Greece’s Parliament Approves New Austerity Bill Despite Dissent
Anti-Austerity protestors spent much of the afternoon today in clashes with police around Parliament, as Greece voted on the latest bailout package. The nearly $100 billion EUR received by the country today marks the end of debt payments required for the next three years. However, as this vote was coming to the floor, dissent mounted among both the opposition parties and within Prime Minister Tsipras’ own ranks. Many see the bailout package as a raw deal for Greece, without a write down of some of their debt (slated to increase to nearly 200% of their GDP after this package). Many outsiders believe that Tsipras bet that the Eurozone would compromise before losing it as a member, and as it turns out, Germany was ready to move them off the Euro currency without any willingness to budge on their full debt repayment requirements.
All of this effort was for naught, as a very similar package to what was originally planned wound up passing overwhelmingly with a 229-64. This vote will allow Athens to keep a financial lifeline in tact, but at a very significant cost. They will need to raise taxes, cut tax evasion, decrease pensions, decrease significant social spending and sell nearly all State assets. Many political strategists did not see such hard terms being accepted at all just a few short weeks ago.
The measure was ultimately approved, even after a minimum of 10 protests occurred near Parliament throughout the afternoon, and large strikes crippled the city’s services. At least 15,000 demonstrators assembled in Syntagma Square this afternoon. Many of them did not ultimately clash with police, but a sizable minority caused serious disruption outside of Parliament.
Calling Tsipras’ Bluff?
With the previous referendum and ‘Oxi’ vote last week, it was clear that PM Tsipras wanted better terms, ones that included a renegotiation of the terms of their debt. These were soundly rejected, namely by Germany, who seemed to be unwilling to accept any renegotiation of the terms of the loans, or write downs of any fractional portion of the debt. Ultimately, the bill was passed much as it was originally written, just with more funds becoming available.
Tsipras spent much of the day and the day prior convincing the public that this bailout agreement was the best choice. However, defections even among his own party were significant prior to the vote being cast. Tspiras told parliament that they had to either accept the agreement, which he largely did not agree with, or have a default. There seemed to have been no wiggle room in the negotiations in the end. The Greek people accepting the bailout remains to be seen, as even with the most healthy projections for economic growth, Greece’s debt to GDP ratio will still be over 100% by 2030. This means this could be a very difficult decade for Greece as these loans result in severely reduced spending.
The IMF broke ranks with the European leaders by calling for debt relief on Tuesday, similar to Greece’s request. However, European leaders, spearheaded by Germany, ruled this out completely. The IMF does not believe Greece has the capacity to pay off its debt burden under any scenario as it stands. The European Commission continues to rule out debt relief as a possibility, until (or unless) Greece runs out of money again. Then this process will start all over again.