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. Read more “Greek Parliament to Approve Bailout, Ruling Party Split”
Parliaments in the eurozone voted in favor of another support program for Greece this week but there were signs of rebellion on the left and the right.
In Germany, sixty of Chancellor Angela Merkel’s own Christian Democrats voted against the planned €86 billion bailout — which would come on top of the €240 billion European countries and the International Monetary Fund have lent the Balkan nation since 2010.
Despite Merkel’s insistence that the country would be watched carefully — this time — by its creditors to ensure that what she described as “unprecedented European solidarity” was matched by the implementation of economic reforms, rightwingers are skeptical. Not only has Greece repeatedly reneged on its reform commitments in the past; it now has a far-left government that was elected on promises to end austerity. Read more “Eurozone Parliaments Back Greek Bailout”
The €82 to €86 billion bailout European leaders agreed to give Greece on Sunday — provided it enacts far-reaching economic reforms — could be a tough sell in those creditor states that have taken the hardest line in recent negotiations.
Two of the three right-wing parties in Finland’s ruling coalition voted against Greece’s second bailout in 2012 when they were in opposition. Neither is particular sympathetic now that Greece has canceled some of the reforms it was committed to undertake and has a far-left government that was elected on a promise to end austerity. Read more “Third Bailout Tough Sell in Northern Creditor States”
Greece proposed economic reforms late on Thursday to qualify for €53 billion more in financial support from other European Union countries. But the reforms were largely similar to those Greeks overwhelmingly rejected in a referendum on Sunday, raising doubts about the country’s sincerity.
With only days left until European leaders meet again in Brussels to discuss the crisis and Greece has to pay back €3.5 billion to the European Central Bank, the coalition of Prime Minister Alexis Tsipras seemed to have folded.
Among the concessions it made in a last-ditch effort to avoid bankruptcy and a Greek ejection from the euro were an overhaul of the complicated sales tax system, the phasing out of a “solidarity grant” for poor pensioners, defense spending cuts and privatizations, including selling off the Port of Piraeus — one of the largest in the Mediterranean — and a number of regional airports.
When he came to power in January, Tsipras halted a privatization program that was originally envisaged to raise €50 billion.
The Open Europe think tank pointed out there were still discrepancies in terms of labor reform. Greece’s creditors are critical of plans to raise the minimum wage and restore collective bargaining which they see a step back from the liberalizations that have been made. Many Greeks, by contrast, blame austerity for leaving almost one in four workers without a job.
But debt forgiveness, otherwise a key demand of Tsipras’ government, wasn’t even mentioned in Thursday’s proposal, hinting at a willingness to compromise.
Even though European officials and the International Monetary Fund recognize that Greece’s debt — which equals around 180 percent of yearly economic output — is unsustainable, relief would be politically infeasible right now in hawkish creditor states like Finland, Germany and the Netherlands.
The same countries are skeptical of Tsipras’ intentions.
After more than 60 percent of Greeks followed his advice to vote “no” in a referendum this weekend that was seen in the rest of Europe as a test of their commitment to the single currency, and given his previous dismissal as “absurd” and “humiliating” the very proposals his government made on Thursday, it is difficult for the Northern Europeans to believe the far-left leader is serious this time.
His party is also split. “The proposals are not compatible with the Syriza program,” said Panagiotis Lafazanis, Tsipras’ energy minister and a hardliner. Some in his faction would welcome a Greek exit from the eurozone, seeing as the only way to unshackle the Balkan nation from German-imposed “neoliberalism” and cuts.
The prime minister said he would ask for parliament’s support Friday night. He might need the help of opposition lawmakers to get a majority for his proposal if the hard left of Syriza defects.
Time is running out. The Financial Times reports that without a deal this weekend, Greek banks will run out of money on Monday and the European Central Bank will pull the plug.
After Greece’s €240 billion bailout program expired last month and it failed to repay €1.5 billion to the IMF, capital controls were imposed to stave off a financial panic, limiting cash withdrawals to €60 or €120 per day.
Despite Greece’s resounding “no” to more austerity, European leaders are trying one last time this week to get the country to sign up to another bailout and keep it in the eurozone.
They shouldn’t bother.
If Sunday’s referendum made one thing clear, it’s that Greece just doesn’t belong. After more than 60 percent of Greeks allowed themselves to be deluded by far-left leaders who said the vote wasn’t about the euro at all but rather a chance to stick it up to the faceless institutions that have “humiliated” this nation of eleven million for five years by trying to make it see reality, the generous thing to do would be to prepare for an orderly Greek exit from the single currency. Read more “Time to Let Greece Go: It Doesn’t Belong in the Euro”
A Greek exit from the euro would be less divisive now than half a year ago. The antics and demands of Greek prime minister Alexis Tsipras have exhausted nearly every other European country’s patience. It seems only France is still in favor of continuing support to keep Greece on board. Read more “Greece Has United Europe Against It — Except France”
Belying the official line of Greek prime minister Alexis Tsipras that a “no” vote in Sunday’s referendum about the latest bailout offer from the nation’s creditors was not a vote on whether or not to stay in the euro, political and economic realities now point inexorably toward a “Grexit”.