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When you’re in a pit filled with crocodiles, there’s no purchase in debating how you fell in. The only priority is to get out. Despite a drama of Hollywood proportions including a young Prime Minister bewailing on national television how the EU held a “knife to my neck”, the Greeks have complied. Last night the nation’s Parliament voted to approve the deal which will unlock Eurozone funds needed to begin the road back to economic health, a process which promises to be long and painful. Despite having created their own misery through decades of delusion, Greek politicians are blaming creditors for their woes. Any agreement based on resentment is dangerous. Right now Greece has no option but to comply to get out of the crocodile pit. But their track record suggests the EU should beware once Greece is safe. As Mark Twain warned: “If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and man.” – Alec Hogg
By Eleni Chrepa, Nikos Chrysoloras and Matthew Campbell
(Bloomberg) – 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.
After more than four hours of debate stretching into the early hours of Thursday, 229 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. Among those who opposed the bill were 32 members of Prime Minister Alexis Tsipras’s Coalition of the Radical Left, or Syriza, a sign the premier may have lost 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.
— Iwan Swiegers (@iswiegers) July 16, 2015
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. Varoufakis Opposes
Yanis Varoufakis, the former finance minister who clashed repeatedly with Wolfgang Schaeuble of Germany, was among 38 members of Syriza’s 149-member parliamentary caucus who either voted “no” or abstained. The result of today’s vote “constitutes a serious division of Syriza,” Greek government spokesman Gabriel Sakellaridis said in a statement. Tspiras’s priority now is to conclude an agreement with Greece’s creditors, he said. 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, although by about 9:45 p.m. most had been dispersed by riot officers.
— The Economist (@EconBizFin) July 16, 2015
Tsipras, who was elected in January pledging to end austerity and forge a new deal with creditors, didn’t rise to speak in support of the bailout bill in parliament until the early hours of Thursday morning.
“I had a choice of a deal I did not agree with, or a disorderly default, or Schaeuble’s choice of a euro exit,” Tsipras said. “I’m the last person to beautify an agreement with which I disagree in many of its points.”
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