Thursday 23 February 2017

Greece PM Tsipras to announce snap election

Yiannis Kourtoglou

A man walks past Greek flags for sale outside a shop in the northern port city of Thessaloniki (AP)
A man walks past Greek flags for sale outside a shop in the northern port city of Thessaloniki (AP)

Greek Prime Minister Alexis Tsipras is expected to announce a snap election later on Thursday, state broadcaster ERT said, in a move to quell a rebellion in his leftist Syriza party after agreeing a new bailout for the country.

Speculation of early elections, most likely in September, has grown in recent days with senior aides including Energy Minister Panos Skourletis openly calling for a return to the ballot box.

ERT said one school of thought in the divided party was to hold the election on Sept. 13 or 20, while other party members preferred an October date.

Earlier today, Greece made a €3.2bn payment to the European Central Bank on a maturing government bond on Thursday, tapping cash from its first disbursement of bailout money, a senior government official said.

"The payment was made, the funds are on their way," the official told Reuters, declining to be named.

Greece received the first tranche of funds from its new bailout loan on Thursday after the European Stability Mechanism approved a rescue of up to €86bn on Wednesday.

The first tranche amounts to €13bn, of which about €12bn will be used to pay down debt, including an earlier bridge loan and the maturing Greek government bond held by the ECB.

The initial tranche was paid in cash. Another €10bn for the recapitalization of banks was sent to a segregated account in the form of ESM notes.

Greece came close to the economic abyss and exit from the euro zone in late June as Tsipras tried to extract concessions which the bloc's finance ministers refused to grant.

Tsipras got the bailout through parliament only with the support of opposition parties, who said they did so merely to save the nation from financial ruin.

The prime minister has talked about calling a Syriza congress to resolve differences with the rebels. But, expressing his personal opinion, Skourletis said Tsipras should move faster. "I would say elections first, then the party congress," he said.

The government had to close the banks at the end of June for three weeks as panicking savers pulled out billions, and imposed capital controls strictly limiting withdrawals from the banking system. While these have since been eased, they remain in force, hurting businesses and raising the risk that unemployment will rise from its current 25 percent.

Tsipras, who came to power only in January, has remained silent over the election issue. But his ministers have openly debated the pros and cons of an early election - which would be the third in as many years - following the party split.

TSIPRAS WEIGHS HIS OPTIONS

Knock-on effects of the capital controls, which are likely to stay until Greek banks are recapitalized later this year with bailout funds, will also hurt voters.

Tsipras has long argued that Greece will never be able to repay all its debts and wants some to be written off. While the euro zone favors merely delaying interest and principal repayments, Tsipras could still present any debt relief moves as an achievement to the electorate.

A Metron Analysis poll on July 24 put support for Syriza at 33.6 percent, making it by far the most popular party, but not enough to govern without a coalition partner, as it does now. No polls have been published since then due to the holiday season.

Syriza members have argued that the party should aim for a majority, saying this would achieve the stable government which Greece has lacked through the past five years of crisis.

"These elections, whenever they are announced by the government, will provide a stable governing solution. My feeling is that Syriza will have an absolute majority," Dimitris Papadimoulis, a Syriza lawmaker in the European parliament, told Mega TV.

Reuters

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