Po­lit­i­cal, eco­nomic tests lie ahead

Af­ter Eurogroup ap­proval, Athens has work cut out to meet mile­stones amid grow­ing pos­si­bil­ity of snap polls

Kathimerini English - - Front Page -

The ap­proval by eu­ro­zone fi­nance min­is­ters of a third bailout for Greece paves the way for the dis­burse­ment of cru­cial res­cue loans this week but also her­alds a new pe­riod of po­lit­i­cal up­heaval for Prime Min­is­ter Alexis Tsipras due to a widen­ing rift in left­ist SYRIZA.

The Euro­pean Sta­bil­ity Mech­a­nism is ex­pected to ap­prove the first tranche of the 86-bil­lioneuro bailout on Wed­nes­day. Some 26 bil­lion eu­ros will be dis­bursed in the first in­stance: 10 bil­lion for Greece’s cash-strapped banks, with most of the rest to go to­ward pay­ing off a 7.2bil­lion-euro bridge loan and cov­er­ing a 3.2-bil- lion-euro re­pay­ment to the Euro­pean Cen­tral Bank on Thurs­day. As with pre­vi­ous bailouts, the loans come at a heavy price.

The bailout fore­sees new spend­ing cuts and tax in­creases, which has prompted ve­he­ment re­ac­tions in the far-left of SYRIZA, as well as sweep­ing struc­tural re­forms that pre­vi­ous gov­ern­ments have failed to im­ple­ment. These in­clude an over­haul of the pen­sion sys­tem, the open­ing of closed pro­fes­sions and the lib­er­al­iza­tion of mar­kets.

Greece’s lenders se­cured the back­ing of cred­i­tor states, many of which were ex­tremely skep- tical of giv­ing Greece another chance, by link­ing the dis­burse­ment of aid to strict “con­di­tion­al­ity” and bud­get tar­gets. Another key com­mit­ment by Greece is the es­tab­lish­ment of a pri­va­ti­za­tion fund, which must be op­er­a­tional by the end of this year and into which some 50 bil­lion eu­ros in state as­sets are to be trans­ferred over the du­ra­tion of the new three-year pro­gram.

The ques­tion of re­liev­ing Greece’s huge debt bur­den is to be ad­dressed af­ter the pro­gram’s first re­view in late Oc­to­ber.

On the do­mes­tic front, Tsipras is ex­pected to ask soon for a vote of con­fi­dence in Par­lia­ment af­ter see­ing 43 of his MPs de­cide not to sup­port the third bailout deal in a bal­lot that took place on Fri­day morn­ing.

The de­fec­tions meant that just 118 coali­tion law­mak­ers voted for the agree­ment, which is just be­low the ab­so­lute min­i­mum of 120 that the gov­ern­ment would need to sur­vive a con­fi­dence mo­tion.

How­ever, sources close to the prime min­is­ter told Kathimerini that Tsipras would aim to se­cure a min­i­mum of 151 votes in the bal­lot of 300 MPs. If he fails to meet this tar­get then early elec­tions will be called.

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