Greece's Prime Minister Alexis Tsipras has announced he is resigning and has called an early election.
Mr
Tsipras, who was only elected in January, said he had a moral duty to
go to the polls now a third bailout had been secured with European
creditors.
The election date is yet to be set but earlier reports suggested 20 September.
Mr
Tsipras will lead his leftist Syriza party into the polls, but he has
faced a rebellion by some members angry at the bailout's austerity
measures.
He had to agree to painful state sector cuts, including
far-reaching pension reforms, in exchange for the bailout - and keeping
Greece in the eurozone.
Greece received the first €13bn ($14.5bn)
tranche of the bailout on Thursday after it was approved by relevant
European parliaments.
It allowed Greece to repay a €3.2bn debt to the European Central Bank and avoid a messy default.
The overall bailout package is worth about €86bn over three years.
Lost majority
Alexis Tsipras made the announcement in a televised state address on Thursday.
"The
political mandate of the 25 January elections has exhausted its limits
and now the Greek people have to have their say," he said.
Mr Tsipras said he would seek the Greek people's approval to continue his government's programme. Analysis: Chris Buckler, BBC News, Athens
In
January, Alexis Tsipras went to the polls in Greece as a man who would
stand against austerity. What a difference seven months makes. Now he is
calling elections to ask the Greek public to support the way he is
trying to lead this country out of its financial crisis.
That
means spending cuts, tax rises and, of course, that third bailout that's
already been agreed. All of that is opposed by a sizeable number of
hard-left MPs within his own party, Syriza.
Mr Tsipras will argue
this election is about bringing certainty to Greece's future. In the
short-term at least, though, it will create political uncertainty. And
that's becoming a pretty familiar feeling here in Athens. Mr Tsipras said Greeks would have to decide whether he had represented them courageously with the creditors.
He
will visit President Prokopis Pavlopoulos later in the evening to
submit his resignation. Greece will then be run by a caretaker
government.
Reacting to the news, Martin Selmayr, European Commission President Jean-Claude Juncker's chief-of-staff, tweeted that "swift elections in Greece can be a way to broaden support" for the bailout deal.
Some
43 of Syriza's 149 MPs had either opposed the bailout or abstained in
last Friday's Greek parliamentary vote that approved the deal.
The rebellion meant Mr Tsipras, who was elected this January, had effectively lost his parliamentary majority.
Mr Tsipras had won power on a manifesto of opposing the stringent austerity conditions that he has now accepted.
He
said he was forced to do so because a majority of Greeks wanted to stay
in the eurozone, and this could not be achieved in any other way.
Greece remains under strict capital controls, with weekly limits on cash withdrawals for Greek citizens.
If a government resigns within a year of election, the constitution
requires the president to ask the second-largest party - in this case
the conservative New Democracy - to try to form an administration.
If this fails, the next largest party must be given a chance.
However, analysts say both parties can waive this and allow the president to approve the snap election.
ATHENS, Greece -- Greece was receiving the first 13
billion-euro ($14.5 billion) payment of its new bailout Thursday, with
12 billion euros earmarked for repaying debts and the remainder for
settling arrears to public sector suppliers.
Athens
was using the funds to repay a 3.2 billion euro ($3.5 billion) debt
installment due Thursday to the European Central Bank - an amount it
could not have afforded to repay without the bailout from 18 other
European nations that share the euro currency with Greece.
European bailout fund supervisors approved the release Wednesday evening.
Without
the rescue loans - Greece's third bailout in little more than five
years - the country would have defaulted on its debts and faced being
forced out of the eurozone.
The new three-year
bailout is worth 86 billion euros ($95.6 billion), and the disbursement
of funds is dependent on the Greek government implementing a series of
reforms, including steep tax hikes and spending cuts.
Accepting
the conditions was a major reversal of policy for Prime Minister Alexis
Tsipras and the coalition government between his radical left Syriza
party and the small nationalist Independent Greeks. It has cost him a
major rebellion within Syriza that threatens to split the party and
could lead to an early election as soon as next month.
Tsipras
has been contemplating his options after a parliament vote to approve
the bailout conditions led to dozens of his own party lawmakers voting
against him. Among the options being discussed are for him to call a
vote of confidence in his government or to call an early election,
potentially in September.
