Prime Minister Alexis Tsipras is evoking a siege mentality as he gets ready to negotiate a third Greek bailout before the end of August after lawmakers voted through another round of creditors’ demands.
The parliament in Athens voted 230 to 63 for a bill that will simplify court decisions and transpose European rules on failing banks. Thirty-six lawmakers from the governing party, Syriza, deserted Tsipras in the ballot that concluded at about 4 a.m. on Thursday. That compared with 39 rebels when the first package was approved last week.
Echoing the rhetoric of the predecessors he once accused of betraying their country, Tsipras said he’ll implement the program even though he thinks the policies being imposed are wrong. He insisted he’ll do everything he can to improve the final deal.
The prime minister is trying to hold together his ad hoc majority as he advances toward the 86 billion-euro ($93 billion) bailout program the country needs to stave off financial collapse.
“Conservative forces within Europe still insist on their plans to kick Greece out of the euro,” Tsipras told legislators in the early hours of Thursday. “We chose a compromise that forces us to implement a program we don’t believe in and we will implement it, because the choices we have are tough.”
The euro gained 0.12 percent to $1.0942 at 10:11 a.m. in Athens as the Euro Stoxx 50 Index climbed 0.35 percent to 3,648. The yield on Greece’s benchmark 10-year bond rose about 4 basis points to 11.7 percent. That’s down from a closing high this year of 13.6 percent in April.
The government has said this bill was the last set of prior actions required by euro-area member states before negotiations on a third bailout can begin.
“Whatever is being voted in parliament today has been agreed with creditor institutions,” Finance Minister Euclid Tsakalotos told lawmakers before the ballot.
The currency bloc asked Greece to streamline sales-tax rates, shore up the pension system, overhaul the civil justice system and transpose EU rules on bank resolution into national law in two bills -- by July 22. Tsakalotos said creditors told Greece to hold off on pension reforms and that the sales-tax changes had already been covered.
“These conservative forces undoubtedly scored a Pyrrhic victory over the Greek government, the Greek people and Greece,” Tsipras said.
Officials from the troika of official creditors are due to arrive in Athens as early as this week to begin detailed negotiations over the three-year aid program. Greece is aiming to wrap up the talks before Aug. 20 so that it can access funds to cover a payment to the European Central Bank.
Abandoned by party hardliners led by former Energy Minister Panagiotis Lafazanis and parliament’s speaker, Zoi Konstantopoulou, Tsipras is reliant on his political opponents to deliver the measures that creditors have demanded.
“The government coalition has lost its majority in the parliament and is significantly weakened,” Nicholas Economides, a professor at New York University’s Stern School of Business, said. “A national salvation government of the pro-European parties and Syriza would significantly increase the power of the government in the negotiations with the creditors as well as its ability to implement the relevant laws.”
The new banking rules will, in theory, shield taxpayers from the cost of bank failures and stipulate that unsecured depositors -- those with more than 100,000 euros with an individual bank -- will face losses before the public purse. Shareholders, senior and junior creditors will be in line to take a hit before depositors.
However, the law won’t come into effect until the start of 2016 and Tsakalotos told lawmakers that banks will already have been recapitalized by then. Greek lenders are in line for as much as 25 billion euros of new capital under the outline terms of the new bailout program.
Read this next:
- Greece Approves EU Demands in Order to Keep the Euro
- ECB Said to Raise Greek Emergency Bank Aid Before Bailout