Greek lawmakers passed a bailout agreement that keeps the country in the euro for now, shifting attention to the European Central Bank as it weighs whether to pump more money into the country’s hobbled financial system.
With voting ongoing in the early hours of Thursday, a majority of members of the 300-seat parliament in Athens approved new austerity measures that are a precondition of as much as 86 billion euros ($94 billion) in aid. Members of Prime Minister Alexis Tsipras’s Coalition of the Radical Left, or Syriza, were among those who opposed the bill, a sign the premier is at risk of losing his majority.
The vote puts the onus on the ECB and other euro-region governments to put in place more emergency funds that will help Greek banks gradually re-open and repair the country’s battered coffers. The ECB’s Governing Council meets in Frankfurt later on Thursday and Germany’s parliament will reconvene to vote Friday on whether to start bailout negotiations that will help Greece cover its debts and pay pensions and salaries.
Accepting the agreement with creditors “was a decision which will be a burden for me for the rest of my life,” Finance Minister Euclid Tsakalotos told lawmakers at the start of the debate. “I don’t know if we did the right thing. But I know we did something to which there was no alternative.”
Finding a way to open banks and allow normal commerce to resume will be the Greek government’s first priority. The ECB plans to make a decision Thursday on whether to increase the level of so-called emergency liquidity assistance it provides to Greek lenders.
Greece also needs to secure bridge financing to cover immediate needs, which include making a 3.5 billion-euro payment to the ECB that’s due on July 20. The European Union has proposed a facility worth 7 billion euros to tide the country over until implementation of the full bailout begins. Euro-area finance ministers are due to hold a call on Greece on Thursday morning.
U.S. stocks ended their longest rally since January as the debate was held, with the Standard & Poor’s 500 Index slipping 0.1 percent. The euro was little changed.
Europe’s most indebted country came closer than ever to being forced out of the euro this month after Tsipras stunned euro-area leaders by calling a snap referendum on spending cuts and tax rises demanded by creditors. Despite a clear majority of Greeks voting “no,” he was forced to capitulate to an even more onerous package that political chiefs said was the only way for Greece to remain in the euro.
Yanis Varoufakis, the former finance minister who clashed with Wolfgang Schaeuble of Germany, was among the members of Syriza’s parliamentary caucus who refused to support the deal. The level of opposition suggests Tsipras may now be forced to rule with a minority government, relying on opposition lawmakers to pass legislation.
“A minority administration will prove unsustainable, making a national unity government likely,” Eurasia Group analyst Mujtaba Rahman said in a note to clients. Such a government, comprising all the major parties, “may prove to be the only way possible” to secure bailout funds, Rahman said.
As debate began on the bailout bill, police fired tear gas outside parliament to disperse anti-austerity protesters, highlighting the challenges Tsipras faces selling further spending cuts to a country already deep in recession. About 13,000 people gathered to protest in central Athens, police spokesman Takis Papapetropoulos said, though by about 9:45 p.m. many had been dispersed by riot officers.
Tsipras, who was elected in January pledging to end austerity and forge a new deal with creditors, didn’t speak in support of the bailout bill in parliament. In a Tuesday television interview, he said he’d agreed to the deal “with a knife at my neck.”
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