The government has
said its main priority was to secure the bailout funding and the
repayment of the ECB loan on Thursday, after which it would announce any
further action.
Tsipras won January elections
on promises to repeal similar austerity measures attached to Greece's
two previous bailouts. But he has said accepting creditor demands for
yet more reforms was the only way to ensure his country remains in the
eurozone, which opinion polls have shown the vast majority of his
population wants.
Hardliners within his party
have accused him of capitulating to unreasonable demands that will
plunge the Greek economy further into recession.
The International Monetary Fund has
called on eurozone ministers to offer Greece debt relief, following the
approval of a new bailout deal.
Greece will receive up to €86bn (£61bn) in loans over the next three years, in return for tax rises and spending cuts.
IMF chief Christine Lagarde welcomed the agreement, but warned Greek debt had become unsustainable.
She said the country needed significant relief "well beyond what has been considered so far".
"Greece cannot restore debt sustainability solely through actions on its own," she added.
The
BBC's Adam Fleming in Brussels says finance ministers will consider
possibly writing off some of the country's debts in the autumn.
The first tranche of loans will be for €26bn.
This will include
€10bn to recapitalise Greek banks and €16bn in several instalments -
the first of which will be for €13bn and will be delivered in time for
Greece to repay about €3.2bn to the European Central Bank (ECB) by 20
August.
European
Commission President Jean-Claude Juncker said the deal sent a message
"loud and clear" that Greece will stay in the eurozone.
It comes at a political cost for Greek Prime Minister Alexis Tsipras, who has faced a rebellion in his left-wing Syriza party.
More
than 40 MPs voted against him when parliament decided on the bailout
agreement on Friday, after all-night talks. He managed to push it
through with the help of members of the opposition.
Dutch Finance
Minister Jeroen Dijsselbloem, who chaired the Eurogoup meeting where
the deal was hammered out, said he was confident it would "address the
main challenges facing the Greek economy".
He acknowledged that
dealing with debt was an important issue, especially for the IMF, but
Germany has so far been vehemently against any debt "haircut" that would
cost creditors billions of euros.
German Finance Minister
Wolfgang Schaeuble told Deutsche Welle radio: "Outright debt forgiveness
doesn't work at all under European law."
Mr Schaeuble added that
there was "a certain amount of room to extend maturities further", but
cautioned: "His room is not very big."
Germany's parliament is to hold a special session on Wednesday to decide on whether to approve the Greek bailout. Third Greece bailout: What are eurozone conditions?
Eurozone finance ministers have agreed on a new bailout deal for Greece after Athens backed the plan.
Eurogroup
chairman Jeroen Dijsselbloem earlier said ministers would need to be
sure the Greek government would carry out the promised reforms.
The
deal demands tax rises and more tough spending cuts in return for a
€85bn (£61bn, $95bn) bailout - Greece's third in five years.
It is needed to stop Greece exiting the eurozone and to avert bankruptcy.
But
it comes at a heavy political price for Greek Prime Minister Alexis
Tsipras, who has faced a rebellion in his left-wing Syriza party.
More than 40 Syriza MPs voted against him when parliament decided on the bailout agreement on Friday, after all-night talks.
Reports
in Greece suggest he will seek a vote of confidence in parliament next
week, bringing the prospect of snap elections closer.
'Optimistic'
Arriving
at the 19-member Eurogroup meeting in Brussels, Germany's finance
minister - one of Mr Tsipras's harshest critics - had been upbeat.
"I
am actually quite optimistic that we shall reach a result today, the
preparations have advanced pretty well," Wolfgang Schaeuble said.
He
said ministers would consider how well Greece had responded to EU
demands, and whether the International Monetary Fund (IMF) would commit
to supporting the bailout package.
German Finance Minister Wolfgang Schaeuble (left) has criticised Greek delays in the past
Earlier the Eurogroup head welcomed the Greek parliament's vote to sign off the deal.
"We're going to talk about political trust," Mr Dijsselbloem said.
"That's still a factor of course with Greece: can we trust that it's actually going to happen?"
Rebellion
Greek
MPs backed the deal on Friday morning after a marathon all-night
session marked by procedural delays and often angry exchanges in
parliament.
The deal received:
222 votes for
64 against
11 abstentions
Third Greece bailout: What are eurozone conditions?
