Crisis Averted, Or Can Kicked Down the Road? Greek Lawmakers Pass 3rd Bailout Deal; Eurozone Approves €86 billion in New Loans


On paper it all looks great— Greek lawmakers approved the new bailout deal and Eurozone leaders followed with their own approval, sending Greece a third bailout worth €86 billion ($96 million), sending the country another lifeline— albeit a temporary one, following the Greek parliament’s 222-64 (11 abstentions) vote in the wee hours of August 14th.

European Commission President Jean-Claude Juncker was ever the optimist.

“The past six months have been difficult. They have tested the patience of policy-makers and they have tested the patience of our citizens even more. Together, we have looked into the abyss. But today, I am glad to say that all sides have respected their commitments,” he said in a statement.

Crisis averted.

Or is this just kicking the can down the road?

A closer look at what really happened— and the deep divisions that really exist, paints a completely different picture of what is really happening in Juncker’s mythically unified Eurozone.

Meanwhile in Greece…

More than 40 Syriza hardliners, including ex-finance minister Yannis Varoufakis and Parliament President Zoi Konstantopoulou, failed to follow the party line, angry at the punishing terms of the package and what some called a sell-out of the party’s principles and a betrayal of its promises to the Greek people.

The Greek Parliament did not start debating the 400-page text of the draft bailout plan until nearly 4am after Konstantopoulou ignored Tsipras’s request to speed up proceedings and instead raised a lengthy series of procedural questions and objections.

In angry exchanges, the conservative opposition New Democracy leadership attacked the government, warning it not to take its support for granted. “If you want to provoke us— and for us to vote for it— you can’t have it both ways,” New Democracy leader Vangelis Meimarakis told finance minister Euclid Tsakalotos.

On the left, former energy minister Panagiotis Lafazanis, who leads a rebel bloc of around a quarter of Syriza’s 149 MPs, pledged to “smash the eurozone dictatorship.”

“I feel ashamed for you. We no longer have a democracy … but a eurozone dictatorship,” Lafazanis said before the vote. Lafazanis signed a declaration with another 12 left-wing politicians saying they would start a new anti-austerity movement. He stopped short of quitting Syriza.

In her concluding pre-vote remarks, Konstantopoulou announced: “I am not going to support the prime minister any more,” while in remarks targeting fellow Syriza finance minister Euclid Tsakalotos, she lashed out at what she called a sexist and psychological attack, with one Greek newspaper to ask in a headline “Can Zoi’s HusbandKeep Her in Check?”


Earlier, the government spokeswoman, Olga Gerovasili, had conceded that divisions within the leftist party, which swept to victory in January’s elections on a staunch anti-austerity platform, were now so deep that a formal split was probably inevitable.

The fierce rebellion in the ranks of his leftist Syriza party— including hard opposition by Konstantapoulou— and even attempts to stall the vote on “technical” grounds, saw prime minister Alexis Tsipras’ base largely eroded, falling short of the 120 votes he would need to survive a censure motion, leading to speculation he might call a confidence vote next week and snap elections as early as next month.

This could delay the implementation of the austerity measures and reforms mandated by the deal.

And in Brussels and beyond…

National parliaments in some eurozone countries also still need to approve the deal. Hardliners like Finland may raise objections.

“We’re really out of patience … Our government has a very tight policy on this. We will not accept increasing Finland’s liabilities, or cuts in Greece’s debts,” Finland’s foreign minister Timo Soini said in an interview to Reuters last week.

And the involvement of the International Monetary Fund also needs to be sorted out. The IMF has long held a pessimistic view on Greece’s economy and questioned its ability to repay its debts, calling for Eurozone leaders to consider some form of debt relief or reorganization of Greece’s loans.

The IMF is refusing to participate in a new bailout until there is an “explicit and concrete agreement” on debt relief from Greece’s eurozone creditors.

“We look forward to working closely with Greece and its European partners in the coming months to put in place all the elements needed for me to recommend to the Fund’s Executive Board to consider further financial support for Greece,” Christine Lagarde, the IMF’s managing director, said in a statement after the deal was announced by the Eurozone.

In her statement, Ms. Lagarde also warned that Greece will need “significant debt relief, well beyond what has been considered so far.”

Germany is the biggest and most formidable opponent of debt relief, insisting that Greece must pay back every single eurocent of its loans. But is also the loudest proponent of keeping the IMF involved in the bailout deal.

IMF involvement in the new bailout was a “precondition” for Berlin, said German finance minister Wolfgang Schäuble. “We have to see that we can get a clear, possibly binding, commitment from the IMF … We’ve always said that has to be feasible. The IMF has its own rules, but we will have to find a way,” he said.


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