Greek Leader Faces Dissent at Home Over Rescue Deal

July 14, 2015 Updated: July 14, 2015

ATHENS, Greece— Prime Minister Alexis Tsipras faced open revolt from some of his own ministers as he tried Tuesday to rally support for a financial rescue agreement that includes measures that will cause more economic pain for Greeks.

The government must pass a raft of measures through Parliament by Wednesday night, including consumer tax increases and pension reforms, in order to start negotiations with European creditors on a third bailout worth as much as 85 billion euros ($95 billion).

Tsipras faced a stark choice at a marathon eurozone summit that ended Monday morning: agree to the deal that tramples on practically all of his pre-election promises to repeal austerity, or see his country’s banks collapse and Greece crash out of Europe’s joint currency.

While Greece tries to fulfill the conditions of the deal, European Union finance ministers were trying to find a way to give Greece a quick cash infusion so that it can avoid defaulting on a debt repayment next week.

Tsipras is expected to have the numbers in Parliament to pass the measures, since he will have the support of most opposition parties. But the government’s political survival is in danger if large numbers of its own lawmakers resign their seats or openly vote against the bill.

Energy Minister Panagiotis Lafazanis, one of the hardliners in Tsipras’ radical left Syriza party, denounced the deal and called on the prime minister to cancel it before legislation reaches Parliament.

“The deal … is unacceptable and does not deserve to be charged to a radical political party such as Syriza, and a battling government that promised to abolish … austerity,” Lafazanis said in a statement on his ministry website. Germany, he said, treated Greece “as if it was their colony and (behaved) as brutal blackmailers and ‘financial assassins.'”

Tsipras was meeting with the party’s top leadership Tuesday morning for talks that were expected to last several hours. Finance Minister Euclid Tsakalotos was also attending the meeting to brief on the contents of the deal.

Defense Minister Panos Kammenos, who heads the government’s junior coalition partner, the right-wing Independent Greeks, described the agreement and the pressure Greece was put under at the summit as an attempt to overthrow the government.

“The night before last, there was a coup. A coup in the heart of Europe,” Kammenos told reporters outside Parliament. This was continuing inside Greece, he said. “They want the government to fall and to replace it with one that hasn’t been voted on by the Greek people.”

Kammenos said his party would continue to support the government and Tsipras, but that they would only vote on measures previously agreed to during a meeting of political leaders before the summit. It was unclear what effect this would have if all the measures needed to be passed by Parliament are submitted in a single bill.

Party spokesman Terence Quick said the Independent Greeks’ 13 lawmakers would vote according to their conscience.

The government holds 162 seats in Greece’s 300-member Parliament, and the bill is likely to pass as it enjoys the support of most opposition parties. But about 30 of Syriza’s own lawmakers have publicly voiced objections, raising concerns over the government’s stability.

Greece’s civil servants union called a public sector strike for Wednesday, the day the bill is expected to be voted on.

Since his election in January, Tsipras has faced intense pressure to backpedal on his promises to Greece’s exhausted electorate, who have faced five years of harsh austerity measures that have left the economy reduced by a quarter and unemployment skyrocket.

But with the economy on its knees, he had little choice. If Greece’s third bailout in five years goes ahead, it will provide about 85 billion euros in loans and financial support, preserving its membership in the euro, shoring up its banks and allowing some stability to return to the battered Greek economy.

Greece has other financing needs beyond its banks. On July 20, it has to repay 4.2 billion euros ($4.6 billion) to the ECB. It is also in arrears on 2 billion euros to the International Monetary Fund, after it missed a 456 million euro payment due Monday, on top of a roughly 1.5 billion euro payment it failed to make June 30.

As bailout talks are likely to take around four weeks, EU finance ministers were discussing how to provide bridge financing for the country.

Jeroen Dijsellbloem, the eurozone’s top official, said finding a solution wouldn’t be easy as all possible instruments and funds have “disadvantages or impossibilities or legal objections.”

Finland’s Alexander Stubb, who’s been one of the most outspoken critics of Greece, said that while it some eurozone countries would find it difficult to provide cash without conditions attached, a solution would likely be found.

“Never underestimate the capacity of European lawyers and economists to come up with a solution,” Stubb said in Brussels.

He said one option would be for Greece to get bilateral loans, or suggested it would be possible for the IMF and the ECB to delay the payments.

“But that’s not for us to decide,” he said. “That’s for the institutions themselves.”

The Greek economy has been pushed to the brink of collapse — banks have been shut for more than two weeks, with cash withdrawals restricted to 60 euros ($67) per day.

When the Greek banks eventually reopen, they will most likely have to depend on more emergency credit from the ECB.

The ECB is not expected to sanction further help to the banks until the Greek parliament passes the first set of creditor demands Wednesday. Even then, limits on money withdrawals and transfers are expected to last for months to come.


Pan Pylas in Brussels contributed to this report.