Thirty-one
Syriza members voted "No", and 11 abstained - the biggest rebellion
within Mr Tsipras's party so far. The rebels represented almost a third
of Syriza's MPs.
A "Yes" vote by MPs was required for eurozone ministers to endorse the deal to release the funds.
The
deal also needs approval from the parliaments of several other
countries, including that of Greece's most influential creditor,
Germany, before any funds can be disbursed. Some nations, such as
Finland, have already given their approval.
Greece must repay about €3.2bn to the European Central Bank (ECB) on 20 August.
If it defaults on this debt, the ECB is likely to stop emergency funding for Greece's crippled banks.
ATHENS, Greece -- Greece agreed on the broad terms of a
new financial rescue package on Tuesday, with a few details remaining to
be cleared up before it is formally approved.
The
bailout would be the third in five years for the country, which is
struggling to heal its economy and pay off its mountain of public debt.
Here is a look at what the deal involves and why it matters.
---
Q: What is the deal?
A:
The bailout agreement entails a three-year package of loans worth about
85 billion euros ($93 billion). Greece needs to money to repay its
debts and avoid a dramatic default that would see it forced out of the
euro, the currency shared by 19 European Union countries. In return, it
must implement a series of budget measures, including spending cuts and
yet more tax increases, just as it had to do for its previous two
bailouts.
---
Q: What are the broad terms?
A:
The details have not all been officially released yet, but leaked
drafts and government sources suggest the terms will heap more pain on
the Greeks.
It envisages reforms that include:
-increases
to corporate, personal income and property taxes, including a
requirement for the following year's income tax to be pre-paid in full
-pension reforms and cuts, and phasing out most early retirement
-cuts to tax benefits for farmers
-cuts to medication prices
-reform of the welfare system
-cuts to military spending, including by reducing personnel numbers
-the sale of some state property
The
government says the deal includes lower budget surplus targets than
originally envisaged, thereby reducing the overall amount of budget cuts
it will need to make.
---
Q: Why does Greece need it?
A:
Despite receiving two bailouts totaling nearly 240 billion euros since
2010, Greece's economy and public finances are in a dire state. Public
debt is about 320 billion euros, or 180 percent of economic output. That
is making investors wary of lending to Greece on bond markets, so the
country has no option but to seek rescue loans from its fellow European
countries and the IMF.
Critics argue the
budget cuts demanded by creditors for the previous two rescues
exacerbated the problems of the economy, which lost a quarter of its
value. The current prime minister, Alexis Tsipras, came to power in
January on pledges to repeal those cuts. However, his attempts to
challenge creditors collapsed after months of acrimony. The government
shut down the country's banks and put limits on money transfers and
withdrawals to staunch a bank run. The turmoil has led the economy back
into a recession.
---
Q: Why is the deal important for Greece and the rest of the world?
A:
Without financial support, Greece would go bankrupt and likely fall out
of the euro. That would be hugely painful economically for the country
and could destabilize the rest of the eurozone.
Though
many economists say the eurozone could withstand the short-term market
turmoil caused by Greece's exit from the euro, many warn it would suffer
in the longer term. A Greek euro exit could, for example, lead
investors to believe that another country might drop out if it gets into
financial trouble as well. A destabilized eurozone would weaken the
world economy as it is a key trading partner for the U.S. and Asia and
at the heart of the global financial system.
---
Q: What happens once Greece's new deal is finalized?
A:
The text of the agreement must be approved by Greece's parliament.
Although Tsipras has suffered major dissent within his radical left
Syriza party, pro-European opposition parties are almost certain to vote
in favor, meaning the agreement will go through. A vote is due late
Thursday.
The deal will also need to be
approved by other eurozone nations. This will initially come from the
eurozone finance ministers, who are expected to discuss the issue
Friday. Some nations will also have to ratify the deal in their
parliaments, including Germany, which was the largest single contributor
to Greece's previous two bailouts and has been Greece's harshest
critic.
EVERY summer, southern Europe’s tourist spots look forward to the
arrival of planeloads of Germans on holiday. But this year encounters
between Germans and their hosts have become loaded. In Knossos, in
Crete, Giorgios Papadopoulos, a tour guide, interrupts his explanation
of Minoan matriarchy to ask a visitor from Berlin about the relationship
between Germany’s finance minister and its chancellor: "What’s up
between Schäuble and Merkel?” Like many Europeans after July’s bitter
bail-out negotiations over Greece, he has become intrigued by the
internal workings of a country he sees as trying to “dominate” the
European Union.
