Monday 26 September 2016

Greece deal poisons Europe as backlash mounts against 'neo-colonial servitude'

Greece's parliament will pass legislation required for a new financial aid package from Europe's rescue fund despite dissenting views from some ruling party deputies, the country's interior minister said on Tuesday.

Ambrose Evans-Pritchard

Published 14/07/2015 | 06:56

Greek Prime Minister Alexis Tsipras arrives at his office in Athens just after flying in from Brussels
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

GREEK premier Alexis Tsipras faced a furious backlash from own Syriza party after yielding to draconian demands from Europe’s creditor powers, and agreeing to let foreign surpervisors to take control of his country.

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The bitter climb-down clears the way towards an €86bn rescue package and the renewal of emergency liquidity for the Greek banking system, once Greece’s parliament has voted for pension cuts, tax rises and a raft of other measures by Wednesday. This is the first of a series of deadlines as the country is kept on a tight leash.

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

Greece's parliament will pass the legislation required for a new financial aid package from Europe's rescue fund despite dissenting views from some ruling party deputies, the country's interior minister said on Tuesday.

"The decisions that will facilitate a return to normality will take place," Nikos Voutsis told reporters.

In addition, the junior coalition partner pledged to continue support for the government but indicated his party would only vote for bailout measures agreed before last weekend's summit in Brussels.

Panos Kammenos, head of the right-wing Independent Greeks said his party would remain in coalition with Tsipras but would only vote for measures agreed at a meeting of leaders from all the main Greek parties before the summit.

"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," he told reporters.

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.

"There can be policies to offset these socially tough measures," he said.

The terms imposed after marathon talks through the night on Sunday are far harsher than those rejected by Greek voters in a landslide referendum a week ago, and risks shattering democratic consent in Greece. It has left Europe bitterly divided along North-South lines of cleavage, severely testing the political cohesion of monetary union.

“Greece has been devastated and humiliated. Europe has showed itself Pharisaical, incapable of leadership and solidarity,” said Romano Prodi, the former Italian prime minister.

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

An independent fund will take control of €50bn of Greek state assets, collateral to prevent Syriza reneging on the deal at a later date. Three-quarters of this will be used to recapitalise the Greek banks and repay debt.

International inspectors will have the power to veto legislation. The radical-Left Syriza government will be forced to repeal a raft of laws passed since it took power in January, stripping away the last fig leaf of sovereignty.

“It is unconditional surrender. We get serious austerity with no debt relief. We will have foreign supervisors crawling over everything,” said Costas Lapavitsas, a Syriza MP and one of 40 or so rebels who plan to abstain or vote against the deal, mostly from the Left Platform.

“They are telling us that from now on, they are going to govern the country. I am afraid there is going to be a real fight about this. There is a groundswell of anger and it is now perfectly clear to a lot of people that the only way out of neo-colonial servitude is to break free of monetary union,” he said.

The Independent Greeks party (ANEL) in the ruling coalition called the deal a “German coup” and said it would not have anything to do with it. The government is close to collapse.

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

Mr Tsipras gave in after being locked in all-night talks with German Chancellor Angela Merkel and French president Francois Hollande, an ordeal described by one EU official as psychological “water-boarding”.

He was left with a grim choice as Greek banks ran out of cash and after two weeks of capital controls had brought industry to a halt. Food companies warned that the country will start to run out of beef and other imported meats within days and could face serious food shortages by the end of the month unless the banking system is reopened, and firms can pay foreign suppliers once again.

The European Central Bank has yet to lift its freeze on emergency liquidity for the Greek financial system. The banks will remain shut through Wednesday.

Yanis Varoufakis, the former finance minister, said Greece had been forced to accept a latter day “Versailles Treaty” that will leave the country languishing in perma-slump for years to come.

There is no guarantee yet that Greece will receive a fresh tranche of funds. The first raft of measures merely open the door for another set of gruelling talks to secure a package from the eurozone bail-out fund (ESM), with yet more sweeping demands.

In the meantime, Greece will need €12bn in bridging finance to clear its arrears to the IMF – now €2bn after missing a fresh payment - and to cover debt repayments in July and in August. This is likely come from the European Commission currency stabilization fund, which ropes in Britain and other non-euro states.

Mr Tsipras sought to put the best possible face on the deal, insisting that he had prevented “the transfer of public property abroad, financial asphyxiation and the collapse of the banking system”.

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

He claimed that Greece had secured a debt restructuring, yet the summit text offers no more no more than a vague promise, despite intense pressure from the US Treasury and the International Monetary Fund for serious relief.

The creditors mention a “possible” extension of maturities at a later date, but only once the Greeks have delivered on a long string of prior measures. The creditors made similar noises in 2012 but failed to deliver.

Mr Tsipras will have to rely on centrist and conservative MPs to carry the deal through parliament, and may ultimately be forced to form a national unity government – leaving him in an invidious position as the "Ramsey MacDonald" of the Greek Left.

Christian Odendahl and John Springford from the Centre for European Reform said the new bail-out “resolves nothing” and is likely to fall apart even if it gets through the Greek parliament. It repeats the errors of previous packages that imposed self-defeating levels of fiscal contraction. “A fresh round of consolidation will raise the Greek debt-GDP ratio, not lower it,” they said.

“Germany’s strategy is clear: impose harsh conditions on any government that seeks to change the austere rules of the game, knowing that electorates in Greece and elsewhere are terrified of the leap into the unknown that would be exit from the euro,” they said.

“The bailout’s economic incoherence will lead the agreement to unravel eventually. Grexit is still very much on the table."

Peter Kazimir, the Slovak finance minister, said Greece is paying the price for indulging in a “Greek Spring” under the Syriza movement, a view widely shared in the former Communist states of central Europe and the Baltics, as well as in Finland, Holland and Germany.

Yet this is matched by a widespread feeling in Italy and France that Germany abused its hegemonic power in the eurozone to push a narrow, mean-spirited agenda, a regret shared by much of the German Left and the country’s pro-European wing.

“Even if a deal can eventually be reached to keep Greece in the euro area, the ramifications of this weekend’s incredible bloodletting will have long-term consequences,” said James Nixon from Oxford Economics.

“The damage done to relations between France and Germany may prove irredeemable, while the German suggestion that Greece be granted a short term euro area surely shatters the principle that membership of the euro area is irrevocable.

“The sight of Greece effectively being hung out to dry will surely trigger a popular backlash against austerity. That fault line may now become more exposed with the political establishments of the European south lining up against the governments of the North."

Telegraph.co.uk

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