By Renee Maltezou and Angeliki Koutantou
Prime Minister Alexis Tsipras fought to contain a backlash from his own leftwing party on Wednesday as parliament prepared to vote on a sweeping austerity package European partners have demanded for a new bailout to keep Greece in the euro.
The ruling Syriza party, elected in January on an anti-austerity platform, has been deeply split by the bailout deal that a reluctant Tsipras was forced to accept after gruelling negotiations in Brussels this week.
More than half of the party’s 201-member central committee signed a statement rejecting the “humiliating” terms of the bailout, saying it was not compatible with the principles of the left. “This proposal cannot be accepted by the people of Syriza,” they said.
With pro-European opposition parties set to back the bailout, the measures are expected to pass some time after midnight. But around 30-40 Syriza lawmakers are likely either to abstain or vote against the government, raising a question mark over how long Tsipras can remain in office.
Former finance minister Yanis Varoufakis, who was sacked by Tsipras last week, denounced the bailout as “a new Versailles Treaty” – the agreement that demanded unaffordable reparations from Germany after World War One.
Deputy finance minister Nadia Valavani resigned and Energy Minister Panagiotis Lafazanis said he would not back the deal.
“The choice between a bailout or catastrophe is a choice made in the face of terror,” Lafazanis, who heads the far-left flank of Syriza, told reporters.
Even ministers supporting it could muster little enthusiasm for an accord which will impose a painful mix of tax hikes, public spending clamps and pension and labour reforms on the already severely weakened economy.
“It’s a difficult deal, a deal for which only time will show if it is economically viable,” Finance Minister Euclid Tsakalotos told lawmakers during a debate on reforms.
A snap election could follow if the prime minister’s majority collapses.
Tsipras is expected to reshuffle his cabinet after the vote, replacing Lafazanis and Deputy Labour Minister Dimitris Stratoulis, another bailout opponent, and possibly making other changes as well.
A study by the International Monetary Fund issued on Tuesday called for much more debt relief than European countries, particularly Germany, have been prepared to countenance so far.
Berlin, which along with the other creditors knew about the IMF study before agreeing to new bailout talks, may wince at providing huge debt relief to a country it scarcely trusts to honour its promises.
With Greece facing an urgent deadline on July 20, when a €3.5bn payment to the European Central Bank is due, European Union officials were racing to agree a bridge financing accord that would enable Athens to avoid defaulting on the loan.
There were strong objections from both Britain and the Czech Republic – EU countries that do not use the euro – to proposals to provide a €7bn loan from the European Financial Stability Mechanism (EFSM), an EU-wide fund not intended for euro zone funding needs.
The European Commission published its own assessment of Greece’s debt burden on Wednesday that also offered the prospect of debt relief. While also ruling out any write-offs, the Commission said debt reprofiling was possible, as long as Greece implemented the reforms it has committed to.
European stocks rose and bond yields fell, with investors betting parliament would back the bailout.
With banks shut and the threat of a calamitous exit from the currency bloc hovering over the country if it cannot conclude a deal, many Greeks see the package as the lesser of two evils.
Civil servants held a strike on Wednesday, as did pharmacists, whose industry would be opened up under the reform package. Leftwing anti-bailout groups staged protest marches, although street protests have been relatively muted so far.
The latest deal was a major capitulation from Syriza, which stormed to power promising an end to austerity. The fiery parliamentary speaker and the party’s parliamentary spokesman both announced they would vote against reforms. Such outbursts had one right-wing newspaper crowing over the “civil war” engulfing the party.
Syriza’s junior coalition partner said it would vote only for certain clauses in the bill, rejecting those reforms that went beyond a previous vote in parliament that had given Tsipras a mandate to negotiate in Brussels.
In recent weeks, negotiations between Athens and its creditors became increasingly fractious, with each side accusing the other of blackmail. Greece painted European countries, particularly Germany, as bullies, while the creditors said their trust in the Greek negotiators had all but evaporated.
