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Greece’s Tsipras faces hard sell to pass punitive bailout deal

Angelos Tzortzinis, AFP

Greek Prime Minister Alexis Tsipras faces a tough task clinging to his government majority on Tuesday as he seeks to sell a bailout deal that requires Greece to pass draconian reforms in 48 hours.


Tsipras, who flew home Monday from gruelling night-long negotiations with European leaders, chaired an executive meeting of his Syriza party early Tuesday before lawmakers began a two-day debate on the deal - set to heap more tax hikes and spending cuts on a country already suffering through six years of recession.

The deal ensures that Greece avoids an imminent financial catastrophe and an exit from the eurozone.

But Energy Minister Panagiotis Lafazanis, a Syriza hardliner, said Germany had treated Greece "as if it was their colony and (behaved) as brutal blackmailers and 'financial assassins’”.

Lafazanis called on the prime minister to cancel the deal before legislation reaches parliament.

"The deal ... is unacceptable and does not deserve to be charged to a radical political party such as Syriza, and a battling government that promised to abolish ... austerity," he said in a statement on his ministry website.

Around 30 out of Syriza's 149 lawmakers are expected to join him in voting against the government.

Facing overwhelming pressure from Greece's creditors and the prospect of a banking collapse, Tsipras had to consent to a raft of austerity measures in Brussels, including sales tax hikes and pension and labour reforms - measures he had campaigned vociferously against over the last five years of the country's financial crisis.

A series of supposed red lines vanished, including objections to tight international oversight of Greece's economy, continued involvement by the International Monetary Fund in Greece's bailout programme and cuts to pensions.

The Financial Times dubbed the bailout deal “the most intrusive economic supervision programme ever mounted in the EU”. For Deutsche Bank, it “barely stops short of demanding that Greece becomes a vassal state of Brussels”.

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In return, eurozone members are due to discuss a package of loans and financial support worth around 85 billion euros ($95.1 billion) over three years that will preserve Greece's membership in the euro, shore up its banks and allow a modicum of stability to return to the battered Greek economy.

Creditors also dangled the carrot of a possible future debt restructuring in the event of a smooth bailout, though ruling out a “haircut” to the country’s mammoth €320 billion debt.

‘Debt colony’

Having endured what one official described as hours of “mental waterboarding” by EU leaders, Tsipras was at pains to put a positive spin on the agreement Monday.

"We managed to avoid the most extreme measures," he said. But in many cases, ordinary Greeks now face tougher measures than those they voted down in a nationwide referendum a little over a week ago.

Tsipras' hardest work may yet be ahead of him. As part of the deal, his government has to get the Greek Parliament to back a series of economic measures by Wednesday that creditors are demanding. And in the weeks to come, Greece will have to make further changes to its economy, such as opening to competition industries like energy that have long been protected.

Passage of the new measures appears assured, since Greece's opposition parties have pledged to support Tsipras' deal. But dissent within the ruling Syriza party is threatening his coalition, raising the prospect of some sort of national unity government or an early election later this year.

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On Tuesday, Syriza’s parliamentary spokesman Nikos Filis urged lawmakers to respond to the “coup” in Brussels by ensuring the government does not fall.

“Lawmakers will not overthrow the mandate given by voters in January,” he said.

It was not clear whether some members of the Left Platform, a group of Syriza hardliners, would endorse the bailout plan, which they swiftly denounced as the "worst deal possible ... (one) that maintains the country's status: a debt colony under a German-run European Union."

One obstacle could be the parliamentary speaker, Syriza’s Zoe Konstantopoulou, who is key to the logistics of the vote and has been one of the creditors' most ferocious critics. Tsipras could try a potentially risky move of forcing her out through a no-confidence vote, although that would eat up precious time and political capital to prepare the reform bills.

Meanwhile, the right-wing Independent Greeks, Tsipras’s junior coalition partners, have promised to support the government, but with the ambiguous caveat that they will only vote for bailout measures agreed before last weekend's summit in Brussels, which were less stringent.

"We are committed to voting for what we decided in the council of the political leaders and only that, no other measures that are imposed," party leader Kammenos told reporters.

There was also word from Tsipras’s former finance minister Yanis Varoufakis who likened the deal to the 1919 Versailles treaty which saddled Weimar Germany with unsustainable debt and helped foster the rise of Nazism.

“This has nothing to do with economics. It has nothing to do with putting Greece back on the rails towards recovery,” he told Australia’s public broadcaster, the ABC.

“This is a new Versailles treaty that is haunting Europe again, and the prime minister [Alexis Tsipras] knows it. He knows he’s damned if he does and he’s damned if he doesn’t.”

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Like Varoufakis, analysts have cast doubt on claims the deal will help put Greece back on a path to economic growth.

Ashoka Mody, visiting professor of international finance at Princeton University, said it just repeated policies that have already failed.

"The economics of this program have been set up for failure," he told The Associated Press. "In three years, if this program is implemented, the Greek economy will be 10 percent smaller than it was and the debt burden will be higher."

Many ordinary Greeks are equally sceptical that the deal will bring about any improvement in their lives and expressed their anger on social media, where the Twitter hashtag #ThisIsACoup trended.

Haralambos Rouliskos, a 60-year-old economist who was out walking in Athens, described the deal as "misery, humiliation and slavery".

The eurozone creditors "are trying to blackmail us," said Katerina Katsaba, a 52-year-old working for a pharmaceutical company.

Others seemed relieved their country was not facing a chaotic exit from the euro.

Kostas Lambos, a retiree in Athens, said things would be "difficult in the beginning" but people had to understand the severity of the situation.

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"This was a necessary step for the country to emerge from the dead ends that had been created in the last few years," he said.

After six years of recession and two bailouts worth €240 billion, Greece’s battered economy has already shrunk by 25% and pushed millions into poverty, evoking memories of the 1930s Great Depression in the US.

The country’s banks have been shut for two weeks, and restrictions limit withdrawals to a paltry 60 euros ($67) per day. They need emergency credit from the European Central Bank to reopen, but indications are that the ECB won't sanction further help until the Greek parliament passes the first set of creditor demands on Wednesday.

Greece has other financing needs beyond its banks. On July 20, it has to make a 4.2 billion-euro ($4.6 billion) debt repayment to the ECB. It's also in arrears on about 1.5 billion euros owed to the IMF. Since its bailout program is not going to be in place by then - Jeroen Dijsselbloem, the eurozone's top official, estimated that would take about four weeks - Greece will need some further help.

Dijsselbloem on Tuesday said finance ministers were struggling to choose from a list of difficult options to help Greece meet its short-term cash needs.

"All of them seem to have disadvantages, legal objections," said the Dutch finance minister and head of the Eurogroup, as he met his counterparts.

Britain, which is not a member of the single-currency bloc, has already said it will resist contributing to any bridge financing for Greece, saying it is up to the eurozone to find the money.

(FRANCE 24 with AP)

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