NEWS

PM Alexis Tsipras faces fierce dissent on bailout deal

TAGS: Politics

With members of his own party openly denouncing a preliminary rescue deal struck with Greece's European creditors, Prime Minister Alexis Tsipras must fight to cling to his government's majority after he was forced to shred election promises and introduce punishing austerity measures in exchange for the bailout.

Tsipras, who flew home Monday from grueling night-long negotiations with European leaders, will chair an executive meeting of his SYRIZA party early Tuesday before lawmakers begin a two-day debate on the deal — set to heap more tax hikes and spending cuts on a country already suffering through six years of recession.

The deal ensures that Greece avoids an imminent financial catastrophe and an exit from the Eurozone. But Panos Kammenos, leader of the junior partner in Tsipras' coalition government, called the bailout plan a German-led "coup."

"This deal introduced many new issues ... we cannot agree with it," Kammenos said after meeting with Tsipras.

Other Greeks rallied Monday night outside Parliament in Athens, urging lawmakers to reject the new demands.

Around 30 out of SYRIZA's 149 lawmakers are likely to vote against the government. Many held private meetings late Monday.

Tsipras had to consent to a raft of austerity measures, including sales tax hikes and pension and labor reforms — measures he had campaigned vociferously against over the last five years of Greece's financial crisis.

"We managed to avoid the most extreme measures," Tsipras said.

But in many cases, ordinary Greeks now face tougher measures than those they voted down in a nationwide referendum a little over a week ago.

SYRIZAs Left Platform, a group of traditionalists in Tsipras's own party, swiftly denounced the agreement as the "worst deal possible ... (one) that maintains the country's status: a debt colony under a German-run European Union."

Experts were divided over the result.

"It was the best deal the Greeks could get," says Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics. "They did not do too badly given the terrible, terrible, disastrous starting point the current government put them in."

But Ashoka Mody, visiting professor of international finance at Princeton University, says the deal just repeats policies that have already failed.

"The economics of this program have been set up for failure," he told The Associated Press. "In three years, if this program is implemented, the Greek economy will be 10 percent smaller than it was and the debt burden will be higher."

If Greece meets all of the requirements spelled out in Monday's agreement, the country will get a three-year rescue program and the commitment to restructure its debt, which is unsustainably high at around $352 billion, or around 180 per cent of its annual GDP.

Since 2010, Greece has received two bailouts totaling $268 billion in return for deep spending cuts, tax increases and reforms agreed to by successive Greek governments. Although the country's budget deficit has fallen sharply, its public debt burden has increased as the Greek economy has shrunk by a quarter.

[AP]

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