Greek parliament approves next phase in bailout reforms / GUARDIAN

Greek parliament approves next phase in bailout reforms

Large majority of MPs including Yanis Varoufakis, the renegade former finance minister, approves further measures required to qualify for €86bn in loans

Helena Smith in Athens and Graeme Wearden

Thursday 23 July 2015 03.40 BST / http://www.theguardian.com/world/2015/jul/22/greece-ecb-emergency-assistance-ceiling-raised-bailout-vote

Greece’s prime minister easily won a crucial vote on a third bailout programme for the debt-stricken nation early on Thursday, hours after the European Central Bank infused cash-starved Greek banks with further emergency liquidity.

A total of 230 MPs backed the economic reforms programme demanded by Greece’s creditors, while 63 voted against the plan at the late-night vote.

Alexis Tsipras again faced down rebels within his own party who oppose a third bailout. Thirty-six Syriza MPs either voted no or abstained, three fewer than at a similar vote last week.

Yanis Varoufakis, the high-profile former finance minister, supported the measures. Last week he had voted against the first set of bailout conditions, including VAT rises and pension cuts, after resigning his post. But in this case, Varoufakis said, the specific measures being voted on included reforms he had previously put forward himself.

The vote clears the way for Greece to begin formal talks with its lenders on a three-year package of loans that could be worth €86bn.

Before the vote Tsipras had urged MPs to support the bailout, which will save Greece from bankruptcy and preserve its place in the eurozone.

“We made difficult choices and now we must all adapt to the new situation,” he told MPs, repeating that he did not agree with many of the reforms but would do his best to implement them.

Athens was thrown further emergency assistance when the European Central Bank (ECB) increased liquidity for Greek lenders ahead of the crucial vote.

The ECB’s governing council agreed on Wednesday to raise the cap on emergency assistance for the country’s fragile banking system by €900m (£629m). The move was immediately received with relief. Greek banks, newly opened after three weeks of enforced closure, have become a weather vane for normality in a country whose close brush with bankruptcy has kept it on the frontline of Europe’s debt drama.

The decision – the second such injection of emergency funds since late June – will allow Greece’s cash machines to keep operating as the tourist season gathers pace, despite the continued imposition of capital controls across the banking sector. The ceiling on funds was previously set at €89.5bn.

With continued membership of the eurozone still far from assured, the Greek finance minister, Euclid Tsakalotos, kicked off a raucous debate in the 300-seat parliament imploring MPs to support the bailout plan. The passage of reforms, including a new code of civil procedure that would overhaul Greece’s notoriously slow judicial sector, were demanded by the EU and the International Monetary Fund in exchange for opening talks on a third rescue package.

Tsakalotos told MPs: “It is extremely important to wrap up this procedure of prior actions so that we can start negotiations on Friday.”

A new bailout programme will provide as much as €86bn in loans for Greece, tiding it over for the next three years. But the stringent terms attached to the package have divided the ruling leftwing Syriza party and raised fears of political instability. With at least a third of the governing party vehemently opposed to the measures, and advocating a euro exit and a return to the drachma, the late-night vote was always expected to be a test of the authority over Syriza of Tsipras.

Hardliners, including the flamboyant former finance minister Yanis Varoufakis, have described the policies as unworkable in a country already labouring under record levels of poverty and unemployment. But on Wednesday night even Varoufakis voted yes.

Costas Isychos, the former deputy defence minister who resigned in outrage over the measures, said: “The coping strategies of a large part of society ran out long ago. The road map foreseen by the accord not only cannot be enforced, I believe large parts of society will fight back.”

Ahead of the ballot, anti-austerity protestors took to the streets, with the civil servants union ADEDY and militants from the communist-affiliated PAME organising rallies against reforms denounced as the harbingers of yet more destitution.

Insiders said it was essential that Tsipras at least retained control of the 110 MPs who last week voted in favour of tax rises and pension cuts – measures spurned by the young prime minister until his spectacular U-turn in the face of possible eurozone ejection.

The controversial policies were passed with the help of “pro-European” opposition parties, including the main centre-right New Democracy, which have argued that Greece must remain at the heart of Europe, and in the eurozone, at any cost.

But across the political spectrum MPs said it was impossible for the government to continue counting on the opposition for support.

Antigone Limberaki, an MP with the centrist Potami party, said: “Tsipras cannot cohabit with at least a third of his political group and more than half of his central committee totally opposed to the measures [outlined] in the third memorandum. Everything now depends on how he handles the problems in his party. It is very clear that he is burning bridges with the other side, that he feels he is on a one-way track and is going down the road of moderation.”