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greek drama

Greek parliament passes sweeping austerity bill in advance of third bailout

Prime Minister Alexis Tsipras is facing a rebellion in Syriza, amid violent protests on the streets of Athens.

Greece Bailout Thanassis Stavrakis Thanassis Stavrakis

Updated: 00.40

GREECE’S PARLIAMENT TONIGHT voted in favour of an austerity bill designed to prepare the country for a third Troika bailout.

Prime Minister Alexis Tsipras had urged lawmakers to vote Yes, after what he described tonight as “blackmail” at a European Council summit last week.

However, the Syriza leader could be facing a serious crisis after a number of high-profile MPs from Tsipras’ left-wing Syriza coalition rejected the bill, including former Finance Minister Yanis Varoufakis and House Speaker Zoi Konstantopoulou.

The final vote was: 229 in favour, 64 against, and 6 abstentions.

32 Syriza MPs voted against the cuts, with six abstaining, out of the party’s total of 149 MPs.

Prime Minister Alexis Tsipras insisted he did not agree with the bulk of the draconian deal, that demands tax hikes, a pensions overhaul and privatisation pledges.

Speaking in the chamber before tonight’s vote, however, he said the country had no other choice if it wanted to stay in the euro.

We will not back down from our pledge to fight to the end for the right of the working people.
There is no other option but for all of us to share the weight of this responsibility.

Greece Bailout Associated Press Associated Press

Earlier this evening, rioters hurled petrol bombs at police who responded with tear gas as an anti-austerity demonstration outside the parliament turned violent.

Groups of youths among the more than 12,000 protesters smashed shop windows and set fire to at least one vehicle.

The clashes were the first significant violence at a protest since the left-wing Syriza government came to power in January promising to repeal bailout austerity.

Police said at least 50 people were arrested.

Greece Bailout Associated Press Associated Press

A video posted by RT this evening shows protesters and riot police clashing, while molotov cocktails and fire bombs are thrown on the streets of Athens.

Emma Aiden / YouTube

Earlier today, Deputy Finance Minister Nadia Valavani resigned from government as it was due to pass the unpopular reforms essentially rejected by the public in a referendum 10 days ago.

“I’m not going to vote for this amendment and this means I cannot stay in the government,” she told reporters.

It came as one of the country’s chief creditors, the Washington-based IMF, warned Greece’s debt burden had already crossed the point of no return.

In a last-ditch deal struck on Monday, Tsipras agreed pension cuts, tax hikes and sweeping privatisations.

Finance Minister Euclid Tsakalotos told a parliamentary debate: “It’s a difficult deal, for which only time will show if it is economically viable.”

But speaker Konstantopoulou urged defiance against the creditors, saying MPs “have the right” to base their vote on the IMF report.

Under the latest bailout plan, eurozone governments will contribute between €40 and €50 billion, the IMF will contribute another major chunk and the rest will come from selling off state assets and the financial markets.

Tsipras has predicted “the great majority of Greek people” will support the deal, but admits he “cannot say with certainty” that it will be enough to stop a so-called “Grexit” until the final bailout agreement is signed.

Europe Greece Bailout Greek Prime Minister Alexis Tsipras AP Photo / Geert Vanden Wijngaert AP Photo / Geert Vanden Wijngaert / Geert Vanden Wijngaert

‘Unsustainable’ debt

However in advice released late yesterday the IMF said Greece’s debts were “highly unsustainable” and they were now expected to peak at nearly 200% of GDP within two years.

Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far,” it said.

IMF1 IMF (emphasis added) IMF (emphasis added)

The IMF said the closure of banks had been “extracting a heavy toll on the banking system and the economy” which had further plunged the country’s finances into a black hole.

It suggested the options left open to the EU included “a very dramatic extension” of grace periods on Greece’s loans in the order of 30 years on all European-sponsored debt.

Another alternative was direct funding injections to prop up the Greek budget or, probably most unpalatable of all, “deep upfront haircuts” – that is, writing off a significant part of the debts.

In arrears

Greece late last month became the first developed country to slip into arrears on its IMF debt repayments when it missed a €1.55 billion bill that fell due.

It has since missed a second repayment, while another large sum will fall due to the European Central Bank on Monday.

The latest comments from the IMF suggesting wholesale debt relief is a must will put more strain on Tsipras, who was forced to turn to his pro-European opponents to get the reforms through parliament.

Contains reporting by AFP and the Associated Press, and additional reporting by Dan Mac Guill.

First published 10.27am

READ: Greek PM says he signed a deal he doesn’t believe in… but will implement >

READ: ‘The Greek people needed the steady hand of Brian Cowen and Brian Lenihan’ >

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