To Germans such outside fascination with their domestic politics is
new, and it makes them uncomfortable. America, as a superpower, may be
used to foreign scrutiny. But the rise of “Berlinology” frightens
Germans. They have no appetite for becoming Europe’s “leader” (the
German word is Führer). Given their past, Germans do not want to seem domineering.
Yet they often do. The anxiety stems from a summit on July 13th, when
Germany led euro-zone countries in forcing Greece to accept tougher
reforms and more austerity in exchange for a third bail-out—even though
Greeks had just rejected them in a referendum. Wolfgang Schäuble, the
finance minister, suggested a “temporary” Greek exit from the euro. Both
he and Angela Merkel, the chancellor, ruled out a haircut of Greek
debt, claiming it would violate euro-zone rules. Germany was thus seen
to use the power of its purse to force its vision on weaker members.
The reaction was swift. Op-eds decried German bullheadedness. On
social media, the hashtags #ThisIsACoup and #BoycottGermany began
trending, while others revived accusations of a “Fourth Reich”. It was a
“public diplomacy disaster,” thinks Thorsten Benner, director of the
Global Public Policy Institute (GPPi), a Berlin think-tank. “Germany is
seen as the harsh, heartless hegemon of the euro zone, ready to bully
small countries into submission.”
Mr Benner’s worries may be overblown: not all foreigners fear German
strength. The negative view is sharpest among an odd alliance of
Anglo-American economists and European leftists sympathetic to Greece’s
Syriza party. France, however sceptical of austerity, wants to preserve
its position alongside Germany in the EU’s “tandem”. The Spanish and
Portuguese governments took Germany’s side regarding austerity, having
survived it themselves. And northern and eastern Europe are in many ways
more Germanic than the Germans. The Baltic states, Slovakia and
Slovenia have had to cut their own budgets sharply, and think the Greeks
should too. Threatened by Russian intervention in Ukraine, even Poland
has yearned lately for a more assertive German role. Many Britons are
hoping for Mrs Merkel’s help in reforming the EU. In short, there is no
crisis in Europe that can be solved without Germany.
Nonetheless, Berlin’s ministries react to any suggestion of German
hegemony with vehement head-shaking. Since the 1950s “all the EU’s
institutions were designed to assure that no country could dominate”,
notes one official defensively—especially not Germany. Germans observe
that Mrs Merkel must constantly compromise with her counterparts—even on
July 13th, when François Hollande, France’s president, made her
forswear Grexit to reach a deal. Their mighty Bundesbank gets the same
single vote on the European Central Bank’s governing council as every
other euro-zone country, and often fails to impose its will. To its own
citizens Germany is, at best, first among equals.
To many Germans this situation seems familiar. It is the same dilemma
the historian Ludwig Dehio described after the country was first
unified in 1871. Germany became “too big for a balance of power in
Europe and too small for hegemony,” he wrote; “not powerful enough to
impose its will on the continent, but at the same time powerful enough
to be perceived as a threat by other powers.” After reunification in
1990, German historians worried that this pattern could repeat itself.
If it did not, it was because Germany under Chancellor Helmut Kohl
still thought of itself as it had since its resurrection after the
second world war: as a “post-national” society. Thomas Mann articulated
this attitude in a famous lecture in 1953, arguing that Germany’s young
people must “dispel the mistrust” by coming out “not for a German
Europe, but for a European Germany”. In the 1980s Hans-Dietrich
Genscher, then foreign minister, argued that (West) Germany had no
national interest other than the EU’s.
What has changed recently is that this “post-national mentality” has
gone, worries Jürgen Habermas, a philosopher. During the July summit,
the country “gambled away in one night all the political capital that a
better Germany had accumulated in half a century,” he thinks. Many on
the centre-left fear that Germany is now “post-post-nationalist”.
Joschka Fischer, foreign minister from 1998-2005, laments that “from now
on Germany will primarily pursue its national interests, just like
everybody else.”
Many Germans on the centre-right deny such a turn to realpolitik.
They think they are just insisting on following common EU rules, and
find nothing nationalist about that. Indeed, it implies that Germany and
other countries should cede more sovereignty. Mr Schäuble, the German
most vilified in Greece, has argued since 1994 that some member states
should form a federal “core”. He now advocates giving the euro zone a
common finance minister and budget.
