ATHENS: Greek lawmakers early on Thursday approved a package of tough economic reforms ordered by their country’s creditors, the first step toward securing a third international bailout to keep Greece from going bankrupt and crashing out of the Eurozone.
But Prime Minister Alexis Tsipras’ victory in parliament, on a vote of 229 to 64, with six abstentions, and one absence, came at a cost. Nearly 40 members of his own left-wing Syriza party voted no or abstained, severely weakening his mandate to govern.
The prospect of early elections, a fragile new ruling coalition or other political instability now looms large just as Athens is in desperate need of unity to enact the new measures and to convince lenders of its commitment to reform.
The measures, including sales-tax hikes and pension cutbacks, were demanded by Greece’s creditors as a condition for opening negotiations on a $94-billion (Dh345.3 billion) bailout, based on Wednesday’s exchange rate. Under a deal reached this week between Greece and its European partners, Athens had to approve the legislation by late Wednesday or early Thursday, or face certain default.
Greek lawmakers against the agreement slammed it as blackmail by fellow European countries that have in effect told Athens either to accept their terms or flunk out of the Eurozone, the group of 19 nations using the euro as currency. An exit from the Eurozone would throw Greece into financial chaos.
The bulk of the opposition to the deal came from within Tsipras’ Syriza party, which took power in January promising to reject the very kind of policies they were suddenly being asked to approve. The party had even rallied a strong majority of Greek voters to say no to such measures in a referendum this month.
Tsipras insisted that the deal, with its prospect of a subsequent three-year international bailout for Athens, was the best way to save Greece from financial ruin.
“I am proud of the struggle and the battle that we have fought,” he told lawmakers shortly before the vote was taken. “There is no other choice than for all of us to share the weight of this responsibility.”
But the agreement and any bailout that follows — which would be Greece’s third in five years — will require more of the painful austerity that his party despises and that has helped shrink the economy by a quarter since 2009.
“The Greek people did not cast their vote in the referendum for us to approve another austerity memorandum,” Energy Minister Panagiotis Lafazanis, one of Syriza’s leftist hardliners, said. “I will not vote for a third [bailout] memorandum. With it, the country cannot move forward. It will be destroyed.”
In a sign of the difficulties that could lie ahead, hundreds of protesters descended on central Athens in the hours before Thursday’s vote. The majority were peaceful, but a small group threw firebombs, which drew tear gas from riot police. About 50 people were arrested, Greek media reported.
Tsipras says he was able to score a significant victory in the deal he struck with fellow European leaders: their agreement to look at ways of easing Greece’s colossal load of public debt, which exceeds $300 billion. Most of Athens’ Eurozone lenders, particularly Germany, have been loath to discuss any form of debt relief, on the grounds that it would excuse Greece of its fiscal irresponsibility.
Tsipras’ call for debt relief was backed up by a report released Tuesday by the International Monetary Fund warning that Greece’s debt load was not sustainable — and that the fund might not participate in a new bailout, as the Eurozone wants it to do, unless the issue is addressed. The IMF cited “the need for debt relief on a scale that would need to go well beyond what has been under consideration to date.”
One of the strongest voices raised against the agreement in parliament was that of Yanis Varoufakis, the former Greek finance minister whose combative style alienated his European counterparts and, some say, made them only more determined to drive a hard bargain with Athens.
Varoufakis compared the deal and potential bailout to the Treaty of Versailles, the disastrous accord after World War I that saddled Germany with unpayable debts and fuelled the rise of a resentful Nazism. Varoufakis, a close ally of Tsipras, voted against the deal.
Although Thursday’s vote could pave the way for a new rescue package, such a package would take several weeks to thrash out and would not address the immediate cash crunch facing Athens, which is in desperate need of funds to make an important debt payment to the European Central Bank next week.
Eurozone finance ministers met in Brussels on Wednesday to try to find a mechanism through which to lend Greece about $8 billion immediately. They identified a funding source, a pot of money set aside by the European Union to promote financial stability, and were working on a way to tap it legally.