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Greece debt crisis: MPs debate tough new laws Greece debt crisis: Tsipras facing eurozone deal revolt
(about 2 hours later)
Greece's MPs are debating tough economic measures they must approve by the end of the day in order for a eurozone bailout deal to go ahead. Greek MPs are debating tough economic measures they must approve by the end of the day in order for an €86bn eurozone bailout deal to go ahead.
The possible €86bn bailout was agreed on Monday, though one of Greece's creditors, the International Monetary Fund, says it does not go far enough. The new legislation includes tax rises and an increase in the retirement age.
The deal requires Greece to increase taxes and raise the retirement age. PM Alexis Tsipras has said he does not believe in the deal, but has urged MPs to agree to the measures.
Greek PM Alexis Tspiras said he does not believe in the deal, though he agreed to it. The vote is expected to pass with opposition help, despite a revolt from some hardliners in the ruling left-wing Syriza party.
In a TV address on Tuesday, Mr Tspiras called the proposals "irrational" but said he was willing to implement them to "avoid disaster for the country" and the collapse of the banks. Pro-European opposition parties have pledged to vote for the measures.
Hardliners in the ruling left-wing Syriza party are likely to vote against, and the junior coalition party has offered only limited support.
Opponents of the deal took to the streets of Athens ahead of the vote, and unions and trade associations representing civil servants, municipal workers and pharmacy owners held strike action.
More than half of the members of Syriza's central committee have signed a statement condemning the bailout agreement, describing it as a coup against their nation by European leaders.
Follow the latest updates hereFollow the latest updates here
In order to receive €86bn (£61bn; $95bn) from the EU over three years, Greek MPs on Wednesday need to approve: The possible bailout was agreed in Brussels on Monday by eurozone members, though one of Greece's creditors, the International Monetary Fund (IMF), has suggested in a report that it does not go far enough - and that Greece will need some of its debts to be written off.
The IMF report was written before the eurozone reached a deal with Greece in the early hours of Monday. Greece's economy has shrunk by 25% in the last five years amid austerity measures designed to curtail its ballooning public sector debt.
It was shared with eurozone leaders in advance, but made public only on Tuesday. In order to receive a third bailout worth €86bn (£61bn; $95bn) over three years, Greek MPs need to approve measures including:
It predicts that, in two years' time, Greek debt will reach close to 200% of GDP (national income) which could "only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far". Monday's announcement of a possible deal was met with anger among many in Greece, who called it a "humiliation".
It recommends a "very dramatic extension" on the maturity of Greece's debts, "with grace periods of, say, 30 years on the entire stock of European debt".
"Other options," it says, "include explicit annual transfers to the Greek budget or deep upfront haircuts (debt write-offs)".
Politics beats economics - by Chris Morris, BBC News, Brussels
The IMF report highlights a massive flaw in the deal hammered out so painfully between Greece and the rest of the eurozone: the numbers don't add up.
It believes that without a restructuring of the Greek debt, it will keep on rising.
But the point about this deal is once again in the eurozone, it was a case of politics trumping economics.
The desire to keep the eurozone together was stronger (for now) than the economic forces threatening to pull it apart.
There was plenty of talk about debt restructuring during the negotiating process, but not on the scale that the IMF is suggesting.
Officially, there will be a discussion of restructuring only after a first review of the new bailout is successfully concluded.
That is several months down the line.
But, while the IMF report doesn't comment directly on Monday's deal (because the report had already been written by then), it certainly implies that the IMF may feel it is unable to take part in the new bailout programme for Greece.
And that would leave a large hole - both in terms of numbers and political credibility.
Germany, the largest contributor to Greek rescue funds, and a number of other eurozone countries have long resisted any talk of haircuts and debt relief.
Monday's announcement was met with anger among many in Greece who called the deal a "humiliation".
Despite this, Greece - whose economy has shrunk by 25% in the last five years - is expected to pass new legislation in parliament on Wednesday.
Three pro-European opposition parties have pledged to vote for the measures.
However, hardliners in Mr Tsipras' own Syriza party are likely to rebel and the junior coalition party, the Independent Greeks, have offered only limited support for the reforms.
Vote risk for Syriza governmentVote risk for Syriza government
The Greek constitution states that a government must have a majority - 151 seats out of 300.The Greek constitution states that a government must have a majority - 151 seats out of 300.
But if it loses a vote, the government can still function in a minority capacity as long as the opposition does not call a vote of confidence and as long as the numbers don't fall below 121.But if it loses a vote, the government can still function in a minority capacity as long as the opposition does not call a vote of confidence and as long as the numbers don't fall below 121.
