Greek PM Wins Backing for Concessions; EU Give Positive Signals

PM Alexis Tsipras acknowledged that the reforms proposed in return for a third bailout are harsh but necessary.

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World
3 min read
Greece’s Prime Minister Alexis Tsipras reacts during a parliament meeting in Athens. (Photo: AP)

Greek Prime Minister Alexis Tsipras won backing from lawmakers on Saturday for painful reform proposals aimed at obtaining a new international bailout, but he faced a rebellion in his own party that could threaten his majority in parliament.

The measures, which received an initial nod from European Union and International Monetary Fund officials before a meeting of euro zone finance ministers on Saturday, were passed with the support of pro-European opposition parties.

With Greece’s banks shut and completely dependent on a credit lifeline from the European Central Bank, the measures were seen as a last chance to avert the collapse of the financial system and prevent Greece from being pushed out of the euro.

In an ominous sign for the stability of the government, however, 10 deputies on the ruling benches either abstained or voted against the measures and another 7 were not present, leaving Tsipras short of the 151 seats needed for a majority of his own.

Prominent leftwingers in the governing Syriza party signalled before the vote that they could not support the mix of tax hikes and spending cuts proposed by Tsipras, following the rejection of similar austerity measures by voters in Sunday’s referendum.

The parliament today gave the government a strong mandate to complete the negotiations and reach an economically viable and socially fair agreement with its partners. The priority now is to have a positive outcome to the negotiations. Everything else in its own time.
– Prime Minister Alexis Tsipras

Positive Signal From EU, IMF

Experts from the European Commission, ECB and the IMF spent Friday reviewing the Greek case for aid and the proposals for economic reforms that will be conditions for any loans.

A person close to the matter told Reuters that EU and IMF officials had given euro zone governments a positive initial assessment of Greece’s request for a new bailout.

The positive evaluation, along with a conclusion that Athens needs a total of some 74 billion euros to meet its obligations, will form a key part of discussions among euro zone finance ministers when they meet in Brussels at 3 pm.

Serious and Credible

Germany, which has contributed more to bailouts than any other country, sounded wary. A finance ministry spokesman ruled out any debt restructuring that would lower its real value.

France, Greece’s strongest supporter in the euro zone, rushed to offer praise. President Francois Hollande called the offer “serious and credible”. Eurogroup head Jeroen Dijsselbloem described it as a “thorough piece of text” but declined to go into specifics.

“Broad support in Greece gives it more credibility, but even then we need to consider carefully whether the proposal is good and if the numbers add up,” he told reporters. “One way or the other, it is a very major decision we need to take.”

The lenders’ backing is crucial for euro zone leaders to support the proposals. Dijsselbloem, European Commission President Jean-Claude Juncker, ECB President Mario Draghi and IMF head Christine Lagarde discussed the plan in a teleconference.

A senior EU official said the meeting of finance ministers from the 19-nation euro area would include discussions on whether Greece needs some debt relief on a third bailout programme despite exasperation at the five-year-old Greek crisis.

Greece asked for 53.5 billion euros ($59 billion) to help cover its debts until 2018, a review of primary surplus targets in the light of the sharp deterioration of its economy, and a “re-profiling” of the country’s long-term debt.

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