Greece swallows bitter bailout pill

Greek lawmakers have passed a bailout agreement that keeps the country in the euro for now, shifting attention to the European Central Bank (ECB) as it weighs whether to pump more money into the country’s hobbled financial system.

After more than four hours of debate stretching into the early hours of Thursday, 229 members of the 300-seat Parliament in Athens approved new austerity measures that are a precondition for as much as €86-billion in aid. Among those who opposed the Bill were 32 members of Prime Minister Alexis Tsipras’s Coalition of the Radical Left, or Syriza, a sign the premier may have lost his majority.

The vote puts the onus on the ECB and other euro-region governments to deploy more emergency funds that will help Greek banks gradually reopen and repair the country’s battered coffers. Before the weekend, the ECB’s governing council was to meet in Frankfurt and Germany’s Parliament was due to vote on whether to start bailout negotiations to help Greece cover its debts and pay pensions and salaries.

Accepting the agreement with creditors “was a decision which will be a burden for me for the rest of my life”, Finance Minister Euclid Tsakalotos told lawmakers. “I don’t know if we did the right thing. But I know we did something to which there was no alternative.”

The euro rose as the verdict became clear, climbing by 0.1% to $1.0958.

Finding a way to open banks and allow normal commerce to resume will be the Greek government’s first priority. The ECB was due to discuss whether to increase the level of so-called emergency liquidity assistance it provides to Greek lenders, which have been shut for more than two weeks to stem withdrawals.

Greece also needs to secure bridge financing to cover immediate needs that include making a €3.5-billion payment to the ECB, due on July 20. The European Union has proposed a facility worth €7-billion to tide the country over until implementation of the full bailout begins.

Forced to capitulate
Europe’s most indebted country came closer than ever to being forced out of the single currency this month after Tsipras stunned European leaders by calling a snap referendum on spending cuts and tax rises demanded by creditors. Despite a clear majority of Greeks voting “no”, he was forced to capitulate to an even more onerous package that political chiefs said was the only way for Greece to remain in the euro.

Yanis Varoufakis, the former finance minister who clashed repeatedly with Germany’s finance minister, Wolfgang Schäuble, was among 38 members of Syriza’s 149-member parliamentary caucus who either voted “no” or abstained. The level of opposition suggests Tsipras may now be forced to rule with a minority government, relying on opposition lawmakers to pass legislation.

“A minority administration will prove unsustainable, making a national unity government likely,” Eurasia Group analyst Mujtaba Rahman said. Such a government, comprising all the major parties, “may prove to be the only way possible” to secure bailout funds, Rahman said.

As debate began on the bailout Bill, police fired teargas outside the Greek Parliament to disperse anti-austerity protesters, highlighting the challenges Tsipras faces selling further spending cuts to a country already deep in recession.

About 13 000 people gathered to protest in central Athens, police spokesperson Takis Papapetropoulos said, though by about 9.45pm most had been dispersed by riot officers.

Tsipras, who was elected in January pledging to end austerity and forge a new deal with creditors, didn’t rise to speak in support of the bailout Bill in Parliament until the early hours of Thursday morning.

“I had a choice of a deal I did not agree with, or a disorderly default, or Schäuble’s choice of a euro exit,” Tsipras said. “I’m the last person to beautify an agreement with which I disagree in many of its points.” – © Bloomberg

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