Greece has dramatically voted ‘yes’ to humiliating bailout terms which will see the country stay in the euro. The Greek parliament passed a raft of austerity measures to secure a three-year European bailout despite the agreement coming two hours after the deadline. It means that other European parliaments can now vote on the plan, too.
The agreement followed violent clashes in the country’s capital last night as protesters hurled petrol bombs at riot police after surrounding the Athens parliament ahead of the final deadline for the country’s €86 billion bailout deal.
As flames erupted, police responded with tear gas against dozens of hooded anti-austerity demonstrators who set ablaze parts of Syntagma square.
Ultimately the bailout terms were agreed after 229 of the country’s 300 MPs backed the ‘yes’ vote. But it wasn’t all good news for Prime Minister Alexis Tsipras as many of the 64 ‘nos’ were members of his own party. In what was a bruising night for the country’s premier, 32 of the 149 members of the radical left-wing Syriza rejected the measures.
A government official has insisted that Tsipras will not resign despite the hit, although he had said he would step down if he did not gather the support of more than 121 of his Syriza MPs. He ended up with the backing of 124.
Former finance minister Yanis Varoufakis and house speaker Zoe Konstantopoulou were among the big names to vote ‘no’ to the reforms.
Varoufakis, who quit his post last week, had earlier said the deal was a ‘new Versailles Treaty haunting Europe’, while Konstantopoulou called it a coup that could cause ‘social genocide’.
On the eve of the deadline, it had looked increasingly likely that the parliament would approve the measures, in large part thanks to pro-European opposition parties.
But in a sign of growing dissent among the Greek people, hundreds of armour-clad officers were forced to use pepper spray to fight back youths in a 12,000-strong crowd who were hurling Molotov cocktails and rocks at them. The youths had mingled with ordinary protesters when crowds gathered as MPs met last night to vote on austerity measures required for the latest European bailout.
Many of the mask-wearing protesters carried wooden bats and pieces of smashed paving stones, in the worst clashes seen since Tsipras’ left-wing government was formed six months ago. Police said about 50 protesters had been detained outside the parliament building.
Inside, Tsipras made a final appeal to parliament for support of the tough package of bailout measures imposed by European partners this week, telling lawmakers there was no alternative, even though he disagreed with the measures.
‘We don’t believe in it, but we are forced to adopt it,’ Tsipras told deputies before a vote on the measures, which had to be approved by parliament for European partners to agree to open talks on a new multibillion euro bailout.
He said he would not shirk his responsibilities and would push forward with political and social reforms and the fight against corruption.
Tsipras has angered many in his anti-austerity party and left-wing supporters by throwing his weight behind the bills, which he and eurozone counterparts agreed to on Monday in order to unlock a new rescue to debt-laden Greece.
More than half of Tsipras’s Syriza party members slammed the deal, branding it ‘humiliating’ and ‘destructive’, while trade unions described the package as ‘economic murder’ and called for thousands to take to the streets.
Mr Varoufakis said the deal was a ‘new Versailles Treaty haunting Europe’.
The 1919 treaty, which set out Germany’s punishment after the First World War, included the payment of crippling reparations that some believe created the economic climate for the rise of the Nazis.
Mr Varoufakis, a member of Tsipras’s left-wing Syriza party, wrote on his blog that the comparison of the bailout deal to the Versailles Treaty was ‘all too germane’.
He also said in a radio interview earlier this week that the austerity package was a ‘form of post-modern occupation’ that would boost the far-right Golden Dawn party.
It followed furious scenes in the Greek parliament yesterday as politicians ripped up papers outlining the terms of the country’s €86 billion bailout deal and threw them at Tsipras.
Politicians had gathered in Athens yesterday afternoon to debate the draconian reforms Tsipras agreed to implement during crunch overnight talks with eurozone leaders earlier this week.
The harsh austerity measures Greece would have to put in place to release the bailout fund have been widely condemned, with even the International Monetary Fund branding them unfair.
Earlier Tsipras revealed that even he does not believe in the tough bailout deal offered by eurozone leaders but said he only agreed to implement it in order to save the near-insolvent country, adding that he has no intention of resigning over the matter.
Defending the terms, Tsipras said the ‘bad deal’ was the best available under the circumstances.
He said: ‘I assume responsibility for all mistakes I may have made, I assume responsibility for a text I do not believe in, but which I signed to avoid disaster for the country, the collapse of the banks.’
Tsipras also predicted that ‘the great majority of Greek people’ will support the deal, but admits he ‘cannot say with certainty’ that it will be enough to stop Greece exiting the eurozone – a so-called ‘Grexit’ – until the final bailout agreement is signed.
The outcome of today’s vote had been in doubt after the IMF issued its stark warning that Greece’s creditors will have to go ‘far beyond’ existing estimates for debt relief to stabilise the country’s finances.
