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Greek debt crisis: Alexis Tsipras hopes to win bailout vote as protests turn violent Greek debt crisis: Alexis Tsipras hopes to win bailout vote as protests turn violent
(about 1 hour later)
Alexis Tsipras is fighting for his political life as he seeks parliamentary backing for the severe austerity measures Greece has pledged to take in exchange for a fresh bailout from its eurozone partners.Alexis Tsipras is fighting for his political life as he seeks parliamentary backing for the severe austerity measures Greece has pledged to take in exchange for a fresh bailout from its eurozone partners.
The Greek prime minister urged his Syriza colleagues to support him in the make-or-break vote on Wednesday night, even as the International Monetary Fund – and his own former finance minister and right-hand man Yanis Varoufakis – savaged the deal struck in the early hours of Monday morning.The Greek prime minister urged his Syriza colleagues to support him in the make-or-break vote on Wednesday night, even as the International Monetary Fund – and his own former finance minister and right-hand man Yanis Varoufakis – savaged the deal struck in the early hours of Monday morning.
As the late-night vote loomed, the scale of opposition within Tsipras’s own party to the agreement, which requires line-by-line scrutiny of Greek policies by its creditors, became clear.As the late-night vote loomed, the scale of opposition within Tsipras’s own party to the agreement, which requires line-by-line scrutiny of Greek policies by its creditors, became clear.
Syriza was elected on a radical platform of rejecting austerity and throwing out the hated “troika” of lenders. More than half the members of the party’s governing council signed a letter on Wednesday rejecting the bailout package and describing it as a coup.Syriza was elected on a radical platform of rejecting austerity and throwing out the hated “troika” of lenders. More than half the members of the party’s governing council signed a letter on Wednesday rejecting the bailout package and describing it as a coup.
Riot police in gas marks guarded the parliament building in Athens as anti-austerity protesters demonstrated against the terms of the deal. The rally in Syntagma Square turned violent at one point, with Motolov cocktails flying and the police teargassing the crowd. Riot police in gas masks guarded the parliament building in Athens as anti-austerity protesters demonstrated against the terms of the deal. The rally in Syntagma Square turned violent at one point, with motolov cocktails flying and the police teargassing the crowd.
Earlier, Tsipras had suffered a blow with the loss of his deputy finance minister, Nadia Valavani. She resigned, saying it was impossible for her to keep serving in the government given what she called the country’s “crushing” capitulation to its creditors. She referred to the bailout agreement as a “tombstone”. Earlier, Tsipras suffered a blow with the loss of his deputy finance minister, Nadia Valavani. She resigned, saying it was impossible for her to keep serving in the government given what she called the country’s “crushing” capitulation to its creditors. She referred to the bailout agreement as a “tombstone”.
The Greek prime minister expects to receive the backing of opposition parties in the crucial vote, but must keep the number of rebels within his own party below 40 to pass the measures required as part of the rescue package. The shadow finance minister, Anna Asimakopoulou, predicted the government would win the vote, saying: “It’s a bad deal. But for Greece’s sake, its future in Europe, it has to go through.”The Greek prime minister expects to receive the backing of opposition parties in the crucial vote, but must keep the number of rebels within his own party below 40 to pass the measures required as part of the rescue package. The shadow finance minister, Anna Asimakopoulou, predicted the government would win the vote, saying: “It’s a bad deal. But for Greece’s sake, its future in Europe, it has to go through.”
Tsipras is expected to reshuffle his cabinet after the vote, pushing objectors within his own party aside, but could struggle to govern effectively.Tsipras is expected to reshuffle his cabinet after the vote, pushing objectors within his own party aside, but could struggle to govern effectively.
“A minority government, even if sustained by a vote of confidence, is unlikely to last very long,” said Mujtaba Rahman, of consultancy Eurasia Group. “Even though Greece’s opposition parties have all come out in favour of Sunday’s deal, a minority government would still likely be rendered dysfunctional by virtue of the continued opposition Tsipras would face from within his own ranks.” “A minority government, even if sustained by a vote of confidence, is unlikely to last very long,” said Mujtaba Rahman of consultancy Eurasia Group. “Even though Greece’s opposition parties have all come out in favour of Sunday’s deal, a minority government would still likely be rendered dysfunctional by virtue of the continued opposition Tsipras would face from within his own ranks.”
Eurozone policymakers appeared to be under increasing pressure from the White House to resolve the crisis. The US Treasury secretary, Jack Lew, flew into Frankfurt for a meeting with Mario Draghi, the president of the European Central Bank, and is due to move on to Berlin and Paris for talks with the German finance minister, Wolfgang Schäuble, and his French counterpart, Michel Sapin, on Thursday.Eurozone policymakers appeared to be under increasing pressure from the White House to resolve the crisis. The US Treasury secretary, Jack Lew, flew into Frankfurt for a meeting with Mario Draghi, the president of the European Central Bank, and is due to move on to Berlin and Paris for talks with the German finance minister, Wolfgang Schäuble, and his French counterpart, Michel Sapin, on Thursday.
Lew has urged his eurozone partners to agree a deal that puts the country’s economy on a sustainable footing.Lew has urged his eurozone partners to agree a deal that puts the country’s economy on a sustainable footing.
Draghi is expected to face tough questions about the ECB’s role on Thursday as he holds a press conference after its regular interest rate-setting policy meeting.Draghi is expected to face tough questions about the ECB’s role on Thursday as he holds a press conference after its regular interest rate-setting policy meeting.
