Prime
minister faces tough task to keep his Syriza party united, as former
finance minister Yanis Varoufakis likens bailout proposal to 1919
Versailles treaty
Phillip Inman in
London, Helena Smith in Athens, and Jennifer Rankin in Brussels
Monday 13 July 2015
22.05 BST /
http://www.theguardian.com/world/2015/jul/13/alexis-tsipras-eurozone-bailout-plan-greek-parliament
Alexis Tsipras was
on course on Monday night to sway radical-leftist Syriza MPs to
accept the most draconian rescue of a sovereign nation since the
second world war, after the Greek prime minister accepted a third
bailout programme that one analyst said came after a weekend of
“gunboat diplomacy”.
Tsipras, locked in
fraught negotiations with EU leaders in Brussels until Monday
morning, indicated that he would carry the Athens parliament, despite
some defections, in a vote on the package by Wednesday.
Determined to keep
his party together ahead of an expected onslaught by MPs opposing the
outlined deal, Tsipras summoned his closest allies to a meeting in
Athens before a gathering of his parliamentary party on Tuesday.
Likening the deal to
the 1919 Versailles treaty – widely seen as the harbinger of the
second world war for its crushing of Weimar Germany – the former
Greek finance minister Yanis Varoufakis called it “unviable”.
“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.”
Distressed at the
sheer scale of the demands from Brussels, the leader of Tsipras’s
coalition partner, the populist Independent Greeks, said he could not
support a key element of the proposals that he described as
“barbaric”.
Panos Kammenos said
a demand that Athens hands over €50bn in assets from privatisations
as collateral for fresh loans was a form of “confiscation” and
“we cannot agree to that”.
Despite the mounting
anger of many Greek politicians, world equity prices rallied at the
plan to keep Greece afloat with a bailout and within the eurozone.
European stock
markets surged almost 2% while Wall Street jumped more than 1% after
a breakthrough came early on Monday when Donald Tusk, president of
the European council, announced that the 19 eurozone leaders had
unanimously reached agreement to keep Greece in the single currency,
adding that Athens had signed up to “serious reforms”.
But the deal, which
one EU official said came after Tsipras was “waterboarded” into
submission, faces huge obstacles in the form of national parliament
votes in Germany, Latvia, Slovakia and possibly France, which could
all balk at the extra €86bn (£62bn) offered to Greece in loans
under the terms of the bailout.
Tsipras must submit
to draconian economic reforms, tougher than those the Greek people
rejected in a referendum just a week before
Controversial
reforms Greece promised to pass into law by Wednesday include
reforming the VAT system, overhauling pensions and signing up to
plans that ensure immediate spending cuts in the event of breaching
creditor-mandated budget targets.
Athens has agreed to
sell off state assets worth €50bn, with the proceeds earmarked for
a trust fund supervised by its creditors. Half the fund will be used
to recapitalise Greek banks, while the remaining €25bn will pay
down Greek debts.
But the level of
hostility engendered by the accord ensured that Greece was likely to
be plunged into prolonged political tumult. With foreign lenders
demanding almost total surrender of the nation’s fiscal
sovereignty, leading Syriza cadres spoke of the deal as the product
of defeat and capitulation.
“Europe is
punishing us … we can’t make this agreement seem better than it
is,” snapped labour minister Panos Skourletis, predicting that
fresh elections would almost certainly have to be held later this
year.
If agreed to by the
Greek parliament, the bailout deal could be worth up to €86bn
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A man walks outside
closed shops in central Athens: if agreed to by the Greek parliament,
the bailout deal could be worth up to €86bn. Photograph: Aris
Messinis /AFP/Getty Images
In a sign of just
how strained relations have become between Athens and its eurozone
partners, the moderate MEP Dimitrios Papadimoulis referred to the
proposed reforms as “atrocities”.
European leaders
lined up to say that Grexit has been averted, gliding over the fact
the eurozone had only agreed to open negotiations that could take up
to four weeks to organise.
“We know time is
critical for Greece, but there are no shortcuts,” said Klaus
Regling, the official in charge of the European stability mechanism –
the eurozone’s permanent bailout fund that Greece hopes to tap.
Politics could be
overtaken by financial deadlines. Athens faces demands to repay €7bn
of debts in July, including €3.5bn due to the European Central Bank
on 20 July.
This will require a
bridging loan of £10bn-£12bn, as the full bailout will not be
agreed in time. All of the other 27 EU nations are expected to be
asked to contribute. However, George Osborne immediately rejected the
idea, according to Treasury officials who said Brussels was told that
the £1bn of UK funds in the ESM should not be used for eurozone
bailouts, in accordance with a 2010 agreement.
Alexis Tsipras talks
to the press at the end of the eurozone leader summit on the Greek
crisis, at the European Council headquarters in Brussels. Facebook
Twitter Pinterest
Alexis Tsipras
talks to the press at the end of the eurozone leader summit on the
Greek crisis, at the European Council headquarters in Brussels.
Photograph: Laurent Dubrule /EPA
Tsipras did manage
to win a concession that the fund should be managed from Greece, not
Luxembourg, as envisaged in a German plan, but the rules will be
drawn up by Greece’s creditors – the troika that Tsipras vowed to
throw off, but only succeeded in renaming as “the institutions”.
Paul Krugman, the
Nobel prize-winning economist and prominent critic of austerity in
Greece, said the creditors’ demands on Greece “went beyond harsh
into pure vindictiveness, [leading to the] complete destruction of
national sovereignty [with] no hope of relief.
“It’s a
grotesque betrayal of everything the European project was supposed to
stand for,” he wrote several hours before the final deal emerged.
As the talks dragged
on through Monday night, #ThisIsaCoup became the top trending topic
on Twitter in Greece, Germany, the UK and Ireland.
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