Greece’s Prime Minister Alexis Tsipras clinched the backing of Greek lawmakers for his bailout proposal, a prelude to a weekend of political wrangling in Brussels that may determine his nation’s place in the euro.
Tsipras won overwhelming support for the package of spending cuts, pension savings and tax increases with a majority of 251 votes in the 300-seat parliament early on Saturday. The country’s three creditor institutions also assessed the program positively as a basis for a 74 billion-euro ($83 billion) bailout, according to a euro area official who spoke on condition of anonymity.
While Tsipras can now vaunt Parliament’s support as a show of domestic resolve to his European counterparts, some of them may need more convincing on the plan itself. When the region’s finance ministers meet later in the day, it’s likely Germany will oppose it, two euro-zone officials said on Friday.
“Our concern has always been the hardening position of Germany and Netherlands in the negotiations,” Michael Michaelides, an analyst at Royal Bank of Scotland Group Plc, wrote in a note to clients on Friday after Tsipras had presented the proposal to creditors. “A deal, whilst now more likely, is not quite nailed.”
Prospects for an agreement that could end almost half a year of confrontation between creditors and Greece’s anti-austerity Syriza-led government prompted the euro and stocks to surge on Friday. While the vote win keeps alive such hopes and provides evidence that the government commands broad support to negotiate a deal, it came at a cost for Tsipras.
Seventeen members of his ruling coalition didn’t back the plan, including Syriza heavyweights Parliament speaker Zoi Konstantopoulou and harldine leftist Energy Minister Panagiotis Lafazanis. The vote result could weaken his grip on power and complicate implementation of any potential bailout agreement.
“From Germany’s vantage point, it is unclear how Tsipras can implement a package that is even more onerous than the one a majority of his population voted against last Sunday,” Eurasia Group analysts including Mujtaba Rahman wrote in a note to clients.
Lawmakers began discussing the bailout proposal at about 11:53 p.m. in Athens and spoke through the early hours of Saturday. In an introductory speech, Finance Minister Euclid Tsakalotos declared Greece is now in a better position than before the July 5 referendum where voters followed government advice and rejected terms of a previous bailout proposal.
“Greek people didn’t give a mandate for rupture,” Tsipras told lawmakers. “They gave a mandate to strengthen the government’s negotiating power for an economically sustainable deal.”
The European Commission, the International Monetary Fund and the European Central Bank assessed the bailout to require 58 billion euros from the European Stability Mechanism -- the euro area’s rescue fund -- and the remaining 16 billion euros from the IMF, one of the officials said. AFP reported the evaluation earlier.
Across Europe, the response to the bailout plan has been mixed. French President Francois Hollande said in a rare Twitter post that its reform proposals were “serious, credible” and demonstrated Greece’s determination to stay in the euro area.
The package almost mirrored that from creditors on June 26 -- which was rejected by Greek voters in a July 5 referendum. Chancellor Angela Merkel’s government said that discussions for that plan only covered a five-month extension whereas the new program request is for three years, so would have to include tougher conditions than addressed at the end of June.
Euro-zone finance ministers will discuss the assessment of the three creditor institutions on Saturday, before leaders are due to meet the next day. An agreement is “possible” but not certain, Tsipras told lawmakers as the debate began.
Though he ceded ground with his bailout proposal, Tsipras insists long-term debt needs to be made more manageable to allow Greece to recover from a crisis that has erased a quarter of its economy. He has a growing support base that includes the U.S., European Union President Donald Tusk and the IMF.