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EU ministers begin drive to deliver bailout as Greece gives bitter consent EU ministers begin drive to deliver bailout as Greece gives bitter consent
(about 3 hours later)
Related: Eurozone bailout deal: what do ordinary Greeks think?Related: Eurozone bailout deal: what do ordinary Greeks think?
Eurozone finance ministers are to begin discussions on delivering Greece’s bailout after MPs in Athens adopted the contentious package amid angry scenes in parliament and violent clashes on the streets. Eurozone finance ministers are to begin discussions on delivering Greece’s bailout after MPs in Athens adopted the contentious package, amid angry scenes in parliament and violent clashes on the streets.
The Eurogroup of ministers from the currency union would discuss the latest developments in Greece on Thursday morning, said the group head, Dutch finance minister Jeroen Dijsselbloem. The Eurogroup of finance ministers is due to hold a conference call to discuss the situation at 8.00 GMT (9.00 BST) on Thursday, as they scramble to assemble a short-term financing package – expected to be worth about €7bn – to keep Greece afloat until the new bailout can be finalised.
Dijsselbloem scheduled the teleconference of eurozone ministers as street violence erupted in Athens on Wednesday while Greek lawmakers voted on harsh reforms demanded by their European partners in order to qualify for a third bailout of up to €86bn. The European Central Bank is also making its scheduled policy statement later and will be holding its normal press conference at 13.45 BST. ECB head Mario Draghi will face questioning on what the central bank intends to do about its emergency liquidity assistance for Greek banks. It could ease its funding squeeze on Athens by increasing funding, but any move is likely to be modest.
Officials in Brussels now must scramble to assemble a short-term financing package – expected to be worth about €7bn – to keep Greece afloat until the new bailout can be finalised. Street violence erupted in Athens on Wednesday while Greek politicians voted on the harsh reforms demanded by their European partners to qualify for a third bailout of up to €86bn.
Even with the deal accepted by Alexis Tsipras’s Greek government and the parliament, MPs in euro states are yet to give the green light. Germany’s Bundestag is set to vote on the plan on Friday and tough talks to finalise the bailout, expected to take much of the summer, can only begin after that.Even with the deal accepted by Alexis Tsipras’s Greek government and the parliament, MPs in euro states are yet to give the green light. Germany’s Bundestag is set to vote on the plan on Friday and tough talks to finalise the bailout, expected to take much of the summer, can only begin after that.
Hours before the Athens vote, the French national assembly voted overwhelmingly in favour of starting negotiations for the third bailout.Hours before the Athens vote, the French national assembly voted overwhelmingly in favour of starting negotiations for the third bailout.
If a deal is reached, eurozone governments will contribute €40bn-€50bn and the IMF will contribute another chunk, with the rest coming from selling off state assets and from financial markets.If a deal is reached, eurozone governments will contribute €40bn-€50bn and the IMF will contribute another chunk, with the rest coming from selling off state assets and from financial markets.
Tsipras faced a revolt over the reforms from his radical-left ruling Syriza party, which came to power in January on anti-austerity promises. But the Athens parliament eventually carried the bill on Wednesday night by 229 lawmakers in favour, 64 against and six abstentions. Tsipras faced a revolt over the reforms from his radical-left ruling Syriza party, which came to power in January on anti-austerity promises. But the Athens parliament eventually carried the bill on Wednesday night by 229 politicians in favour, 64 against and six abstentions.
The threat of Athens being forcibly ejected from the eurozone appeared to focus minds, with more MPs voting in favour of austerity reforms than at any other time in Greece’s crisis.The threat of Athens being forcibly ejected from the eurozone appeared to focus minds, with more MPs voting in favour of austerity reforms than at any other time in Greece’s crisis.
In a vote that saw tensions soar in and outside parliament, Syriza suffered huge losses as 40 MPs revolted against the measures, but pro-European opposition parties delivered their support.In a vote that saw tensions soar in and outside parliament, Syriza suffered huge losses as 40 MPs revolted against the measures, but pro-European opposition parties delivered their support.
