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Monday 5 December 2016

Greece crisis: Cracks appear in Government partners over bailout terms as vote looms

Published 14/07/2015 | 12:48

A man walks by a mural in Athens, Greece July 14, 2015, Prime Minister Alexis Tsipras faces a showdown with rebels in his own party furious at his capitulation to German demands for one of the most sweeping austerity packages ever demanded of a euro zone government. REUTERS/Yannis Behrakis
A man walks by a mural in Athens, Greece July 14, 2015, Prime Minister Alexis Tsipras faces a showdown with rebels in his own party furious at his capitulation to German demands for one of the most sweeping austerity packages ever demanded of a euro zone government. REUTERS/Yannis Behrakis
Greek Prime Minister Alexis Tsipras arrives at his office in Athens just after flying in from Brussels
Greek premier Alexis Tsipras: faces opposition within Syriza
Pensioners are given priority tickets by a National Bank branch manager (R), as they wait to receive part of their pensions in Athens, Greece July 13, 2015. Euro zone leaders clinched a deal with Greece on Monday to negotiate a third bailout to keep the near-bankrupt country in the euro zone after a whole night of haggling at an emergency summit. REUTERS/Yiannis Kourtoglou
Youths hold a placard that reads 'Do we stay in Euro?' during an anti-austerity protest in central Athens, Greece, July 12, 2015. Euro zone leaders told near-bankrupt Greece at an emergency summit on Sunday that it must restore trust by enacting key reforms before they will open talks on a new financial rescue to keep it in the European currency area. REUTERS/Yiannis Kourtoglou
A security worker leaves a National Bank branch after bringing money in central Athens, Greece, July 13, 2015. Euro zone leaders clinched a deal with Greece on Monday to negotiate a third bailout to keep the near-bankrupt country in the euro zone after a whole night of haggling at an emergency summit. REUTERS/Yiannis Kourtoglou
Sunlight reflects off solar water heaters in Athens, Greece, July 12, 2015. Euro zone leaders told near-bankrupt Greece at an emergency summit on Sunday that it must restore trust by enacting key reforms before they will open talks on a new financial rescue to keep it in the European currency area. REUTERS/Cathal McNaughton
German Chancellor Angela Merkel arrives in her car at a euro zone leaders summit in Brussels, Belgium, July 12, 2015. Euro zone leaders will fight to the finish to keep near-bankrupt Greece in the euro zone on Sunday after the European Union's chairman cancelled a planned summit of all 28 EU leaders that would have been needed in case of a "Grexit". REUTERS/Philippe Wojazer TPX IMAGES OF THE DAY
A one Euro coin is seen in this file photo illustration taken in Rome, Italy July 9, 2015. Greece's 18 euro zone partners want Prime Minister Alexis Tsipras to push legislation through parliament before releasing funds to avert a state bankruptcy and starting negotiations on a third bailout programme. REUTERS/Tony Gentile/Files GLOBAL BUSINESS WEEK AHEAD PACKAGE - SEARCH "BUSINESS WEEK AHEAD JULY 13" FOR ALL IMAGES
Greek Prime Minister Alexis Tsipras speaks with German Chancellor Angela Merkel (L) and French President Francois Hollande at a euro zone leaders summit in Brussels, Belgium, July 12, 2015. Euro zone leaders will fight to the finish to keep near-bankrupt Greece in the euro zone on Sunday after the European Union's chairman cancelled a planned summit of all 28 EU leaders that would have been needed in case of a "Grexit". REUTERS/Stringer/Pool
IMF managing director Christine Lagarde and Finance Minister Michael Noonan and French Finance Minister Michel Sapin at the meeting in Brussels
Greek prime minister Alexis Tsipras
Taoiseach Enda Kenny arrives for the meeting in Brussels yesterday
Pro-EU protesters take part in a rally in front of the Greek parliament in Athens last week. Photo: Yannis Behrakis/Reuters
Greece still has a chance to access €1.2bn allocated to banks
A worker at the Athens Stock Exchange stands in the reception hall as an electronic board displays stock prices. Getty Images
A Greek national flag flies near the Parthenon temple on Acropolis Hill in Athens, Greece, on Saturday, Feb. 21, 2015. Photo: Yorgos Karahalis/Bloomberg
People withdraw cash from ATMs in central Athens on June 19, 2015, as a beggar lays on the pavement. The European Central Bank's decision-making governing council will hold an emergency session on June 19 to discuss a request from the Bank of Greece for an
Greek Finance Minister Euclid Tsakalotos (L) and former finance minister Yanis Varoufakis talk during a parliamentary session in Athens
Traders talk in front of the German share price index DAX board at the stock exchange in Frankfurt, Germany
Greek Finance Minister Yanis Varoufakis leaves the Prime Minister's office where a governmental council takes place in Athens June 15, 2015. Greece's government on Monday played down the prospect of submitting a new counter-proposal as sought by lenders in
Visitors look at the view across the city from beneath the Parthenon temple on Acropolis Hill in Athens, Greece
Passersby walk past an electronic stock quotation board outside a brokerage in Tokyo July 13, 2015. Japan's Nikkei share average rose on Monday as yet another strong rebound in Chinese shares soothed investor sentiment and as oil's fall boosted airliners and other energy users, though uncertainty on Greece's fate in the euro zone capped gains. REUTERS/Issei Kato
Enda Kenny leaves a meeting of eurozone heads at the EU Council building in Brussels
Finance Minister Euclid Tsakalotos arrives at the presidential palace in Athens yesterday

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.

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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.

Read More: Euro zone finance ministers struggle for ways to keep Greece from defaulting

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.

Read more: 'My friends have all left Greece for work - but someone has to stay'

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.

Read more: Talks on 'draconian' bailout deal to take another month

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.

Read more: Left-wing TDs here abandon Syriza after 'capitulation' to EU demands

"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.

Reuters

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