Eurozone to give crucial verdict on Greek bailout deal

GMT 16:06 2015 Friday ,14 August

Arab Today, arab today Eurozone to give crucial verdict on Greek bailout deal

German Finance Minister Wolfgang Schauble (L)
Brussels - AFP

Eurozone finance ministers gathered in Brussels on Friday for crucial talks on approving a huge bailout for Greece designed to save the country from financial collapse and a chaotic exit from the eurozone.

The talks come after Greek lawmakers finally voted through the 85-billion-euro ($95-billion) rescue plan -- which will see Athens make tough wide-sweeping reforms in exchange for the cash -- after a bitter all-night debate.

But Germany, Europe's effective paymaster, was insisting on further clarification of details from Athens, and has suggested potentially giving Greece an emergency loan to pay off its immediate debts instead of signing off on the longer-term deal.

Greek Prime Minister Alexis Tsipras warned that any German bid to palm off his debt-laden country with a bridging loan would be "a return to a crisis without end", and appealed to the European ministers to reject the proposal.
"It is what certain people have been looking for systematically, and we have a responsibility to avert that, not to facilitate it," the embattled premier told parliament after a day and night of heated debate on the bailout.

Athens and its creditors -- the EU, European Central Bank and International Monetary Fund -- are under pressure to hammer out the deal before August 20, when it is due to pay 3.4 billion euros to the ECB.

"I am confident in the fact that we are going to get a result today," German Finance Minister Wolfgang Schaeuble said as he arrived for the talks in Brussels.

But several major issues remained on the table, including the thorny matter of debt relief.

The IMF is refusing to take part in the rescue unless the Europeans can agree on some form of relief for Greece's huge debt mountain -- equivalent to 170 percent of GDP -- to bring it down to a sustainable level.

Germany is adamant the IMF must be part of the deal, but is also hostile to prospects of a "haircut" or partial writedown, which could potentially cost it and other holders of Greek debt billions of euros.

- 'Prefer compromise to suicide' -

A third of MPs in Tsipras' radical-left party Syriza rebelled against him in Friday's vote, and he only managed to push it through with the help of the opposition -- raising fresh speculation he will be forced to call early elections.
Syriza swept to power in January on a wave of popular anger against the austerity demanded by creditors in exchange for two previous bailouts.

Critics say the painful reforms have strangled the Greek economy, which only emerged from six years of brutal recession in 2014.

By backing a deal that involves more tough reforms, Tsipras has faced widespread accusations from within his party that he has abandoned his principles and capitulated to blackmail from the creditors.

Their demands go far beyond economic management to include an extensive overhaul of Greece's health and social welfare systems.

Seemingly small details of daily life will be affected by the new rules, from visits to the doctor to an extension of the expiry dates on pasteurised milk in the supermarkets.

But Tsipras told parliament that he preferred compromise over "the heroic dance of Zalongo" -- a reference to a notorious 19th-century mass suicide in Greece, when a group of women and children jumped to their deaths rather than submit to the cruel Ottoman governor Ali Pasha.

His government has "taken on the responsibility to continue the fight rather than commit suicide and then go running to other international forums saying it wasn't fair that we had to kill ourselves," he added.
The debate raged through the night, with the vote held up by procedural wrangling from hardline parliament speaker Zoe Constantopoulou, who termed the bailout unconstitutional and declared she could "no longer support" the prime minister.

"Every corner and beauty of Greece is being sold," she said.

It was unclear if Constantopoulou would join former energy minister Panagiotis Lafazanis, who is forming a breakaway party backing a Greek exit from the euro.

- Germany digs in its heels -

Ahead of the Brussels meeting, German deputy finance minister Jens Spahn sounded a note of caution about the prospects of a final deal, saying Berlin and Paris still had questions on Greece's plans to privatise parts of its economy.

Aside from a green light from the eurozone, there are numerous other political hurdles the deal will need to jump in order to move ahead, including several votes in European parliaments.

Finland became the first eurozone peer to endorse the deal on Thursday, albeit with conditions.

The German parliament's vote would be a key step in the process, and Bundestag president Norbert Lammert said this would happen on August 18 or 19 if the bailout gets a Eurogroup thumbs-up.

Ahead of the Greek parliament vote, official estimates showed the economy expanding 0.8 percent in the second quarter -- despite the cash-strapped government imposing capital controls to prevent a bank run.

But EU forecasts show it shrinking 2.3 percent this year and 1.3 percent in 2016.


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