Greece Debt Crisis: Greek MPs Approve Bailout Deal

bailout deal

Greek MPs have approved harsh economic measures to enable an €86bn eurozone bailout deal to go ahead.

An overwhelming majority of Greek MPs voted in favor of the reform package, with 229 voting ‘Yes,’ 64 voting ‘No’ and 6 abstaining.

New legislation will include tax hikes, an increase in the retirement age, spending cuts and pensions reform.

Prior to the vote,  there were violent clashes near to the Greek parliament building between protesters and police during a massive anti-austerity protest.

The BBC report:

Prime Minister Alexis Tsipras had said he did not believe in the deal, but nonetheless urged MPs to agree to the measures.

He said he was willing to implement the “irrational” proposals to avoid the collapse of the banks and disaster for Greece.

In a passionate speech just before the vote, he told parliament: “The Greek people are fully conscious and can understand the difference between those who fight in an unfair battle and those who just hand in their weapons.”

The vote passed despite a revolt from some hardliners in his ruling left-wing Syriza party.

Among them was parliamentary Speaker Zoe Constantopoulo, who walked out before the vote, before returning to make a fiery speech condemning a “very black day for democracy in Europe”.

More than half of the members of Syriza’s central committee signed a statement condemning the bailout agreement, describing it as a coup against their nation by European leaders.

Opponents of the deal took to the streets of Athens ahead of the vote, and unions and trade associations representing civil servants, municipal workers and pharmacy owners held strike action.

The possible bailout was agreed in Brussels on Monday by eurozone members, though one of Greece’s creditors, the International Monetary Fund (IMF), has suggested in a report that it does not go far enough – and that Greece will need some of its debts to be written off.

Greece’s economy has shrunk by 25% in the last five years amid austerity measures designed to curtail its ballooning public sector debt.

In order to begin negotiations over a third bailout worth €86bn (£61bn; $95bn) over three years, Greek MPs needed to approve measures including:

  • The ratification of the eurozone summit statement
  • VAT changes including a top rate of 23% to take in processed food and restaurants and; a 13% rate to cover fresh food, energy bills, water and hotel stays; and a 6% rate for medicines and books
  • The abolition of the VAT discount of 30% for Greek islands
  • A corporation tax rise from 26% to 29% for small companies
  • A luxury tax rise on big cars, boats and swimming pools
  • And end to early retirement by 2022 and a retirement age increase to 67

As parliamentary committees considered the details of the laws, deputy finance minister and Syriza member Nadia Valavani announced her resignation, saying: “I’m not going to vote for this amendment, and this means I cannot stay in the government.”

Greek Finance Minister Euclid Tsakalotos told MPs: “Monday was most difficult day of my life. It’s a decision that will weigh on me for rest of my life. We had no choice.”

He added: “We never said this was a good agreement.”

And tempers flared when former Finance Minister Yanis Varoufakis was heckled with shouts of “You got us here” while addressing one committee.

The jeers came when he said he doubted the deal could work, and compared it to the conditions imposed on Germany in the Treaty of Versailles after World War One.

Meanwhile, French MPs have overwhelmingly backed the Greek bailout deal. Because of their constitutions, several eurozone members, including Germany, must ratify the deal in their parliaments before it can proceed.

Banks stay shut

Greece faces an immediate cash crisis. Banks have been shut since 29 June.

Mr Tsipras has warned banks are unlikely to reopen until the bailout deal is ratified, and this could take another month.