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Greek Parliament Approves Tough Reforms Needed To Get Bailout

  • RFE/RL

Greek Prime Minister Alexis Tsipras (right) sits next to Finance Minister Euclid Tsakalotos as he attends a parliamentary session in Athens on July 16.

Greek Prime Minister Alexis Tsipras (right) sits next to Finance Minister Euclid Tsakalotos as he attends a parliamentary session in Athens on July 16.

Greece's parliament approved tough economic reform measures demanded by European leaders in return for a new bailout, overcoming significant dissent within the governing leftist Syriza party.

The bill to impose sweeping sales tax hikes and reforms in pensions and other programs passed in the early hours of July 16 by 229-to-64, relying in part on the support of three pro-European opposition parties.

Several prominent members of Prime Minister Alexis Tsipras' ruling party voted against it, including Energy Minister Panagiotis Lafazanis and former Finance Minister Yanis Varoufakis.

Tsipras said the nation had no choice but to accept tough terms from creditors.

"We had a very specific choice: A deal we largely disagreed with, or a chaotic default," he said as he received a standing ovation from his party.

The unpopular reforms were needed to clear the way for Greece to start negotiations with European lenders over getting a new bailout package worth at least 85 billion euros.

Eurozone finance ministers planned to hold a conference call on July 16 to discuss the vote's outcome. Even with approval by the Greek parliament, they cannot formally begin negotiating a new bailout until the parliaments of several other member states give them a green light.

Germany's Bundestag is set to vote on the plan on July 17, and tough talks to finalize the bailout, which could take much of the summer, would only begin after that.

If a deal is reached, European officials said eurozone governments would contribute between 40 and 50 billion euros, the International Monetary Fund would contribute another chunk, and the rest would come from selling off Greek state assets and from financial markets.

WATCH: Greek Anti-Austerity Protesters Clash With Police

Before the vote, clashes broke out at an antiausterity rally outside the Greek parliament.

A group of 200 youths threw Molotov cocktails and rocks at police, who responded with pepper spray and tear gas.

Police say dozens of protesters were detained during the hourlong clashes, the worst violence since Tsipras's left-wing government came to power six months ago.

More than 10,000 people staged a peaceful rally in the center of Athens to protest against the austerity bill.

The clashes died down as the debate began in the parliament, though a few hundred protesters remained in central Syntagma Square surrounded by a heavy police presence.

The outbreak of violence came as Tsipras faced a growing wave of hostility from members of his own party.

Leaders from the eurozone on July 13 pressured Tsipras into accepting public spending cuts that were even tougher than those rejected by Greek voters in a July 5 referendum.

But the raft of consumer-tax increases and pension reforms along with free-market reforms contradict the core policies of Tsipras’s left-wing Syriza party.

It did not appear immediately after the vote that enough Syriza lawmakers voted against the austerity package to threaten the survival of Tsipras' government.

Finance Ministry Secretary-General Manos Manousakis was among several who stepped down on July 15, announcing the decision by tweeting a copy of his resignation letter.

In all, 38 lawmakers from Syriza voted against the package. Lafazanis, one of those who voted against, offered to resign afterwards, suggesting that an internal party revolt had been quashed by the overwhelming vote in favor of the deal.

Without the bailout loans, Greece is likely to default on its foreign debts and be forced out of the eurozone.

IMF chief Christine Lagarde told CNN on July 15 that EU creditors were moving closer to the idea of restructuring Greece’s massive debt.

"I have some hope, because as late as a couple of hours ago, I understand that there were some more positive noises towards that principle of debt restructuring," Lagarde said.

Her comments come after an IMF study was leaked warning the bailout package doesn't offer enough to ensure Greece's solvency in the long term.

The IMF study said that Greece's financial muddle has worsened considerably and European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension.

Otherwise, the study warns, eurozone countries must make annual transfers to the Greek budget or accept "deep upfront haircuts" on existing loans.

"Greece's debt can now only be made sustainable through debt-relief measures that go far beyond what Europe has been willing to consider so far," the IMF said.

Greece missed its second debt payment to the IMF in two weeks on July 13.

With reporting by Reuters, AP, AFP, and Bloomberg