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Greek Parliament approves tough economic reforms demanded by creditors

Greek Parliament approves tough economic reforms
Despite concerns from the EU ministers about Greece’s ability to implement the proposed demands, Greek MPs have passed sweeping austerity reforms demanded by creditors in return for a third bailout package. Prime Minister Alexis Tsipras embraced the big moment as the vote to ‘go ahead’ with the Eurozone- dictated reforms were passed overwhelmingly in the parliament early Thursday, paving the way for an €86 billion Eurozone bailout deal. It was a virtually painful decision for the Greek Parliament to commend the deal on the table, but it was the only possible option available to avert the ongoing economic crisis and to keep the already crippled nation in the euro. Tsipras said he did not believe in the deal, but nonetheless urged MPs to approve the harsh austerity measures.

The deal was passed quite easily with an overwhelming majority: 229 lawmakers in the 300-seat chamber voted ‘Yes’, 64 voted against it, and six abstained. Half of the No votes came from Mr. Tsipras’s own Syriza party. Former Finance Minister Yanis Varoufakis, Energy Minister Panagiotis Lafazanis and Deputy Labor Minister Dimitris Stratoulis voted against the new package. Yet much of the support came from opposition parties. Prime Minister actually required support from its pro-European opposition parties to push the measure, the harshest set of austerity reforms ever introduced in the country. Instead he suffered rebellion within his own party.

Ahead of the vote, protesters hurled rocks and threw petrol bombs at riot police during an anti-austerity protest outside parliament, and the police responded with tear gas.

Mr. Tsipras has two days to pass the creditors’ proposals as Greece faces an immediate cash crisis. With Greek parliamentary approval secured, the path has been cleared for parliaments in each of the other Eurozone countries. Eurozone finance ministers were due to hold a conference call to review whether the parliamentary approval of the bailout is sufficient to release the payment of a €12 billion loan to prevent it from defaulting on a key payment to the ECB. Greece is facing a deadline on 20th July, with a €3.5 billion payment to the ECB due. The ECB maintained emergency funding to keep Greek banks afloat. The European Commission has formally proposed a €7 billion loan for Greece through the European Financial Stability Mechanism (EFSM), which has been strongly opposed by Britain and other European Union members that do not use the euro.

The terms imposed by international creditors led by Germany include significant pension adjustments, increase in value added taxes, an overhaul of its collective bargaining agreements, tight limits on public spending, and end to early retirement by 2022 and a retirement age increase to 67. In addition, he must agree to set €50 billion of public assets aside in a special offshore account under the supervision of foreign lenders as leverage. The conditions of the bailout are similar to the kind of austerity measures that the Greeks have rejected in the referendum on 5th July. One way or another, it’s a victory for Tsipras as his country stands on the edge of collapsing and the deal has provided him with new ammunition to get the tumbling Greek economy back on its feet.