الأربعاء , مايو 19 2021

Eurozone backs Greek bridging loan

Pensioners argue with a bank employee as they wait for the opening of the national bank of Greece to withdraw a maximum of 120 euros ($134) for the week in central Athens on 16 June

Greek pensioners have been some of the hardest hit by bank closures lasting nearly three weeks

Eurozone ministers have agreed to give Greece a €7bn (£5bn) bridging loan from an EU-wide fund to keep its finances afloat until a bailout is approved.

The loan is expected to be confirmed on Friday by all EU member states.

In another development, the European Central Bank agreed to increase emergency funding to Greece for the first time since it was frozen in June.

The decisions were made after Greek MPs passed tough reforms as part of a eurozone bailout deal.

Greek banks have been closed for almost three weeks.

Read the latest updates

Eurozone leaders agreed on the bailout in principle in Brussels on Monday, on the condition that the Greek parliament passed reforms on taxation increases and pension curbs by Wednesday.

The €7bn bridge loan was agreed in a conference call on Thursday to tap the EU’s EFSM emergency fund.

At a news conference on Thursday, ECB President Mario Draghi said emergency funding – ELA – to Greek banks was being raised by €900m over one week.

“Things have changed now,” he said. “We had a series of news with the approval of the bridge financing package, with the votes, various votes in various parliaments, which have now restored the conditions for a raise in ELA.”

Greek Prime Minister Alexis Tsipras won the parliamentary vote late on Wednesday by 229 votes to 64, but needed the support of opposition MPs to do so.

His left-wing Syriza-led government is expected to survive, despite losing its majority after 38 Syriza MPs rejected the reforms.

Finnish mandate

It paves the way for eurozone finance ministers to open detailed talks on the bailout, worth up to €86bn.

Finland’s parliament on Thursday approved the bailout talks – one of a number of eurozone states which require a mandate from their own parliament for Greece to secure new funds.

Germany’s parliament is due to vote on the deal on Friday.

Analysis: Gavin Lee, Europe reporter, Athens

“Greece is being treated like a modern-day Sisyphus. We’ll be forever rolling the rock of austerity,” one protester told me outside parliament, before the demonstration turned violent.

There were glimpses of Greece at its ugliest on the streets. Petrol bombs were thrown at police lines, a TV satellite truck set alight, and police fired tear gas and stun grenades into the crowd.

It lasted no more than half an hour, but given the level of bitterness here, the fear is that these scenes are more likely in future.

Inside parliament, the political reluctance to pass these measures was clear. MP after MP spoke in a late-night debate, criticising and cursing the deal. But the majority voted to accept the measures, feeling the alternative was too bleak to risk.

The result has come at a price for Mr Tsipras. Reports here suggest a government reshuffle is on the cards in a few hours’ time, with dissenting cabinet ministers to be replaced by those “on message” with their leader’s position.

Passionate opposition came from within Mr Tsipras’s own Syriza party, with parliamentary speaker Zoe Constantopoulou calling the measures “social genocide”.

Speaker Zoe Constantopoulou was among the Syriza MPs who rebelled

Former Finance Minister Yanis Varoufakis was another vocal opponent.

In his address to parliament Mr Tsipras said: “I acknowledge the fiscal measures are harsh, that they won’t benefit the Greek economy, but I’m forced to accept them.”

‘The easy part’

Since capital controls were imposed and the banks shut on 29 June, Greeks have been limited to withdrawing €60 a day.

German Finance Minister Wolfgang Schaeuble, known for his hardline approach, told national radio he would submit a request for parliament to reopen negotiations on the third bailout with “full conviction”.

What happens next?

1. EU member states back eurozone decision on €7bn bridge loan to clear Greece’s immediate debts (expected Friday)

2. German parliament to back negotiations on €86bn eurozone bailout deal (Friday)

3. Greek parliament to pass further reforms (22 July)

4. Lengthy eurozone talks to start on bailout through European Stability Mechanism

But he also said he believed a temporary “Grexit” – Greece leaving the eurozone – would perhaps be a better option.

Meanwhile Slovakia’s Finance Minister Peter Kazimir said in a tweet he welcomed “the positive vote” but said “this is the easier part of the deal”.

By 22 July, Greece must also commit to a major overhaul of the civil justice system. It has to agree to more privatisation, to review collective bargaining and industrial action, and make market reforms, including Sunday trading.

The vote in the early hours of Thursday approved:

  • VAT changes including a top rate of 23% to take in processed food and restaurants; a 13% rate to cover fresh food, energy bills, water and hotel stays; and a 6% rate for medicines and books
  • An increase in corporation tax from 26% to 29% for small companies
  • An increase in luxury taxes on big cars, boats and swimming pools
  • An end to early retirement by 2022, increasing the retirement age to 67

Opponents of the bailout measures took to the streets of Athens in mainly peaceful protests ahead of the vote on Wednesday. However, one group threw petrol bombs at police officers who responded with tear gas.

Unions and trade associations representing civil servants, municipal workers and pharmacy owners also went on strike on Wednesday.

Riot police were deployed to disperse the protesters in Athens on Wednesday evening

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