• Greek coalition's majority reduced to 3 after 2 MPs defect
  • Bailout measures bill approved as bank recapitalization looms

Greek Prime Minister Alexis Tsipras’s already slim parliamentary majority was further eroded after two lawmakers in his coalition refused to support a vote on austerity, raising alarm for the government’s ability to see through measures attached to the bailout.

The 300-seat chamber voted 153-137 to ease restrictions on foreclosures and impose new taxes, including a levy on wine. Tsipras’s majority is now down to three lawmakers after two members of parliament -- one from the governing Syriza party and one from Independent Greeks, the junior coalition partner -- wouldn’t back the bill.

The mini-mutiny does not bode well for Tsipras’s political longevity just two months after winning a snap election. It also adds pressure on his government to muster enough votes and push through additional belt-tightening measures and cost-cutting overhauls in the country’s pension system that were a condition for financial assistance.

Syriza expelled Stathis Panagoulis from the party’s parliamentary caucus after he abstained from the vote. Nikos Nikolopoulos, elected with the ticket of Independent Greeks, voted against the bill and refused to give up his seat. Party leader Panos Kammenos booted him from the parliamentary group late on Thursday.

Ally Lost

In a further blow, the 41-year-old leader lost one of his closest allies. Lawmaker and former spokesman in Tsipras’s first government, Gavriil Sakellaridis, resigned from parliament ahead of the vote, citing his inability to participate in the implementation of the government’s policy. His defection didn’t have an impact on the government’s majority, as he gave up the seat in his constituency in favor of the next in votes Syriza candidate.

Tsipras was catapulted to power this year on a promise to end austerity, only to capitulate to creditors’ demands after the freezing of aid from the euro area brought the country’s financial system to the brink of collapse and forced the former firebrand opponent of bailouts to impose capital controls. 

Economic Overhaul

The approval of the latest round of economic overhauls was among the conditions set by euro area member-states for the disbursement of as much as 10 billion euros ($10.7 billion) in emergency loans, which will be used to backstop the recapitalization of the nation’s battered banks. Another 2 billion euros is scheduled to be disbursed for budget financing.

Greek lenders cleared the hurdle of a pan-European review in 2014 thanks to capital increases of more than 8 billion euros and restructuring plans approved by the European Commission. Then their solvency was put to the test when Tsipras rejected the terms attached to the country’s bailout lifeline.

The country’s four largest banks are now selling stock to fill part of a 14.4 billion-euro hole in their accounts identified by the European Central Bank. The state-owned Hellenic Financial Stability Fund will contribute the rest, with loans from Greece’s latest bailout.

Finance ministry officials from the euro area are scheduled to assess on Friday whether the bill approved by Greek lawmakers fulfills the conditions for the disbursement of bailout funds. 

The government was forced to amend some of the conditions negotiated with representatives of the ECB, the EU Commission and the International Monetary Fund earlier this week, after a backlash from its own lawmakers. An excise tax of 40 euro-cents per liter of wine was cut by half, to contain defections within the governing coalition. Opposition parties also voted against most articles in the bill.

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