Greece OKs stiff economic measures
But as 3rd bailout nears, possibility of instability looms large
ATHENS, Greece — Greek lawmakers early today approved a package of tough economic overhauls ordered by their country’s creditors, the first step toward securing a third international bailout to keep Greece from going bankrupt and crashing out of the eurozone.
But Prime Minister Alexis Tsipras’ victory in Parliament, on a vote of 229-64, with six abstentions and one absence, came at a cost. Nearly 40 members of his own leftwing Syriza party voted no or abstained, severely weakening his mandate to govern.
The prospect of early elections, a fragile new ruling coalition or other political instability now looms large, just as Athens is in desperate need of unity to enact the new measures and convince lenders of its commitment to change.
The measures, including sales tax hikes and pension cutbacks, were demanded by Greece’s creditors as a condition for opening negotiations on a $94 billion bailout, based on Wednesday’s exchange rate. Under a deal reached this week between Greece and its European partners, Athens had to approve the legislation by late Wednesday or early today, or face certain default.
Greek lawmakers against the agreement slammed it as blackmail by fellow European countries that have in effect told Athens either to accept their terms or flunk out of the eurozone,
the group of 19 nations using the euro as currency. An exit from the eurozone would throw Greece into financial chaos.
The bulk of the opposition deal came from within Mr. Tsipras’ Syriza party, which took power in January promising to reject the very kind of policies they were suddenly being asked to approve. The party had even rallied a strong majority of Greek voters to say no to such measures in a referendum this month.
Mr. Tsipras insisted that the deal, with its prospect of a subsequent three-year international bailout for Athens, was the best way to save Greece from financial ruin. “I am proud of the struggle and the battle that we have fought,” he told lawmakers shortly before the vote was taken. “There is no other choice than for all of us to share the weight of this responsibility.”
But the agreement and any bailout that follows – which would be Greece’s third in five years – will require more of the painful austerity that his party despises, and that has helped shrink the economy by a quarter since 2009.
“The Greek people did not cast their vote in the referendum for us to approve another austerity memorandum,” said Energy Minister Panagiotis Lafazanis, one of Syriza’s leftist hardliners. “I will not vote for a third [bailout] memorandum. With it, the country cannot move forward. It will be destroyed.”
In a sign of the difficulties that could lie ahead, hundreds of protesters descended on central Athens in the hours before today’s vote. The majority were peaceful, but a small group threw firebombs, which drew tear gas from riot police. About 50 people were arrested, Greek media reported.
Mr. Tsipras said he was able to score a significant victory in the deal he struck with fellow European leaders: their agreement to look at ways of easing Greece’s colossal load of public debt, which exceeds $300 billion. Most of Athens’ eurozone lenders, particularly Germany, have been loath to discuss any form of debt relief, on the grounds that it would excuse Greece of its fiscal irresponsibility.
Although today’s vote could pave the way for a new rescue package, such a package would take several weeks to thrash out and would not address the immediate cash crunch facing Athens, which is in desperate need of funds to make an important debt payment to the European Central Bank next week.
Eurozone finance ministers met Wednesday in Brussels to try to find a mechanism through which to lend Greece about $8 billion immediately.