Greece crisis: Cracks appear in Government partners over bailout terms as vote looms
Published 14/07/2015 | 12:48
POLITICIANS in Greece's ruling Syriza party and their allies were arguing behind closed doors today about whether to back sweeping reforms the government must ram through parliament as it races to meet the terms of an unpopular bailout deal.
Having staved off financial meltdown with a new agreement from Greece's creditors, Prime Minister Alexis Tsipras has less than 48 hours to smother dissent from hardliners and pass measures tougher than those rejected in a referendum days ago.
Syriza and its junior coalition ally held separate meetings to prepare for parliament sittings to pass the laws, which include plans for tax hikes, pension reforms and tighter supervision of the government's finances.
It was a spectacular turnaround for a Syriza party voted into power in January promising to end years of cuts and recession in a country where a quarter of people are unemployed. There was some speculation, including in Germany's mass-selling Bild newspaper, that Tsipras could resign.
Comparing the challenge facing the government to the Gordian Knot of mythology that was impossible to untie, Interior Minister Nikos Voutsis was nevertheless confident that Tsipras could muster enough votes in parliament.
"The decisions that will facilitate a return to normality will take place," Voutsis told reporters.
But investors were less sure. European shares edged lower on Tuesday after a four-day rally amid uncertainty over whether the measures would be passed in time.
The party's junior coalition partner promised to support the government, with the ambiguous caveat that it would only vote for bailout measures agreed before last weekend's summit in Brussels, which were less stringent.
"We are committed to voting for what we decided in the council of the political leaders and only that, no other measures that are imposed," Panos Kammenos, head of the right-wing Independent Greeks, told reporters.
He and a parliamentary spokesman for Syriza railed against what he described as a "coup" by creditors to force Greece to accept harsh reforms, while opponents of the new measures are planning strikes and protests in the coming days.
GOVERNMENT IN QUICKSAND
Tsipras will probably have to sack some hardline ministers and count on opposition lawmakers to pass the reforms, which could be clubbed together in one bill on Wednesday.
One obstacle could be the parliamentary speaker, Zoe Constantopoulou, who is key to the logistics of the vote and has been one of the creditors' most ferocious critics. Tsipras could try a potentially risky move of forcing her out through a no-confidence vote, although that would eat up precious time and political capital to prepare the reform bills.
"The government finds itself in quicksand after the deal with creditors," the centre-right Kathimerini newspaper said.
"Mr. Tsipras needs to solve a difficult equation as dissenters on Wednesday's vote may reach or exceed 40," it said. Tsipras needs 151 of 300 lawmakers to pass the reforms and with the votes of his own party and allies theoretically has 162.
"Mr. Tsipras has decided to first pass the measures in parliament with the support of the opposition parties and then attempt to solve the Gordian Knot."
The Bank of England Govenor Mark Carney also drew on Greek mythology to underscore the scale of the challenge, saying it needs a "Herculean" effort from all sides for the deal to work.
Austria's Chancellor Werner Faymann said a "Grexit" could not be ruled out despite the agreement, echoing findings by a Reuters poll of 60 economists, some of whom saw at least a 50 percent chance of Greece leaving the currency.
The poll, which was carried out in the 24 hours after news of the agreement broke, also pointed to skepticism about whether the deal was good for both Greece and Europe, and whether Greece had enough assets to sell to meet the terms of the deal.
"No one can say that some kind of a catastrophe is ruled out," Faymann told a weekly government news conference.
Euro zone finance officials are struggling to find a way to give Greece bridge financing to keep the country afloat while a third bailout package is negotiated, especially to pay back loans owed to the European Central Bank next week.
TRUCE OR DESTRUCTION
There has been a mounting anger at both the government and the creditors, with many Greeks decrying what they saw as a humiliation imposed on them that treated their country like a European colony.
German Finance Minister Wolfgang Schaeuble became the focus of the outrage by floating a proposal during the bailout talks over the weekend for a temporary Greek exit from the euro zone.
According to Germany's Handelsblatt newspaper on Tuesday, Schaeuble later suggested in discussions with other euro zone finance ministers that Greece could issue IOUs as a means of interim financing. Schaeuble suggested Athens could use IOUs to serve some of its domestic payment obligations.
"With this deal, the public mandate and the proud 'No' of the Greek people in the referendum is cancelled," said Energy minister Panagiotis Lafazanis, one of the leftist hardliners whom Tsipras must sidestep to implement the reforms.
"The government and the prime minister himself, even at the last minute, have the opportunity to change their mind and take it back, before the parliament decides," he said in a statement.
"The dilemma posed by the creditors, truce or destruction, is fake and terroristic and has been demolished in the public conscience," he said.
The pain for Greece continues, with bank closures and strict controls on withdrawals from cash machines squeezing businesses dry. A Greek trade federation called on the government to loosen such capital controls to allow companies to make payments owed to overseas vendors.
Fighting its own battle with Brussels to secure reforms of the European Union, British Finance Minister George Osborne has ruled out any financial involvement in a fresh bailout for Greece. The move followed suggestions a mechanism backed by the whole European Union could provide bridge financing.