The outcome will significantly weaken Tsipras as the scale of the rebellion sinks in. Stripped of its working majority, the Syriza-dominated two-party coalition will struggle to enforce the pension cuts and VAT increases outlined in the deal or implement any other legislation outside it. The outcome will significantly weaken Tsipras as the scale of the rebellion sinks in. Stripped of its working majority, the Syriza-dominated, two-party coalition will struggle to enforce the pension cuts and VAT increases outlined in the deal, or to implement any other legislation outside it.
Still, there was relief that the Greek parliament had overwhelmingly supported reforms to ensure that talks on a third bailout for the debt-stricken country can begin. Still, there was relief that the Greek parliament had overwhelmingly supported reforms to ensure that talks on a third bailout can begin.
“The national parliament sent the message that it had to send to Europe,” said Vangelis Meimarakis, interim leader of the conservative main opposition New Democracy party. “The national parliament sent the message that it had to send to Europe,” said Vangelis Meimarakis, the interim leader of the conservative main opposition New Democracy party.
Tsipras was opposed by leading members of his party, including the former finance minister Yanis Varoufakis who resigned the post before last week’s bailout talks. On Wednesday night, at the height of the parliamentary drama in Athens, Nadia Valavani, the deputy finance minister, also resigned, saying it was impossible for her to keep serving in the government.Tsipras was opposed by leading members of his party, including the former finance minister Yanis Varoufakis who resigned the post before last week’s bailout talks. On Wednesday night, at the height of the parliamentary drama in Athens, Nadia Valavani, the deputy finance minister, also resigned, saying it was impossible for her to keep serving in the government.
The prospect of Greece plunging into political turmoil will be heightened by speculation that Tsipras may be forced to call early elections. A cabinet reshuffle predicted for Thursday could see him remove objectors but also potentially leave him struggling to govern effectively.The prospect of Greece plunging into political turmoil will be heightened by speculation that Tsipras may be forced to call early elections. A cabinet reshuffle predicted for Thursday could see him remove objectors but also potentially leave him struggling to govern effectively.
There was sporadic violence in central Athens as riot police fired teargas and fought running battles with anti-austerity protesters armed with molotov cocktails.There was sporadic violence in central Athens as riot police fired teargas and fought running battles with anti-austerity protesters armed with molotov cocktails.
As helicopters circled over Syntagma Square, dozens of petrol bombs were thrown in some of the most serious violence in the Greek capital for two years.As helicopters circled over Syntagma Square, dozens of petrol bombs were thrown in some of the most serious violence in the Greek capital for two years.
Thousands of people took part in a series of otherwise peaceful marches to protest against the deep austerity cuts imposed as conditions of the bailout.Thousands of people took part in a series of otherwise peaceful marches to protest against the deep austerity cuts imposed as conditions of the bailout.
Amid the drama the US treasury secretary, Jack Lew, flew into Frankfurt for a meeting with Mario Draghi, the president of the European Central Bank. Lew has urged his eurozone counterparts to seal the deal on Greece. As the protests unfolded, Christine Lagarde, the director of the International Monetary Fund, hinted that Greece’s creditors were moving closer to the idea of debt relief, although she added that writing off a portion of the the debt - a haircut - remains off the table.
“I have some hope because I understand as late as a couple of hours ago there were some more positive noises to that principle of debt restructuring,” she told CNN.
“One way has to be found in order to release that burden and allow that country to demonstrate yes it can be back on a sustainable path.”
The IMF has told eurozone countries that Greece needs far more generous debt relief than what is on offer. It thinks Athens should receive a 30-year grace period before it has to start paying off its debts.
Meanwhile, the US is likely to continue to urge eurozone leaders to seal the deal on Greece. The US treasury secretary, Jack Lew, flew into Frankfurt for a meeting with Mario Draghi, the president of the European Central Bank.
Draghi is expected to face tough questions about the ECB’s role when 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 when he holds a press conference after its regular interest rate-setting policy meeting.
The European commission confirmed it planned 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. George Osborne, Britain’s chancellor, demanded that eurozone countries indemnify the Treasury against any losses if the UK is forced to contribute.The European commission confirmed it planned 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. George Osborne, Britain’s chancellor, demanded that eurozone countries indemnify the Treasury against any losses if the UK is forced to contribute.
Agence France-Presse contributed to this reportAgence France-Presse contributed to this report