Clearing EU Hurdles, Greek Austerity Package Moves Forward

Germany approves bailout talks, EU approves bridging loan, and wildfires rage in Athens

Germany approved talks for a bailout on Thursday, but Greece's debt crisis is far from over. (Photo: Theophilos Papadopoulos/flickr/cc)

The German Parliament on Friday voted yes on entering a new round of negotiations for a Greek bailout, and the European Union formally approved a bridging loan--two steps that move the controversial EUR86 billion rescue package for debt-ridden Greece forward past a significant hurdle.

Parliament, or Bundestang, voted 439-119, with 40 lawmakers abstaining, in favor of beginning talks on a third bailout which, as Common Dreams reported on Thursday, "comes at a high political and social cost" through severe austerity measures--but which Greek Prime Minister Alexis Tsipras said he was "forced to accept."

The BBC reports:

Prior to the vote, Chancellor Angela Merkel warned of "predictable chaos" if the Bundestag did not back the plan.

The Greek parliament has already voted in favour of the hard-hitting austerity measures required by the eurozone for a third bailout deal.

Among those measures are tax hikes, pension cuts, and privatization of public property. The measures are harsher than those rejected just this month by more than 60 percent of Greek voters in an emergency referendum on July 5. Former finance minister Yanis Varoufakis called them Greece's "terms of surrender."

The Greek Parliament approved the deal on Thursday despite pushbacks from Syriza lawmakers and mass protests throughout the country--which grew dramatic overnight with a police crackdown as some unexpected wildfires in Peloponnese, Athens and Evia.

With tempers running high in the streets on Friday, members of German Parliament cast their ballots on Greece's financial future following a tenacious--if rambling--speech by finance minister Wolfgang Schauble. Both he and Merkel said the deal was a "last attempt" to help Greece, which has taken two previous bailouts in the past five years.

Schauble has been one of the most vocal opponents of providing debt relief to Greece.

But according to Christine Lagarde, chief of the International Monetary Fund (IMF), one of the creditors setting the terms for Greece's poorly-received bailout package, the country must be given "significant debt relief to make its borrowings sustainable."

A bridging loan was also approved on Friday, which grants EUR7 billion to Greek banks from a European Union-wide fund. That loan, which is scheduled to arrive Monday, will help Greece relieve some of its most pressing debts, including a EUR3.5bn due to the European Central Bank (ECB) and EUR1.5bn to the IMF. The IMF has said it will not participate in any new bailout for Greece without that debt being paid.

Germany is not the only country voting on the bailout on Friday. Austria approved it earlier in the day, and next in line are Latvia and Estonia. The Guardian is providing live updates here.

According to Reuters:

The chairman of euro zone finance ministers Jeroen Dijsselbloem expects negotiations on the third bailout for Greece to take four weeks.

EU officials hope the bailout deal will be in place by mid-August when Greece needs to make further payments to the ECB to redeem its maturing debt, because the bridge financing organised so far is only 7.16 billion euros -- enough to see Athens through July, but not through August. ($1 = 0.9218 euros)

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