World Economy

Greece MPs Approve 3rd Bailout Deal Amid Protests

Greece MPs Approve 3rd Bailout Deal Amid ProtestsGreece MPs Approve 3rd Bailout Deal Amid Protests

A divided Hellenic parliament has approved a third bailout for the country in five years, amid protests in Athens. The tense vote has lead to divisions within the ruling Syriza party, with snap elections on the horizon.

Greek Prime Minister Alexis Tsipras was handed a victory early Friday after opposition legislators approved a €85 billion ($94.8 billion) bailout to keep the country financially afloat, DW reported.

A clear majority of 222 MPs approved the 400-page text containing the bailout conditions–over 64 who voted against and 11 abstentions. Tsipras would need at least 120 votes in the 300-member chamber to continue as a minority leadership.

During the all-night debate ahead of the vote, Tsipras urged lawmakers to make the "necessary choice" for the Greek nation, strongly warning against the option of a bridging loan, incidentally a German proposal, because it would hurl Greece back into a "crisis without end."

Days earlier, Tsipras struck a deal with foreign creditors that will keep the country solvent. But it comes at a heavy cost to ordinary Greeks, reinforcing painful and unpopular austerity measures that the left-wing leader had campaigned against in January.

Already, anti-austerity Syriza lawmakers have signaled they will call for snap elections as early as next month.

Campaign Promises

"The fight against the new bailout starts today, by mobilizing people in every corner of the country," said a statement signed by Panagiotis Lafazanis, a former cabinet minister and 11 other Syriza members posted on the far-left faction's Iskra website.

"I feel ashamed for you," Lafanzanis exclaimed, looking directly at Tsipras. "We no longer have a democracy ... but a eurozone dictatorship," he said. "Give us what we voted for."

Rebels such as Lafanzanis have implored the government to stand by the campaign promises on which it was elected to reverse the waves of spending cuts and tax rises, which have had a devastating effect–driving up unemployment and shrinking an already weak economy–over the past six years.

An analysis seen by the Reuters news agency said the creditor institutions had "serious concerns" about the sustainability of Greek public debt. However, sustainability could be achieved without any write-off by extending grace periods before Athens has to start paying interest and principal on its bailout loans.

IMF Sets Conditions

The IMF favors some sort of debt "haircut" while Germany implacably opposes such relief, although several leading figures have suggested openness to extensions of debt.

Months of bitter negotiations between Athens and creditors have shaken an economy that last year had been pulling out of a long depression before turning down again.

IMF said Thursday that it would only make a decision on providing further financing for Athens after steps are taken to make its debt burden more sustainable and only after Greece's European partners weigh in.

"The IMF... will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities' program and debt relief have been taken," IMF senior official Delia Velculescu said in a statement.

Surprise Growth

The Greek economy unexpectedly grew by 0.8% in the second quarter. The data came as a surprise and a boon to Tsipras, who has just secured a third rescue package from creditors.

Greece's economy unexpectedly returned to growth in the period from April to June, with the annual figure up 1.4% compared to 2015. Quarter-on-quarter, growth came in at 0.8%.

In the first quarter, Greece reported flat growth instead of the 0.2% contraction previously announced. It means the country did not slip into recession at the beginning of the year, as previously thought.

Statistics office Elstat did not provide any details on what sectors were driving growth, but economist Nikos Magginas from National Bank told the Reuters news agency that tourism, industrial production and consumption showed "particular resilience."

The Greek economy emerged from a six-year recession in 2014 but shrank again in the final quarter as political upheaval returned.