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Greece swallows bitter pill, passes bailout

August 14, 2015

A divided Hellenic parliament has approved a third bailout for the country in five years, amid protests in Athens. The tense vote has lead to divisions within the ruling Syriza party, with snap elections on the horizon.

Image: picture-alliance/dpa/Panagiotou

Greek Prime Minister Alexis Tsipras was handed a pyrrhic victory early Friday after opposition legislators approved a 85-billion-euro ($94.8 billion) bailout to keep the country financially afloat.

A clear majority of 222 MPs approved the 400-page text containing the bailout conditions - there were over 64 who voted against and 11 abstentions. However, only 118 of the 162 members of Tsipras' governing coalition (comprising Syriza and the small right-wing Independent Greeks) voted in favor. Tsipras would need at least 120 votes in the 300-member chamber to continue as a minority leadership.

Immediately following the vote, the Reuters news agency quoted a senior official in Tsipras' coalition saying the prime minister would seek a no-confidence vote after August 20, the deadline for an outstanding loan repayment to the ECB. Reuters also quoted another senior official in the opposition New Democracy party saying it wouldn't lend its support to Tsipras.

'Eurozone dictatorship!'

During the all-night debate ahead of the vote, Tsipras urged lawmakers to make the "necessary choice" for the Greek nation, strongly warning against the option of a bridging loan, incidentally a German proposal, because it would hurl Greece back into a "crisis without end."

Days earlier, Tsipras struck a deal with foreign creditors that will keep the country solvent. But it comes at a heavy cost to ordinary Greeks, reinforcing painful and unpopular austerity measures that the left-wing leader had campaigned against in January.

Already, anti-austerity Syriza lawmakers have signaled they will call for snap elections as early as next month.

"The fight against the new bailout starts today, by mobilizing people in every corner of the country," said a statement signed by Panagiotis Lafazanis, a former cabinet minister and 11 other Syriza members posted on the far-left faction's Iskra website.

"I feel ashamed for you," Lafanzanis exclaimed, looking directly at Tsipras. "We no longer have a democracy ... but a eurozone dictatorship!" he said.

Griechenland Parlament Ministerpräsident Alexis Tsipras
It was a bittersweet victory for Tsipras on Friday morningImage: picture-alliance/dpa/P. Tzamaros

'Give us what we voted for'

Rebels such as Lafanzanis have implored the government to stand by the campaign promises on which it was elected to reverse the waves of spending cuts and tax rises, which have had a devastating effect - driving up unemployment and shrinking an already weak economy - over the past six years.

An analysis seen by the Reuters news agency said the creditor institutions had "serious concerns" about the sustainability of Greek public debt. However, sustainability could be achieved without any write-off by extending grace periods before Athens has to start paying interest and principal on its bailout loans.

The IMF favors some sort of debt "haircut" while Germany implacably opposes such relief, although several leading figures have suggested openness to extensions of debt.

Months of bitter negotiations between Athens and creditors have shaken an economy that last year had been pulling out of a long depression before turning down again.

Data on Thursday showed the economy returned to growth in the second quarter, confounding economists' expectations of a deepening recession. However, many analysts predict it is likely to have worsened since then as the government imposed capital controls on June 29 to save the Greek banking system from collapse.

Griechenland Beratung Hilfspaket Protest
While lawmakers were debating inside, protests took place on Syntagma SquareImage: Reuters/C. Hartmann

IMF to wait and see

Meanwhile, the International Monetary Fund said Thursday that it would only make a decision on providing further financing for Athens after steps are taken to make its debt burden more sustainable and only after Greece's European partners weigh in.

"The IMF... will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities' program and debt relief have been taken," IMF senior official Delia Velculescu said in a statement.

glb/kms (AFP, Reuters, AP)