The number of anti-bailout MPs is known to be at least 30 within Syriza's 162-seat coalition.The number of anti-bailout MPs is known to be at least 30 within Syriza's 162-seat coalition.
The question is whether there will be more than 41.The question is whether there will be more than 41.
If the numbers go below 121, Alexis Tsipras's government will be severely damaged and will likely look to opposition parties to join a national unity government. If the numbers go below 121, Prime Minister Alexis Tsipras's government will be severely damaged and will likely look to opposition parties to join a national unity government.
Mr Tsipras has said he does not believe in the deal, though he agreed to it.
In a television address on Tuesday, he called the proposals "irrational" but said he was willing to implement them to "avoid disaster for the country" and the collapse of the banks.
As parliamentary committees considered the details of the laws, Deputy Finance Minister and Syriza member Nadia Valavani announced her resignation, saying: "I'm not going to vote for this amendment, and this means I cannot stay in the government."As parliamentary committees considered the details of the laws, Deputy Finance Minister and Syriza member Nadia Valavani announced her resignation, saying: "I'm not going to vote for this amendment, and this means I cannot stay in the government."
And tempers flared when former Finance Minister Yanis Varoufakis was heckled with shouts of "You got us here" while addressing one committee.And tempers flared when former Finance Minister Yanis Varoufakis was heckled with shouts of "You got us here" while addressing one committee.
The jeers came when he said he doubted the deal could work, and compared it to the conditions imposed on Germany in the Treaty of Versailles after World War One.The jeers came when he said he doubted the deal could work, and compared it to the conditions imposed on Germany in the Treaty of Versailles after World War One.
Opponents of the deal took to the streets of Athens ahead of the vote, and unions and trade associations representing civil servants, municipal workers and pharmacy owners held strike action. Banks stay shut
Short-term help
Greece faces an immediate cash crisis. Banks have been shut since 29 June.Greece faces an immediate cash crisis. Banks have been shut since 29 June.
Mr Tsipras has warned banks are unlikely to reopen until the bailout deal is ratified, and this could take another month.Mr Tsipras has warned banks are unlikely to reopen until the bailout deal is ratified, and this could take another month.
The European Commission has formally proposed a short-term €7bn loan for Greece through the EU-wide European Financial Stability Mechanism (EFSM).The European Commission has formally proposed a short-term €7bn loan for Greece through the EU-wide European Financial Stability Mechanism (EFSM).
Use of the EFSM for eurozone rescues has been opposed by Britain and other countries which are not part of the euro but are European Union members.Use of the EFSM for eurozone rescues has been opposed by Britain and other countries which are not part of the euro but are European Union members.
But one British official in Brussels told the BBC the UK government had no objection in principle to the use of the EFSM - as long as British taxpayers' money was ring-fenced from any liability. One British official in Brussels told the BBC the UK government had no objection in principle to the use of the EFSM - as long as British taxpayers' money was ring-fenced from any liability.
Valdis Dombrovskis, a senior European Commission official, said it was working to protect non-euro states from any negative financial consequences should the loan not be repaid.Valdis Dombrovskis, a senior European Commission official, said it was working to protect non-euro states from any negative financial consequences should the loan not be repaid.
'Need for debt help'
The IMF report was written before the eurozone reached a deal with Greece in the early hours of Monday. It was shared with eurozone leaders in advance, but made public only on Tuesday.
It predicts that, in two years' time, Greek debt will reach close to 200% of GDP (national income) which could "only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far".
It recommends a "very dramatic extension" on the maturity of Greece's debts, "with grace periods of, say, 30 years on the entire stock of European debt".
"Other options," it says, "include explicit annual transfers to the Greek budget or deep upfront haircuts (debt write-offs)".
Germany, the largest contributor to Greek rescue funds, and a number of other eurozone countries have long resisted any talk of haircuts and debt relief.
Politics beats economics - by Chris Morris, BBC News, Brussels
The IMF report highlights a massive flaw in the deal hammered out so painfully between Greece and the rest of the eurozone: the numbers don't add up.
It believes that without a restructuring of the Greek debt, it will keep on rising.
But the point about this deal is - once again in the eurozone, it was a case of politics trumping economics.
The desire to keep the eurozone together was stronger (for now) than the economic forces threatening to pull it apart.
There was plenty of talk about debt restructuring during the negotiating process, but not on the scale that the IMF is suggesting.
Officially, there will be a discussion of restructuring only after a first review of the new bailout is successfully concluded.
That is several months down the line.
But, while the IMF report doesn't comment directly on Monday's deal (because the report had already been written by then), it certainly implies that the IMF may feel it is unable to take part in the new bailout programme for Greece.
And that would leave a large hole - both in terms of numbers and political credibility.
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