Tuesday 25 October 2016

Greek MPs pass new austerity bill as violence flares on streets

Colin Freeman in Athens

Published 16/07/2015 | 02:30

Riot police stand amongst the flames from exploded petrol bombs thrown by a small group of anti-establishment demonstrators in front of parliament in Athens yesterday. Photo: Reuters
Masked anti-establishment youths and anti-austerity protesters face riot police during clashes in Athens

Greek MPs last night voted in favour of punishing new austerity measures to secure a third Brussels bailout to stave off the threat of bankruptcy.

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The vote - to introduce reforms demanded by Brussels as a condition for a new bailout - came as the worst violence for months erupted on the streets of Athens.

Police clashed with protesters outside the parliament and tear gas and smoke wreathed the streets of the Greek capital.

After a tense debate that lasted into the small hours of this morning and divided the ruling Syriza party, the 300-member parliament voted by a majority of 229 to 64 to pass a raft of tax hikes and pension reforms.

The midnight vote on reforms will raise VAT, cut pensions spending and reform the country's statistics body.

The reforms are among the conditions laid down by Brussels for a third bailout of around €85bn, and will stop Greece being thrown of the eurozone.

The country's prime minister, Alexis Tsipras, had said he would step down if significant numbers of his own party - which holds 151 seats in the parliament - voted against the reforms.

In the end, a total of 32 Syriza MPs did so, which was around the figure expected, while six abstained. That means Mr Tsipras is probably unlikely to feel the need to resign.

Among those who voted against the package of reforms was Mr Tsipras's former finance minister, Yanis Varoufakis, who likened the measures to a "Treaty of Versailles" for Greece.

The Leftist prime minister has refused to head up a national unity government, and said he would consider his position if he did not gain the majority backing of his members.

The reforms will also see VAT raised on hotels, funeral services and basic food items. Tax discounts for the country's popular tourist islands will also be abolished.

Prominent dissenters included the country's energy minister, Panagiotis Lafazanis, who heads up the far-left flank of Syriza, which makes up around a third of the party.

"The choice between a bail-out or catastrophe is a choice made in the face of terror," said the firebrand Mr Lafazanis.

He is set to be sacked from office if Mr Tsipras carries out a bold reshuffle of his cabinet after the vote, as expected.

Yanis Varoufakis, who resigned from his position as finance minister, said: "The powerful demanded that the losers accept terms they had no right to demand. The losers accepted commitments they had no right to accept."

The vote means the European Central Bank could move to finally lift its freeze on emergency funding for Greek banks (ELA) as early as today.

This liquidity has been capped at €89bn for the past two weeks, placing intense pressure on the country's creaking banks, which are set to be shut for most of the summer.

"I believe they will leave the cap unchanged until after the vote, and start increasing it afterward, always step-by-step and conditional on programme implementation," said Frederik Ducrozet, at Credit Agricole.

Eurozone finance ministers will now formally announce the start of negotiations on a third bailout deal.

Ministers will also discuss controversial plans to provide Greece with €7bn in "bridging loans" from an EU-wide rescue fund (EFSM).

EC vice-president Valdis Dombrovskis said the EFSM was "the best possible avenue" for creditors, as Brussels scrambles to find nearly €12bn needed to stop Greece going bankrupt over the summer. (© Daily Telegraph, London)


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