Greek deal faces key vote as IMF threat looms

By Helen Pooper

While acknowledging Sunday's summit was 'a bad night,' Prime Minister Alexis Tsipras is pleading with his nation to support an imperfect agreement.

ATHENS — The Greek Parliament is expected to approve drastic austerity measures tonight that will reshape the country’s economic and business landscape, but a surprising development could still throw a wrench in the deal.
The International Monetary Fund has signaled it may not participate in the new, three-year bailout of up to €86 billion because Greece may never be able to repay the money without major debt forgiveness. In total, Greece’s debts would be almost twice the value of the country’s economic production.

“The events of the past two weeks — the closure of banks and imposition of capital controls — are extracting a heavy toll on the banking system and the economy, leading to a further significant deterioration in debt sustainability relative to what was projected” the IMF said. 
Greece owes the IMF €21.2 billion for the previous two bailouts. The country missed a payment of €1.5 billion on June 30 and another bill of about €456 million on July 13.
On Wednesday, the European Union said it would lend more than €7 billion to Greece for the country to cover critical repayments in the next weeks.
Nevertheless, the IMF’s position puts pressure on Germany, which along with several northern European countries, has long resisted extending debt relief for Greece.
The German Bundestag is expected to hold an emergency session Friday to vote on the deal. Parliaments in several other countries, including a strongly divided Finland, will also debate the issue.
The split among creditors reflects a similar divide among the Greek Parliament and voters.
“I tried to get the best [deal] I could get,” Tsipras said in a remarkable interview with Greek public television. “We got an agreement … but it doesn’t include the same dead-end options that I got offered on June 25.” Referring to the Sunday Brussels summit, he pulled no punches: “It was a bad night.”
On opposition to approval of the austerity package being demanded by Greece’s creditors, Tspiras said:  “In our party, I can’t throw people out. They have to take responsibility for that themselves.”
“I’m not going to force people to do what they don’t want to do,” Tsipras continued. “I’ve taken decisions that no one else could have taken easily, critical decisions … I’m not going to accept someone accusing me of not having respected left-wing values and the Greek people.”
Tsipras also added fuel to his already incendiary relationship with the German government, saying that the only alternative he was offered included “Schäuble’s plan,” the five-year “time-out” from the euro floated by German Finance Minister Wolfgang Schäuble.
But Tsipras said he discussed this with German Chancellor Angela Merkel and she told him: “That isn’t my plan.”
Schäuble, meanwhile, told reporters in Brussels that many Germans, “also in the German federal government,” believe a “Grexit” is a better solution than the deal Merkel helped forge.
All of which adds to the unpredictable backdrop for Wednesday’s vote in Athens on the package. Speculation has grown in recent days that Tsipras will have to reshuffle his cabinet or even call new elections and form an interim government in the face of eroding support within his anti-austerity Syriza party.
At least 30 lawmakers are expected to vote against the agreement with creditors, which imposes further tax hikes and budget cuts on the austerity-weary nation and forces it to put about €50 billion worth of state assets into a privatization fund to repay its debts and shore up its banks.
Opposition parties said they would support Tsipras in Wednesday’s crucial vote, meaning the bailout bill should pass comfortably.
But the deal is bitterly opposed by Syriza’s far-left wing. Tsipras’s junior coalition partners, the right-wing Independent Greeks, have called it “a coup.” Both parties held closed-door meetings on Tuesday to discuss their positions ahead of the vote, which could go late into the night.
“Tsipras can survive this because he has significant political capital right now,” said John Dimakis, executive director at Athens-based communications strategy firm STR. “It will be difficult for him to carry out the necessary structural reforms but he has gained political momentum and that will help him.”
“He has to avoid a new election, it would be a disaster for the country. But he has the backing of the opposition parties so he will be able to implement the legislation,” Dimakis added.
Tsipras’ interview seemed part of a strategy to persuade members of parliament the only way to cushion the impact of the bailout on low-income Greeks and keep fighting for change in Europe is to stay united in government.
“This left-wing government must not fall,” said Nikos Filis, a spokesman for Syriza who is seen as close to Tsipras.
Interior Minister Nikos Voutsis struck a similar note: “We’re not going to achieve anything by running away.”
Tsipras’ thin parliamentary majority will almost certainly be lost in Wednesday’s vote, raising questions about the government’s ability to carry out the reforms demanded by lenders in exchange for up to €86 billion in financing over three years.
Tsipras had support from 162 of 300 members of parliament, but that fell to roughly 145 seats, including abstentions and no-shows, after he drafted an austerity-laced plan to present to European leaders last weekend. The final deal was even more severe.
Energy Minister Panagiotis Lafazanis, who heads the Left Platform wing, called the country’s creditors “brutal blackmailers and financial assassins” and urged Tsipras on Tuesday to roll back on the deal before it is sent to parliament.
“The government and the prime minister himself, even at the 11th hour, have the opportunity and the right to change position and reverse course on the agreement,” he wrote on the Left Platform’s website Iskra.
Lafazanis was among party rebels who refused to support the government’s draft bailout proposals in parliament on Saturday, but so far he has not resigned.
Further dissent came from Independent Greeks’ leader Panos Kammenos, who was ambiguous about how he and his MPs would vote, but signaled ultimate support.
“This was a coup in the heart of Europe…they want to replace the government with an unelected government and we’re not going to allow this to happen,” Kammenos told reporters after his party’s committee meeting on Tuesday.
In a sign of the difficulties Tsipras will face when it comes to implementing the bailout terms, an anti-capitalist group and a civil servants’ union held a small anti-austerity rally on Monday evening in central Athens. Pharmacists said they would stay closed on Wednesday to protest creditors’ demands to liberalize the market.
In contrast to friction within leftist ranks, opposition parties said they would back the accord because it was the only way to stay in Europe and avert the collapse of the nation’s cash-strapped banks.
Banks will stay closed for at least another day but capital controls, which include a €60 limit on cash withdrawals, are expected to stay in place for several months.
Panagiotis Karkatsoulis of To Potami said the centrist party would support the reform bills but would not give Tsipras “a blank check.”
The largest opposition party, the conservative New Democracy, said it would back the bailout accord without demanding modifications.
“We need a purposeful national government that will implement the agreement, Mr. Tsipras,” Dora Bakoyannis, a prominent New Democracy lawmaker, wrote on Twitter. “We support this agreement.”