek Syriza party leader Alexis Tsipras makes a speech in parliament in Athens, June 10, 2011
Greek Syriza party leader Alexis Tsipras makes a speech in parliament in Athens, June 10, 2011 (Greek Prime Minister’s Office)

Greece’s parliament was due to approve measures in the early hours of Thursday that Finance Minister Euclid Tsakalotos said would clear the way for negotiations on a third bailout from the European Union to begin later this week.

But in a sign of how contentious the reforms demanded from Greece in return for financial aid are in the country, dozens of the ruling Syriza party’s own members were expected to vote against new policies for dealing with failed banks and speeding up the justice system. The package could only pass with support from opposition parties that are determined to keep Greece in the euro.

Panagiotis Lafazanis, the former energy minister and leader of Syriza’s most left-wing faction, accused Prime Minister Alexis Tsipras of betraying their “common struggle” by submitting to European “blackmail,” the Kathimerini newspaper reported.

Greece has no future as a blackmailed austerity colony of the eurozone but as a proud country which, without guardianship and despite the difficulties, fights against poverty, austerity and unemployment and for the deep reduction of debt.

Earlier, Tsipras had challenged his critics to come up with a better plan. “I’ve seen strong reactions and read heroic statements but I haven’t heard an alternative proposal,” he said.

The Greek leader capitulated to his creditors’ demands for economic and judicial reforms earlier this month despite winning January’s election on promises to cancel austerity and later getting 61 percent support in a referendum to reject the terms of Greece’s last bailout.

His admission to lawmakers on Wednesday night that the Syriza-led government would carry out a program it doesn’t believe in will do little to assuage the concerns of creditor states that Greece might once again fall short of its commitments.

In Germany, a fifth of Chancellor Angela Merkel’s own conservative lawmakers voted against giving Greece a third bailout last week.

The prospect of another rescue package has nevertheless allowed the European Central Bank to resume support for Greek banks which, lacking cash, were forced to limit cash withdrawals to €60 or €120 per day last month.

Without a third aid package, which is expected to come in at €86 billion, Greece would risk default and ejection from the eurozone.

Most other eurozone countries, including powerful Germany, were prepared to let Greece exit after Tsipras exhausted their patience by overturning reforms previous bailouts — worth €240 billion over five years — were conditioned on.

The far-left leader also demanded debt forgiveness, something Merkel ruled out this weekend, at least until Greece enacts reforms that should boost its competitiveness.

“When the first successful assessment of the program being negotiated now is completed, exactly this question will be discussed,” she told ARD television on Sunday. “Not now, but then.”

Equaling more than 180 percent of Greece’s yearly economic output, its gargantuan public debt is seen by economists — including those at the International Monetary Fund that jointly administered Greece’s last two bailouts — as a drag on its economy. But the costs of servicing Greece’s debt are kept artificially low by its creditors and what sent the economy back into recession earlier this year was Syriza’s victory in the general election, driving investors away and depressing business confidence.

Beyond overhauling bankruptcy laws and improving the efficiency of Greek courts, Tsipras has promised to streamline the sales tax system, broaden the tax base, make the pension system more affordable and privatize electricity transmission.

Other countries are skeptical given that previous Greek governments failed to honor similar commitments.

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