Greek PM Tsipras has faced a revolt in the left-wing Syriza party over the mix of tax hikes, market reforms and spending cuts demanded by lenders
Greek Prime Minister Alexis Tsipras tried to rally his Syriza party on Tuesday before a vote in parliament on the second package of measures demanded by international creditors to open talks on a new bailout deal.
Tsipras has faced a revolt in the left-wing Syriza party over the mix of tax hikes, market reforms and spending cuts demanded by lenders but is expected to get the package through parliament with the support of pro-European opposition parties.
Talking to Syriza officials on the eve of the vote, he said he aimed to seal the bailout accord, which could offer Greece up to 86 billion euros in new loans to bolster its tottering finances and ward off the threat of a forced exit from the euro.
“Up until today I’ve seen reactions, I’ve read heroic statements but I haven’t heard any alternative proposal,” he said, warning that party hardliners could not ignore the clear desire of most Greeks to remain in the single currency.
“Syriza as a party must reflect society, must welcome the worries and expectations of tens of thousands of ordinary people who have pinned their hopes on it,” he said, according to an official at the meeting.
Earlier government spokeswoman Olga Gerovasili said the government expected to wrap up bailout talks with the lenders by Aug. 20 with negotiations expected to begin immediately after Wednesday’s vote in parliament.
Officials from the creditor institutions – the European Commission, European Central Bank and International Monetary Fund – are due in Athens on Friday for meetings with the government, Deputy Finance Minister Dimitris Mardas said.
Wednesday’s vote in parliament follows a first vote last week on the so-called “prior actions” on the mix of economic reforms and budget cuts demanded of Greece as a condition before the start of full bailout talks.
The bill was passed but a revolt by 39 Syriza lawmakers who refused to back the measures raised questions over the stability of the government, which came to power in January on an explicit anti-austerity platform.
The heads of the centrist To Potami party and the socialist Pasok party both said they would back the Tsipras government over the bailout accord but demanded a clear “road map” from the prime minister about what would happen after that.
Denouncing the bailout, Syriza hardliner Rudi Rinaldi resigned from the part’s 13-member political committee, saying loading more austerity on to the stricken Greek economy would pile on more hardship but not keep the country in the euro.
“It is ideological, political and strategic default for Syriza,” he said.
Together with his coalition partners from the right-wing Independent Greeks, Tsipras has 162 seats in the 300-seat parliament. But last week’s rebellion cut his support to just 123 votes and any further defections may be seen as undermining prospects for reform.
Some government officials have suggested that if support dropped below 120 MPs – the minimum required to win a confidence vote if parliament voted with the lowest allowable quorum of 240 lawmakers – Tsipras would have to resign.
But it is unclear whether he would step down. If a confidence vote were actually held, he would almost certainly win with the backing of the pro-European opposition parties.
PENSIONS, TAX ON FARMERS
Following last week’s vote, European authorities released billions of euros in emergency funding to allow Athens to meet debt payment deadlines and reopen banks closed three weeks ago to prevent a run on deposits collapsing the system.
Offering some encouragement, ratings agency Standard and Poor’s lifted its long-term sovereign credit rating on Greece to ‘CCC+’ from ‘CCC-‘, saying it believed default was no longer inevitable in the next six to 12 months following the move.
It said the chance of Greece leaving the euro zone was now less than 50 percent.
With normality slowly returning after the banks reopened on Monday, the government tabled the second bailout bill, which will focus on justice reform and banking issues.
The bill to be passed on Wednesday adopts into Greek law new European Union rules on propping up failed banks, decreed after the 2008 financial crisis and aimed at shielding taxpayers from the risk of having to bail out troubled lenders.
The so-called bank recovery and resolution directive (BRRD) imposes losses on shareholders and creditors of ailing lenders, in a process known as “bail-in”, before any taxpayers’ money can be tapped in a “bail-out” bank rescue.
The bailout bill also includes the adoption of new rules for the country’s civil justice system, aimed at accelerating lengthy judicial processes and cutting costs.
It also deals with sensitive issues affecting forced home foreclosures, which banks have committed not to proceed with before the end of the year.
However it will not include pension reforms curbing early retirement or increasing tax rates paid by farmers from 13 percent to a range of 26-33 percent – an issue strongly opposed by the conservative New Democracy party.
Instead they will be dealt with in coming weeks under a full bailout deal with European partners.
The fact that the measures were not included in the bill aroused some media speculation that Athens was backtracking on reform commitments.
However Deputy Agriculture Minister Vangelis Apostolou said legislation would be passed in August or September or even later, depending on discussions with the lenders.
Officials from the government and the lenders say neither early retirement reforms or tax increases for farmers were required to be included in the two packages of legislation to be passed by July 15 and July 22.