The PJ Tatler

Greek Parliament Approves Bailout Plan But Will the Rest of Europe?

European Union finance ministers are now examining the Greek government’s proposals for a $56 billion bailout following a vote in the Greek parliament early this morning that approved the plan proposed by Prime Minister Alex Tsipras.

The debate went on far into the night with the most radical left wing deputies refusing to support their party leader and prime minister. They accused Tsipras — rightly — of completely caving in to the demands for austerity from Greece’s creditors. In many ways, Tsipras’s proposals are actually more painful than the cuts and tax hikes proposed by creditors last week before the referendum. Greek voters rejected the creditor’s demands, but Tsipras, who claimed a mandate to refuse more austerity measures, ended up acquiescing to virtually all the severe medicine being demanded by Germany and other hard liners in the EU in return for a modest debt restructuring plan.

There is no guarantee that the finance ministers will approve the Greek plan. A rejection would throw the ball into the court of EU political leaders who will meet tomorrow in Brussels in the most important summit in the history of the common currency.

It’s a make or break weekend for Greece.

Guardian:

A weekend of what is billed as “last-chance” summitry is to decide Greece’s fate after the government of Alexis Tsipras caved in to creditors’ demands for further austerity measures in return for the promise of limited debt relief. With the support of France, he tabled 13 pages of economic and tax reform pledges as the basis for talks on a new bailout worth more than €53bn (£38bn) over three years.

Live Greek debt crisis: Tsipras has lost creditors trust say finance ministers- live
Finance ministers set to discuss latest Greek proposals after Alexis Tsipras receives backing from his MPs
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In the early hours of Saturday morning the Greek parliament voted to back Tsipras’s proposals. Despite a rebellion by some of his own MPs, Tsipras was given the backing of 250 out of 300 MPs to negotiate this weekend.

Tsipras said the vote gave him a “strong mandate to complete the negotiations to reach an economically viable and socially fair agreement”.

“The priority now is to have a positive outcome to the negotiations. Everything else in its own time,” he said.

In an ominous sign for the stability of the government, however, 10 deputies on the ruling benches either abstained or voted against the measures and another seven were absent, leaving Tsipras short of the 151 seats needed for a majority of his own.

Prominent leftwingers in the governing Syriza party signalled before the vote that they could not support the mix of tax hikes and spending cuts proposed by Tsipras, following the rejection of similar austerity measures by voters in Sunday’s referendum.

Energy minister Panagiotis Lafazanis, deputy labour minister Dimitris Stratoulis as well as the speaker of parliament, Zoe Constantopoulou, all abstained.

“The government is being totally blackmailed to acquiesce to something which does not reflect what it represents,” Constantopoulou said.

Beyond the plan itself is the issue of trust. The Greek government has been strutting arrogantly across the stage in recent months, calling Germans Nazis, accusing the European Commission of wanting to destroy Greece, and going so far as comparing what was happening to Greece with “terrorism.” Tsipras has been telling the EU one thing and then going in front of TV cameras and saying another. Many EU government are simply tired of the posturing clown whose bombast has resulted in a complete capitulation to the demands of Greece’s creditors:

Less than a week ago, Greece stood defiant.

Thousands of people flooded the square outside Parliament, draping themselves in blue-and-white flags to celebrate the country’s sweeping rejection of the tough austerity measures demanded by its European creditors, which Greece’s fiery young leader had likened to “blackmail.”

But by Friday, the euphoria had faded as Prime Minister Alexis Tsipras’s vows to stand up to ­Europe caved to the harsh realization that the birthplace of democracy stood just 48 hours away from financial ruin — and Greeks were poised to swallow what amounted to the same dose of austerity they had refused in a vote Sunday.

“Each one of us shall be confronted with his stature and his history. Between a bad choice and a catastrophic one, we are forced to opt for the first one,” Tsipras said in a speech before his party’s lawmakers, according to local media. “It is as if one asks you for your money or your life.”

Yesterday’s optimism about reaching a deal has dissipated today as it becomes clear that the Germans may blow up any agreement. Chancellor Angela Merkel is facing a revolt in the Bundestag over the idea of the German taxpayer continuing to fund the Greek government:

But Germany and other governments have remained skeptical and two euro zone sources said on Saturday that the demands for new financing from Athens had alarmed some Eurogroup members.

One source, who told Reuters that he was almost certain late on Friday that a deal would be agreed on Saturday, said he was now not so sure, four hours before ministers meet at 1300 GMT.

Senior officials in the Euro Working Group were still in talks in Brussels on Saturday morning to prepare the Eurogroup.

“The high figures for financing needs over the next three years may be too high and too sudden,” the first source said.

The second said he now put the chances against reaching a deal in the Eurogroup meeting to open negotiations at 60-40.

The sources said experts reckoned that Greece, which asked for a three-year credit from the euro zone’s European Stability Mechanism of 53.5 billion euros, would need 82 billion euros to meet its obligations. It could hope for some 16 billion still due from the IMF before March and could also hope to receive nearly 8 billion in other EU funding that it lost its claim to when it failed to complete an earlier bailout deal last month.

However, further funding from the IMF would depend on euro zone governments offering Greece substantial debt relief, the first source said — something Germany has been very wary of.

A German Finance Ministry spokesman declined comment on a Bild newspaper report that Finance Minister Wolfgang Schaeuble, disenchanted with Greece’s presence in the euro, saw Tsipras’s proposals as inadequate and opposed opening new talks.

No deal will get done without Germany because any agreement reached with Greece will have to be approved by several EU parliaments — including Germany’s. Merkel will not present a deal to the Bundestag unless she is convinced it will pass muster with deputies in her own party who are tired of throwing money at the Greek debt problem only to see it go down a dry hole.

Greece is not out of the woods. And blame for a failure to achieve a deal will fall squarely on the shoulders of Alex Tsipras and his radical left wing government.