The deal has split the ruling radical Syriza party as it includes changes to labour laws, pensions, VAT and other taxes that were rejected by voters in a July 5 referendum.
Tsipras’ hard-pressed government suffered its first resignations yesterday afternoon, with a junior finance minister and a senior economy ministry official walking out in protest.
‘I’m not going to vote for this amendment and this means I cannot stay in the government,’ said junior finance minister Nadia Valavani.
The parliament in Athens had to approve the deal before the 18 other eurozone leaders could start negotiations over what Greece is to get in return: a three-year bailout worth up to €86 billion, its third rescue programme in five years.
Yesterday afternoon it emerged that more than half of Syriza’s central committee had signed a statement slamming the agreement Greece reached with its European creditors earlier this week, describing it as a coup against their nation by European leaders.
The statement, signed by 109 of the committee’s 201 members, says the agreement was ‘the result of threats of immediate financial strangulation’ and is a new bailout with ‘humiliating terms of supervision, destructive for our country and its people.’
Under the plan, eurozone governments will contribute between €40 and €50 billion, the IMF will contribute another chunk and the rest will come from selling off state assets and from financial markets, a European official said.
The revelations put greater strain on Tsipras, who has been forced to turn to pro-European opposition parties to get the reform measures through parliament after a rebellion by some 30 rebel lawmakers in his own party.
The embattled premier said he took ‘full responsibility’ for signing an accord he did ‘not believe in.’ He said he agreed to it ‘to avoid disaster’ as the country teetered on the brink of economic collapse.
‘A prime minister must fight, speak the truth, take decisions and not run away,’ Tsipras said in an interview on Greek public television, when asked whether he would resign if the reforms failed to pass or he lost his parliamentary majority.
Finance Minister Euclid Tsakalotos told a parliamentary debate: ‘It’s a difficult deal, for which only time will show if it is economically viable.’
Tsipras said Greeks’ savings were safe, but the reopening of the banks – which have been closed since the end of last month – depended on the finalising of the deal, which could take a month. The finance ministry said they would remain closed until at least Thursday.
The European Central Bank has been keeping Greek banks afloat with emergency liquidity, but it could be forced to cut off that aid if Greece misses a huge debt repayment due on Monday.
European governments are meanwhile divided over options to help Greece meet its short-term cash needs while it waits for the eurozone bailout deal to be finalised, which will likely to take at least four weeks.
The European Commission on Wednesday formally backed a controversial proposal to use an EU-wide crisis fund to cover Greece’s short-term cash needs, officials said, setting up a clash with Britain and Germany.
In a sign of the ongoing concern about the global fallout of the Greek crisis, US Treasury Secretary Jacob Lew will travel to Germany and France on Wednesday and Thursday for talks with top officials.
Now that Greece has passed the agreement, Europe’s next step is to push the deal through several national parliaments, many in countries that are loath to afford Athens more help.
Yesterday the European Commission said there are ‘serious concerns’ about the sustainability of Greece’s debt load amid a worsening in its economy.
The Commission said in a report that its main forecasts are for debt to reach 165 per cent of GDP in 2020, 150 per cent in 2022 and 111 per cent in 2030.
In an ‘adverse’ scenario, in which the economy does worse than expected, the debt load would hit a massive 187 per cent, 176 per cent and 142 per cent, respectively.
The left-wing government of Prime Minister Alexis Tsipras took office in January.
The Commission says that since the end of last year, there was a ‘very significant weakening of commitment to reforms and backtracking on previous reforms’ which quickly led to a ‘significant deterioration of debt sustainability.’
The Commission has cut its growth estimates and expects up to a 4 per cent contraction in Greece’s economy this year, compared with a 0.5 percent rise predicted early this year.
The German government is arguing that one possible way to help Greece meet its financial obligations in coming days, before a full bailout program is established, is for the country to issue IOUs for domestic needs.
Finance Ministry spokesman Martin Jaeger said Wednesday that ‘we have included this element in the discussion’ among eurozone nations on how to keep Greece afloat while talks proceed on the details of a full bailout deal. The talks are expected to last weeks. Jaeger says that IOUs are just one of ‘various conceivable approaches.’
Greece needs short-term financing among other things to repay a loan to the European Central Bank due next week and to clear arrears with the International Monetary Fund.
The loan would be made pending the start of a full bailout program agreed on between the 19 eurozone leaders on Monday.
Since Greece needs to meet debt payments as soon as next week, eurozone nations have been looking for a way to give it a first, quick loan. They are considering tapping a fund, the EFSM, which is backed by all 28 countries in the EU. The problem is that non-euro nation Britain does not want to help pay for Greece, which it considers a eurozone issue
The embattled premier said he took ‘full responsibility’ for signing an accord he did ‘not believe in, but which I signed to avoid disaster for the country’ as it teetered on the brink of economic collapse.
Daily Mail
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