Dissension in the ranks: Greek government in fresh turmoil over €86bn bailout deal

BY Fraser Tennant

Following the intense negotiations required to secure the €86bn conditional bailout deal with eurozone leaders, Greek prime minister Alexis Tsipiras now needs to do more tough talking – this time with his own coalition partners.

The first to highlight dissension within the ranks of the Greek government was Panos Kammenos, defence minister and leader of the Independent Greeks party, who likened the deal to that of a coup by foreign leaders. The junior coalition partner has made it clear that he will not support the measures included in the bailout deal.

Mr Kammenos said: “The agreement speaks of 50bn euros worth of guarantees concerning public property, of changes to the law including the confiscation of homes. We cannot agree to that."

The new bailout agreement has also to be approved by parliaments in a number of eurozone states.

Further examples of the strength of opposition in Greece to the terms of the deal include demonstrations at the Greek parliament and the announcement of a 24-hour strike by civil service workers.

“The Greek government made a 360 degree shift after six months of tenuous negotiations and accepted another devastating deal for Greece," says Dimitris Rapidis, a political analyst and director of the think-tank, Bridging Europe. “The government and its prime minister, Alexis Tsipras, grew public expectations immensely and irrelevantly, motivating 61 percent of the electorate to vote ‘no’ in the recent referendum.”

The financing deal agreed for Greece over the next three years (the third such bailout) is on condition that Greece passes all agreed reforms – which include tax revenue, liberalising the labour market, and pension and VAT reforms – by Wednesday 15 July.

Should the four pieces of legislation required not be passed by the Greek government, the deal will fail – leaving Greece’s banks facing a possible collapse and opening the door to the country's expulsion from the eurozone.

Adding to Greece’s short-term crisis is the International Monetary Fund’s (IMF) announcement that the beleaguered country had this week missed a debt repayment (€456m) for the second consecutive month.

“The social and electoral consequences for the Syriza party, and especially for Mr Tsipras himself, will be assessed mid-term,” asserts Dimitris Rapidis. “It’s important to point out that this bailout has no chance to succeed and improve the current economic conditions in Greece as there is no concrete growth plan, there is no commitment to address unsustainable debt and, above all, there is no plan to protect the most vulnerable parts of the society.

“On the contrary, by accepting such a program, Greece moves closer to a Grexit or, worse, to a continuous political instability and social unrest. This government had every chance to shift course, demonstrating a solid social appeal so far, even with bigger geopolitical risks for the country, but it finally chose to apply the same catastrophic recipe.”

Potential Grexit or otherwise, finance ministers from all 28 EU countries are convening on Tuesday 14 July to hold a scheduled meeting in Brussels to discuss the mounting debt crisis in Greece.

News: Eurozone Leaders Reach Rescue Deal for Greece, With Tough Conditions

©2001-2019 Financier Worldwide Ltd. All rights reserved.