The ECB’s decision not to raise the ceiling on emergency aid to Greek banks has been blamed by some analysts for forcing the effective shutdown of the country’s financial sector. Banks have now been closed for more than a fortnight, with withdrawals capped at €60 (£42) a day.The ECB’s decision not to raise the ceiling on emergency aid to Greek banks has been blamed by some analysts for forcing the effective shutdown of the country’s financial sector. Banks have now been closed for more than a fortnight, with withdrawals capped at €60 (£42) a day.
Under the bailout deal, Greece was given until Wednesday night to pass legislation implementing key parts of the austerity package, and eurozone finance ministers are due to discuss Greece’s compliance with the conditions on Thursday.Under the bailout deal, Greece was given until Wednesday night to pass legislation implementing key parts of the austerity package, and eurozone finance ministers are due to discuss Greece’s compliance with the conditions on Thursday.
Related: Eurozone bailout deal: what do ordinary Greeks think?Related: Eurozone bailout deal: what do ordinary Greeks think?
As the Greek parliament prepared to vote, Varoufakis, who quit before last weekend’s talks, fanned opposition to the deal by publishing an annotated version of the text that warned “debt bondage ad infinitum is the name of the game”.As the Greek parliament prepared to vote, Varoufakis, who quit before last weekend’s talks, fanned opposition to the deal by publishing an annotated version of the text that warned “debt bondage ad infinitum is the name of the game”.
Of plans for creditors to oversee a new programme of economic reforms, he said: “The Greek parliament must, again, after five months of short-lived independence, become an appendage of the troika – passing translated legislation mechanistically.”Of plans for creditors to oversee a new programme of economic reforms, he said: “The Greek parliament must, again, after five months of short-lived independence, become an appendage of the troika – passing translated legislation mechanistically.”
As Tsipras battled to shore up support in Athens, officials in Brussels were scrambling to assemble a short-term financing package – expected to be worth about €7bn (£5bn) – to keep Greece afloat until the details of a new bailout can be hammered out. As Tsipras battled to shore up support in Athens, officials in Brussels were scrambling to assemble a short-term financing package – expected to be worth about €7bn – to keep Greece afloat until the details of a new bailout can be hammered out.
The European commission has confirmed that it plans to tap the European Financial Stability Mechanism, the EU-wide bailout fund, to meet part of the cost of a bridging loan, putting the UK on the hook for just over 15% of it.The European commission has confirmed that it plans to tap the European Financial Stability Mechanism, the EU-wide bailout fund, to meet part of the cost of a bridging loan, putting the UK on the hook for just over 15% of it.
Valdis Dombrovskis, the commissioner for the euro, said the EFSM was being considered because of the “obvious absence of any other solution”.Valdis Dombrovskis, the commissioner for the euro, said the EFSM was being considered because of the “obvious absence of any other solution”.
But George Osborne, the UK chancellor, demanded that eurozone countries indemnify the Treasury against any losses if Britain is forced to contribute.But George Osborne, the UK chancellor, demanded that eurozone countries indemnify the Treasury against any losses if Britain is forced to contribute.
The Treasury is pushing for the €1.9bn of profits the ECB has made on Greek bonds – a pot of money Greece’s embattled Syriza government had previously hoped to tap into – to be set aside in an account that could be used to compensate non-euro member countries for any losses. The Treasury is pushing for the €1.9bn of profits the ECB has made on Greek bonds – a pot of money Greece’s embattled government had previously hoped to tap into – to be set aside in an account that could be used to compensate non-euro member countries for any losses.
Osborne has insisted that Brussels honour a promise made to David Cameron in 2011 that British taxpayers would not be forced to underwrite eurozone bailouts. A Treasury insider said: “This would be strengthening that promise, by giving it legal form.”Osborne has insisted that Brussels honour a promise made to David Cameron in 2011 that British taxpayers would not be forced to underwrite eurozone bailouts. A Treasury insider said: “This would be strengthening that promise, by giving it legal form.”
Several other eurozone member states will also be required to secure the backing of their national parliaments for the new rescue package. The French national assembly passed the deal on Wednesday by 412 votes to 69, after the prime minister, Manuel Valls, stressed that it “is not a blank cheque”.Several other eurozone member states will also be required to secure the backing of their national parliaments for the new rescue package. The French national assembly passed the deal on Wednesday by 412 votes to 69, after the prime minister, Manuel Valls, stressed that it “is not a blank cheque”.
The IMF, meanwhile, took the unusual step of publishing its “debt sustainability analysis” for the stricken country after parts of it were leaked to the media. The damning paper – which eurozone ministers received before the weekend’s marathon talks – suggested Greece may need a 30-year moratorium on repayments; or a substantial “haircut” – a partial writeoff of its debts – if its public finances are to be sustainable. The IMF, meanwhile, took the unusual step of publishing its debt sustainability analysis for the stricken country after parts of it were leaked to the media. The damning paper – which eurozone ministers received before the weekend’s marathon talks – suggested Greece may need a 30-year moratorium on repayments; or a substantial “haircut” – a partial writeoff of its debts – if its public finances are to be sustainable.
The IMF’s intervention reopened the cracks in the creditors’ approach to Greece’s plight. Sapin said: “The IMF is saying the same thing as we are.” A spokesman for the German finance ministry, Martin Jäger, repeated Berlin’s insistence that there could be no debt relief.The IMF’s intervention reopened the cracks in the creditors’ approach to Greece’s plight. Sapin said: “The IMF is saying the same thing as we are.” A spokesman for the German finance ministry, Martin Jäger, repeated Berlin’s insistence that there could be no debt relief.
Greece is already in arrears to the IMF, and the emergence of the paper raised doubts whether the Washington-based lender would be willing to contribute to another Greek bailout.Greece is already in arrears to the IMF, and the emergence of the paper raised doubts whether the Washington-based lender would be willing to contribute to another Greek bailout.