Amid Protests Greece Passes Austerity Bailout
Above: Riot police use teargas outside the Greek parliament. Photograph: Milos Bicanski/Getty Images
Alexis Tsipras drives through tax increases and pensions shakeup amid angry splits in his Syriza party
Five years into the worst crisis to hit their country in decades, Greek MPs voted by a large majority in the early hours of Thursday morning to accept draconian austerity as the price of further bailout funds but at great personal cost to prime minister Alexis Tsipras.
In a vote that saw tensions soar in and outside parliament, the embattled leader’s radical leftist Syriza party suffered huge losses as 40 MPs revolted against the measures. A total of 229 lawmakers voted in favour of the internationally mandated measures, 64 against and six abstained.
As expected, it was backed by pro-European opposition parties, including the former ruling party New Democracy, as well as the Syriza’s coalition partners, the rightwing Independent Greeks. But it was rejected en masse by MPs from the hardline Left Platform grouping within Syriza.
The outcome will significantly weaken Tsipras as the scale of the rebellion sinks in. Stripped of its working majority, the Syriza-dominated two-party coalition will struggle to enforce the pension cuts and VAT increases outlined in the deal or implement any other legislation outside.
But there was also relief that the Greek parliament had overwhelmingly supported reforms to ensure that talks on a third bailout for the debt-stricken country can begin.
“The national parliament sent the message that it had to send to Europe,” said Vangelis Meimarakis, interim leader of the conservative main opposition New Democracy party.
Tsipras was opposed by leading members of his party including the flamboyant former finance minister Yanis Varoufakis who resigned as Greece’s finance minister before last week’s bailout talks.
The energy minister, Panagiotis Lafazanis, who heads Left Platform, said while he and other cadres in the faction had rejected the deal, he would still support the government.
“We support the government but we disagree with this new memorandum, with these measures,” Lafazanis told reporters emerging from the parliament at 2.30am. “We are the heart and soul of Syriza.”
The prospect of Greece plunging into political turmoil will be heightened by speculation that Tsipras may be forced to call early elections after a cabinet reshuffle expected on Thursday. He is likely to remove objectors within his party but could struggle to govern effectively.
The threat of Athens being forcibly ejected from the eurozone appeared to focus minds with more MPs voting in favour of austerity reforms than at any other time in the crisis.
Earlier, there was sporadic violence in central Athens as riot police fired teargas and fought running battles with anti-austerity protesters armed with molotov cocktails.
As helicopters circled over Syntagma Square, dozens of petrol bombs were thrown in some of the most serious violence in the Greek capital for two years.
Thousands of people took part in a series of otherwise peaceful marches to protest against the deep austerity cuts demanded in exchange for a fresh €86bn (£60bn) international bailout.
As the late-night vote loomed, Tsipras suffered a blow with the loss of a key minister, Nadia Valavani. The deputy finance minister resigned, saying it was impossible for her to keep serving in the government.
Also before the vote, the French national assembly voted overwhelmingly in favour of starting negotiations for the third bailout. The German Bundestag will vote on Friday.
Eurozone policymakers appeared to be under increasing pressure from the White House to resolve the crisis. The US Treasury secretary, Jack Lew, flew into Frankfurt for a meeting with Mario Draghi, the president of the European Central Bank. Lew has urged his eurozone counterparts to agree a deal .
Draghi is expected to face tough questions about the ECB’s role when he holds a press conference after its regular interest rate-setting policy meeting.
Protesters clash with police in Athens.
The ECB’s decision not to raise the ceiling on emergency aid to Greek banks has been blamed by some analysts for forcing the effective shutdown of the country’s financial sector.
As Tsipras battled to shore up support, officials in Brussels were scrambling to assemble a short-term financing package – expected to be worth about €7bn – to keep Greece afloat until the details of a new bailout can be hammered out.
The European commission has confirmed that it plans to tap the European Financial Stability Mechanism, the EU-wide bailout fund, to meet part of the cost of a bridging loan, putting the UK on the hook for just over 15% of it.
But George Osborne, the chancellor, demanded that eurozone countries indemnify the Treasury against any losses if Britain is forced to contribute.
The IMF took the unusual step of publishing its “debt sustainability analysis” for Greece after parts of it were leaked to the media.
The damning paper suggested Greece may need a 30-year moratorium on repayments or a substantial “haircut” – a partial write-off of its debts – if its public finances are to be sustainable.