Greece tackles final reform hurdle before new bailout talks

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Greece tackles final reform hurdle before new bailout talks
By MENELAOS HADJICOSTIS and NICHOLAS PAPHITIS

ATHENS, Greece (AP) — Greek lawmakers debated into the early hours Thursday on further reforms demanded by international creditors in return for a third multi-billion-euro bailout, with attention focusing on government dissenters who have vowed to reject the measures.

Despite the revolt in Prime Minister Alexis Tsipras' own party, parliament is expected to approve the draft legislation in the second such crucial vote in a week — and again with broad support from pro-eurozone opposition parties. Failure to do so would derail the bailout and rekindle fears over Greece's future in the shared euro currency.

As with last week's vote, Tsipras' main problem lies with hard-line lawmakers in his party, many of whom see the reforms as a betrayal of the anti-austerity platform that brought their Syriza party to power in January.

Addressing parliament, Tsipras said the reforms were a necessary price to pay to keep Greece alive after stormy talks with its creditors nearly collapsed earlier this month.

"There is no doubt that the process we are following today ... is not a normal process," he told lawmakers. "But the essence is that ... we were led to a tough compromise, on the basis of which we are summoned today to legislate under a state of emergency."

He also ruled out resigning.

"The presence of the left in this government isn't about the pursuit of office, it's a bastion from which to fight for our people's interests," he said. "And as far as I'm concerned, I won't abandon this bastion, at least of my own free will."

Tsipras said approval would give Greece breathing room to quash speculation that the country will be forced to abandon the euro, and help it regain market confidence and eventually tap bond markets again.

Before the debate got underway, about 10,000 people demonstrated outside parliament, protesting the latest measures to overhaul Greece's judicial and banking sectors. Minor violence marred the end of the protest when a few teenagers threw petrol bombs at riot police, but no injuries or arrests were reported.

Negotiations with creditors are expected to start soon after the latest package of reforms is approved.

The radical left-led government hopes the new bailout talks can conclude before Aug. 20, when Greece must repay a debt worth more than 3 billion euros ($3.3 billion) to the European Central Bank.

On Wednesday, the ECB provided a new vital cash injection to Greece's battered banks. A European banking official told The Associated Press the ECB decided to increase emergency liquidity to Greek banks by 900 million euros ($980 million) — the second such cash injection in just under a week.

Fearing a run by depositors flocking to take their savings out of Greek banks, the government imposed capital controls more than three weeks ago, restricting daily withdrawals to 60 euros ($65) per account holder. Extra ECB liquidity means that Greek banks will still be able to hand out cash.

Greece has relied on bailout loans totaling 240 billion euros since 2010 after it was locked out of international money markets. It nearly crashed out of the eurozone this month, after relations between Athens and its creditors hit rock-bottom, and was only saved by a last-minute U-turn from Tsipras.

Thursday's vote is Tsipras' second crunch test in parliament in a week. The reforms, included in a nearly 1,000-page bill, are among the prerequisites Greece's European creditors have insisted upon in order for negotiations to begin on a third bailout for Greece worth around 85 billion euros ($93 billion).

Many in Tsipras' Syriza party, including former finance minister Yanis Varoufakis, voted against last week's austerity measures, which included a big hike to sales taxes that took effect on Monday. If more than a handful of others join the dissent in Thursday's vote, then Tsipras' government could be in trouble.

Although he would still retain a nominal parliamentary majority — as he has shown no inclination to expel rebels — Tsipras would be politically hamstrung, depending on the support of opposition parties to pass any new reforms.

At least five Syriza lawmakers said Wednesday they would vote against the draft law — including the firebrand parliament speaker, Zoe Konstantopoulou. In a letter to Greece's president and Tsipras, Konstantopoulou asserted the measures were a "violent attack on democracy," arguing that lawmakers had been given very little time to study the voluminous bill.

Tsipras has accused party critics of acting irresponsibly.

"I've seen a lot of reactions and heroic statements, but so far I haven't heard any alternative proposal," Tsipras told party lawmakers on Tuesday, according to a senior government official. The official asked not to be named, citing the sensitivity of the parliamentary vote.

The reforms being considered Thursday are aimed at reducing the country's court backlog and speeding up revenue-related cases. Greek lawyers' associations oppose them, arguing that they will have the opposite effect.

Justice Minister Nikos Paraskevopoulos conceded that the government would have preferred changes, but added that Greece is "in a state of emergency" and the alternative to accepting the proposed reforms would be the country's forced exit from the eurozone.

"Out of two problems, I chose the milder one," he said.

Lawmakers have also been called on to approve reforms related to banking union mechanisms, aimed at reducing the risk for European governments from bank crises.

In Brussels, Pierre Moscovici, the European Union's top economy official, said he hopes the bailout deal can be signed by mid-August, although he acknowledged that means Greece has to meet a "punishing" schedule. Moscovici said he welcomed the latest vote even though it did not include all details hoped for on reducing early retirement and farmers' taxation.

In return for Greece's bailouts, successive governments have had to enact harsh austerity measures to try to get public finances into shape. Though the annual deficit has been reduced dramatically, the country's debt burden has risen as the Greek economy has shrunk by around a quarter.

The European Union's statistics agency announced Wednesday that Greece was making some progress on the debt front at the start of 2015, improvement that was largely erased by the bank closures and other recent events.

Following repayments to European creditors and the International Monetary Fund, Eurostat said Greece's debt fell to 301 billion euros at the end of the first quarter from 317 billion at the end of 2014. That took the country's debt burden down to 168.8 percent from 177.1 percent.

Greece's debt still remains the highest in the 19-country eurozone by a wide margin.
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Derek Gatopoulos in Athens and Raf Casert in Brussels contributed to this report.


-- (c) Associated Press 2015-07-23

[alant]

No where do I see anything that tells me the debt can be repaid. The fall in Greek debt is playing with figures. Show me a plan that gets rid of the 300 billion in debt and I will start to think the pain and suffering may have a point. If not then it is just to save face and that should be a crime in human rights terms.

[fleur3]

No where do I see anything that tells me the debt can be repaid. The fall in Greek debt is playing with figures. Show me a plan that gets rid of the 300 billion in debt and I will start to think the pain and suffering may have a point. If not then it is just to save face and that should be a crime in human rights terms.

which human right ? The right to have a better life, earlier retirement etc than the rest of europe and expect europe going to pay for it ??

I expect that , WHEN Greece does what it should do and promised alrerady many times to do, part of the debt will be forgiven. But not now!!! First showing then earning !

[SheungWan]

No where do I see anything that tells me the debt can be repaid. The fall in Greek debt is playing with figures. Show me a plan that gets rid of the 300 billion in debt and I will start to think the pain and suffering may have a point. If not then it is just to save face and that should be a crime in human rights terms.

which human right ? The right to have a better life, earlier retirement etc than the rest of europe and expect europe going to pay for it ??

I expect that , WHEN Greece does what it should do and promised alrerady many times to do, part of the debt will be forgiven. But not now!!! First showing then earning !

The debt already is and has been in a de facto process of forgiveness by the extension of loan term, effectively reducing interest rates to peppercorn level. As for the above 'show me a plan' whining there is one right there, right on the table; its called default and withdrawal from the Euro. But the Greek government has had its suicidal blackmailing bluff successfully called and they won't do it, at least right now. Well Varoufakis and the other fools say they would but are happy enough for the moment not to have to make the decision and instead sit on the sidelines getting on their mangy high horses. Just like the populist left like to do.

[kotsak]