ATHENS – Prime Minister Alexis Tsipras battled to win lawmakers’ approval on Wednesday for a bailout deal to keep Greece in the euro, while the country’s creditors, pressed by the IMF to provide massive debt relief, struggled to agree a financial lifeline.
Having reluctantly conceded to negotiating a third bailout from international lenders on stringent terms, Tsipras must face down a rebellion in his anti-austerity Syriza party to push sweeping pro-market reforms and spending cuts through parliament.
“It’s a difficult deal, a deal for which only time will show if it is economically viable,” his finance minister, Euclid Tsakalotos, told lawmakers during a debate on reforms.
Dozens of MPs, including senior Syriza figures and the government’s junior coalition partner, may partially or fully reject the bailout, forcing Tsipras to rely on pro-European opposition lawmakers to carry the vote, which is expected after midnight.
A snap election could follow if the prime minister’s majority collapses, and in an early sign of trouble in store, the deputy finance minister abruptly submitted her resignation and the energy minister said he would not back the deal.
“The choice between a bailout or catastrophe is a choice made in the face of terror,” Panagiotis Lafazanis, who heads the far-left flank of Syriza, told reporters.
Adding to the uncertainty, a confidential study by the International Monetary Fund, seen by Reuters, called for much more debt relief than European countries, particularly Germany, have been prepared to countenance so far.
Berlin, which along with the other creditors knew about the IMF study before agreeing to new bailout talks, may wince at providing huge debt relief to a country it scarcely trusts to honour its promises.
But Germany insists on having the IMF in the negotiations to help keep Greece in line, and may countenance extending maturities for Greek debt provided there was no write-down.
“Technically, this possibility exists,” said finance ministry spokesman Martin Jaeger when asked about the option of extending the maturities of Greek debt to 30 years or so.
“That is certainly an element that one can consider, but it will not be the solution if it leads to a significant reduction in the cash value (of the debt) as then we would in the end have nothing other than a debt haircut via the backdoor,” he said. (Reuters)