But others in his camp, the Christian Democrats (CDU), assert a more
naked self-interest. Each time the party submits a Greek bail-out to the
Bundestag, the number of defectors increases; one in five voted against the July compromise. Bild, Germany’s largest tabloid, stokes German resentment that foreigners are exploiting their past guilt to “blackmail” them.
Germany is not imposing its will on Europe. If it were able to do so,
Greece would probably no longer be in the euro zone. The question is
just how happy Europe ought to be about this. Germany is back in its old
dilemma: too weak for hegemony, too large for balance. No other country
can think of imposing solutions, but Europe will not allow Germany to
do so either. That may mean that the EU’s biggest challenges—from
immigration to preventing a British exit and fixing the euro—will
continue to go unmet.
Read more at
http://www.economist.com/news/europe/21660583-europe-fears-german-nationalism-germany-says-it-simply-enforcing-rules-strict-order#Z6HtmmAXRZyISg7p.99
Greek banks are reopening after three weeks of closures sparked by the deadlock over the country's debt.
Athens reached a cash-for-reforms deal aimed at avoiding a debt default and an exit from the eurozone.
But
many restrictions remain, including a block on money transfers abroad,
and Greeks also face price rises with an increase in Value Added Tax
(VAT).
Meanwhile, Germany has said it is prepared to consider further debt concessions to Greece.
Queues at ATMs have been a feature of life in Greece for weeks,
with people waiting in line each day to withdraw a maximum of €60 (£41) a
day, a restriction imposed amid fears of a run on banks.
Media captionMark Lowen from a traditional taverna in Greece on the likely impact of VAT increases
From Monday, the daily limit becomes a weekly one, capped at €420 (£291), meaning Greeks will not have to queue every day.
An architect told the BBC that the banks re-opening will make only a small difference to his ability to operate:
"The
key challenge is that we cannot pay our suppliers, which means that we
will eventually run out of products to sell," Vassilis Masselos told the
BBC World Service's Newsday programme.
Greece's recession
While banks throwing open their doors marks the return of some normality to the Greek economy, long-term problems remain.
Unemployment
is stubbornly high, and as this chart shows, Greece's recession is
comparable to one of history's most famous economic crashes. How bad are things for the Greeks? The scale of hardship But a block on transfers to foreign banks and a ban on cashing cheques remain in place.
Greeks will also pay more on a range of goods and services, including taxis and restaurants, with VAT rising from 13% to 23%.
The rise was among a package of reforms demanded by Greece's creditors to open talks on the proposed €86bn bailout.
Greeks and tourists will have to pay more in restaurants, with a VAT rise imposed by creditors coming in
The Greek government has a new look after a reshuffle replaced ministers opposing the deal
Members of Prime Minister
Alexis Tsipras' party rebelled against the austerity measures demanded
by creditors when it was voted through parliament.
But it paved
the way for Greece to receive a bridging loan, which enables the
reopening of the banks and for Athens to repay debts of €4.2bn,
(including €700m in interest), to the European Central Bank due on
Monday.
German row
Both
Greece and the IMF have been arguing for a restructuring of its €320bn
debt, saying its current position is "unsustainable".
German Chancellor Angela Merkel ruled out "a classic haircut" - a markdown of Greece's debts.
But
she told German television other forms of relief, such as extending
maturities or slashing interest rates, could be considered once the
details of the latest programme are worked out.
She also played
down reports of a row with her Finance Minister Wolfgang Schaeuble, who
suggested in an interview with Der Spiegel magazine that he would rather
resign than defend something he did not believe in.
"The finance
minister will, like me, conduct these negotiations and I can only say
that no-one came to me and asked to be relieved," said Ms Merkel when
asked about the suggestion.
Germany, which is the largest contributor to Greek rescue funds, has taken a tough line on Greece.
At
one point in the fraught talks over the bailout, Mr Schaeuble suggested
Greece could temporarily leave the eurozone while it stabilises its
economy.
Mr Tsipras, who has reshuffled his cabinet to replace
rebellious ministers, has another set of reforms to push through
parliament on Wednesday.
In a damning assessment, his former Finance Minister Yanis Varoufakis told the BBC the economic programme imposed on Greece was "going to fail".
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