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Greek parliament backs new debt reform plan

Greece's parliament on Saturday approved a reform package to save the country from financial collapse, as sources in Brussels said Athens's latest plan could form the basis of a massive new bailout worth 74 billion euros (S$111.5 billion).

[ATHENS] Greece's parliament on Saturday approved a reform package to save the country from financial collapse, as sources in Brussels said Athens's latest plan could form the basis of a massive new bailout worth 74 billion euros (S$111.5 billion).

The package was backed by 251 lawmakers, out of 300 deputies, according to an AFP tally, giving Greek Prime Minister Alexis Tsipras a mandate to continue last-ditch talks with the country's creditors ahead of an European Union summit on Sunday.

The vote came after Mr Tsipras urged parliament to approve a package of reforms including a pension overhaul, tax hikes and privatisations similar to those offered by creditors last month, to keep the nation "alive" and in the EU.

The measures, submitted in Brussels Thursday, sparked criticism from hardline members of his radical left ruling party Syriza, around 10 of whom abstained from or voted against them. Opposition parties, however, helped push them through.

Three senior government figures were among those who chose not to vote, while several others from the ruling party including former finance minister Yanis Varoufakis stayed away, showing the weight of division over the plans.

"It is a choice of high national responsibility, we have a national duty to keep our people alive... we will succeed not only to stay in Europe but to live as equal peers with dignity and pride," Mr Tsipras said ahead of the vote.

Parliament's backing came hours after an EU source in Brussels said the country's latest debt proposals were "positive" enough to form the basis of a massive new bailout worth 74 billion euros.

Greece on Thursday submitted plans designed to woo fresh cash from its international creditors that concede several key points that Tsipras's ruling coalition - and Greek voters - had previously fiercely opposed.

They included a request for a three-year funding plan including debt relief and a separate 35-billion-euro investment package.

But while the concessions have brought relief from many quarters it has also been met with scepticism, with Germany leading a bloc of eurozone nations who fear Greece could turn into a black hole for any new loans.


In Brussels, an EU source who asked not to be named said "there has been positive evaluation of the Greek programme".

The EU's bailout fund, the European Stability Mechanism, was ready to consider putting up 58 billion euros, plus 16 billion euros from the International Monetary Fund, for what would be a third debt rescue, the source said.

This would now go to the Eurogroup of 19 eurozone finance ministers who meet Saturday, but it stood only a "50-50" chance of approval due to opposition by hardliners such as Germany who oppose any debt relief for Athens.

The Greek proposals fail to meet international demands on some thorny issues, including tax breaks for Greece's islands and cuts to military spending.

Speaking ahead of an EU summit called Sunday for a final decision, Mr Tsipras admitted mistakes had been made but insisted the new proposals were the best possible deal for Greece.

"The loan deal... entails many proposals that are far from our pledges, from what we feel is right for the recovery of the economy," the prime minister said.

Still, he said it was "marginally better" than proposals put forward by the creditors last month that did not offer relief from Greece's suffocating 320-billion-euro mountain of debt.

Sunday's EU summit comes a week after Greeks decisively rejected creditor demands for more austerity in return for fresh EU-IMF bailout funds in a historic public referendum.

Greek Finance Minister Euclid Tsakalotos, named to the job this week, said the government also wanted parliament's approval "to strengthen the country's bargaining position, to achieve better terms in the agreement".

But Greek commentators said Saturday the result of the vote, including the high level abstentions, could force a shake-up in the government and even a cabinet reshuffle.


Earlier, France and Italy welcomed the new proposals, with French President Francois Hollande calling them "serious and credible" while cautioning that "nothing is decided yet".

Italian Prime Minister Matteo Renzi declared himself "more optimistic" that a deal would be done.

But Germany said the outcome of this weekend's crisis talks was "completely open".

Berlin leads a bloc of hardline eurozone nations saying that, after two bailouts over the past five years totalling 240 billion euros, and 107 billion euros in debt forgiveness in 2012, Greece is looking like a bottomless money pit.

The possibility of a breakthrough sent stock markets soaring in Europe, Asia and the US on Friday, while the euro briefly rose above US$1.12 for the first time in July.

Although Greek voters last Sunday roundly voted "No" to accepting tough austerity terms for a bailout that expired June 30, they are alarmed at capital controls that have closed banks and rationed cash at ATMs.

Some 8,000 people gathered in Athens ahead of the parliamentary vote to protest against more austerity, police said, although most overwhelmingly want to keep the euro.

"The government has to find a deal with its European partners no matter what. We didn't vote 'No' to leave the eurozone," said a pensioner in Athens, Nikos Eftekidis.

But another pensioner, Mr Giorgos, said the "government's proposed measures are very tough, I wasn't expecting that".


Read more on the Greek crisis here