Monday 5 December 2016

Greek government on its 'last legs' while Angela Merkel faces growing rebellion in Berlin

Mehreen Khan

Published 18/08/2015 | 08:00

Greek premier Alexis Tsipras has much to ponder
Greek premier Alexis Tsipras has much to ponder

Greek MPs are poised to hold a vote of confidence in the government of Alexis Tsipras after Leftist party rebels deserted the prime minister over the punishing terms of a third international bail-out agreement.

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Syriza's energy minister Panos Skourletis said it was now "self evident" that parliamentarians would decide on whether or not to continue supporting the government after a "deep wound" had been inflicted on the ruling coalition.

Lawmakers voted to ratify a 30-page "Memorandum of Understanding" to keep the country in the eurozone for the next three years on Friday.

But the terms of the deal, which roll back a number of key pledges from the anti-austerity government, have split the ruling party. Mr Tsipras failed to get the backing of at least 120 of his own MPs, a constitutional threshold that could oblige him to trigger a vote in his leadership.

Support for the ruling coalition has becoming vanishingly thin. Greece's two main opposition parties - which have so far voted to keep the country in the euro - vowed to pull the plug on the embattled premier should a vote be called in the coming weeks.

Pasok, the much depleted socialist opposition, joined the conservative New Democracy in refusing to endorse Mr Tsipras and his junior coalition partner, led by defence minister Panos Kammenos.

"The government has signed the third and most onerous bail-out. All the negative consequences for the country and its citizens bear the signatures of Mr Tsipras and Mr Kammenos," said a Pasok party statement.

"We have no confidence in the Tsipras-Kammenos government and of course will not give it if we are asked."

Should he fail to win majority backing from Greece's 300 MPs, Mr Tsipras is almost certain to hold a snap election.

Syriza's radical Left Platform - which makes up a third of the party's membership - has already threatened to form a breakaway faction under the leadership of firebrand former minister Panagiotis Lafazanis. Grassroots party members are set to hold an internal ballot over the party's position in September with talks that an election could be called for as early as September 20.

Panagiotis Kouroublis, health minister, said a vote was the only way to reconcile Greek voters with the years of spending cuts and tax hikes demanded by creditor powers as the price of euro membership.

"Elections are not the best choice ... but for the economy to pick up there must be political stability," he said. "To implement such a serious programme with painful measures, you cannot do that without a popular mandate."

Creditors have demanded up to 47 legislative "prior actions" before a first disbursement of €26bn can be released to Athens - its first dose of rescue money since August 2014. The measures include raising the minimum retirement age to 67, liberalising the country's drugs and energy sectors, and reversing public sector hiring promises.

Collapsing political support in Greece comes as a host of eurozone parliaments are set to vote on a deal to release up to €86bn to the near-bankrupt country this week.

Chancellor Angela Merkel is facing the biggest domestic rebellion in her 10 years in office over the aid package.

More than 60 of her Christian Democrat MPs rejected restarting talks over a new Greek rescue in an initial vote in July. This insurrection is set to mount when the package is put before a final parliamnetary vote on Wednesday, according to a key ally of the German premier.

Michael Fuchs, deputy chairman of the CDU, said he had yet to decide whether or not he would back the bail-out as doubts over the involvement of the International Monetary Fund continue to hang over Berlin.

"There might be some changes by tomorrow, even,” said Mr Fuchs in an interview with Bloomberg.

Continued financial aid from the IMF has been a key condition for Germany, which will be the biggest single contributor to the bail-out. Ms Merkel, who has been forced to cancel trips to Italy and Brazil in a bid to convince her lawmakers to back the deal, reassured her party that the Fund would join the new rescue by October at the latest.

Without the IMF, the entire burden of Greece's financing needs will fall on eurozone member states through the bloc's bail-out fund, the European Stability Mechanism.

Greece's bank stocks closed down 8pc on Monday on the news that senior bondholders would be "bailed-in" under a planned €10bn recapitalisation of lenders. Depositors however will be protected under the plans which were agreed by eurozone finance ministers on Friday.

Telegraph.co.uk

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