Greek Bailout Deal Nobody Believes Will Work Approved By Parliament

In the early hours of this morning Greece’s parliament passed the austerity measures demanded by its creditors in order to open talks on a new Greek bailout.

Prime Minister Alexis Tsipras, deserted by many in his own Syriza party who believe the measures to be “social genocide” and “a new Versailles Treaty”, relied on the support of other pro-European opposition parties to vote the measure into law leaving his future in government in question.

EurActiv reports that in order to secure funding of up to €86 billion, Greece accepted significant pension adjustments, increases to valued added tax (VAT), an overhaul of its collective bargaining system, measures to liberalise its economy and tight limits on public spending. It has also agreed to the contentious €50bn fund into which state-owned assets will be placed pending privatisation to act as collateral on the deal.

Tsipras himself said: “I acknowledge the fiscal measures are harsh, that they won’t benefit the Greek economy, but I’m forced to accept them.” In doing so he echoed the assessment of the IMF reported earlier in the day which said that the terms of the Greek bailout negotiated at the weekend will fail to solve the economic crisis, a view which British Prime Minister David Cameron said “must be right”.

One of the most vocal critics of the new Greek bailout deal was former Finance Minister Yanis Varoufakis. Ahead of the debate he posted his own annotated version of the Euro-Summit Agreement on Greece on his website. Describing the document as the “Terms of Greece’s Surrender – as it will go down in history” he invited those interested to “read and weep”.

In his assessment Varoufakis refers to a new European Stability Mechanism as a “new extend-and-pretend loan”. Referring to the Euro Summit demand that Greece first legislates on certain reforms he says: “Greece must subject itself to fiscal waterboarding, even before any financing is offered.”

Turning to the VAT reforms he says these will make the system “more regressive, through rate rises that encourage more VAT evasion” whilst hampering recovery through “dealing a major blow at the only Greek growth industry – tourism”.

Perhaps his most damning assessment comes in reply to the demand that the government must “consult and agree with the Institutions on all draft legislation in relevant areas with adequate time before submitting it for public consultation or to Parliament” in order to qualify for the bailout. Varoufakis translates this a meaning the “Greek Parliament must, again, after five months of short-lived independence, become an appendage of the Troika [the tripartite committee led by the European Commission with the European Central Bank and the International Monetary Fund]– passing translated legislation mechanistically.”

Another assessment of the situation was printed in the letters page of the Telegraph two days ago (see tweeted copy below):

Other senior Syriza members voting against their own government while still declaring loyalty to it included Energy Minister Panagiotis Lafazanis (leader of Syriza’s ‘internal opposition’, known as the Left Faction) and Deputy Labour Minister Dimitris Stratoulis. After voting Lafazanis said: “We support Syriza in government and we support the Prime Minister. We don’t support the bailout.”

Eurozone finance ministers are today discussing the vote in the light of Greece’s next deadline. On Monday a €3.5 billion payment to the European Central Bank falls due which means the country requires interim financing to avoid defaulting on that loan. Failure to do so will mean the emergency liquidity lifeline Greek banks have been offered may be cut off.

As reported by Breitbart London yesterday the short-term finance will be €7bn provided through the European Financial Stability Mechanism (EFSM). In the past assurances were made that the EFSM would no longer be used for Eurozone stability issues following its previous use in relation to Ireland, Portugal and Greece. Instead the new European Stability Mechanism would kick in. Although Britain is not a member of the Eurozone, use of the EFSM would mean Britain contributing as it is funded by all 28 EU member states.

Chancellor George Osborne, backed by the Czech Republic, said the EFSM idea a “non-starter” because Eurozone countries alone should be called on to alleviate the Greek debt crisis, not those countries who retain their own currencies. However, the process can be initiated if just 15 countries representing 65 per cent of the EU’s population vote in favour.

CityAM reports that in “an embarrassing about-face” the Treasury is now preparing to cooperate over the EFSM by working with the European Commission to fund the bridging loan as requested, but also to ring-fence the UK’s contribution in order to protect it from risk.

Raoul Ruparel of the think tank Open Europe has commented on the proposed use of the EFSM, saying:

“In the end, if I were Osborne, I would argue that this is about trust – something the Eurozone has emphasized heavily in the Greek negotiations. The UK and others received clear political assurances that the EFSM would be replaced by the ESM and that it would no longer be used for Eurozone bailouts. If the Eurozone goes back on its word then trust is clearly broken. It also sends the message that the Eurozone’s needs trump all else. The combination of this breach of trust and the worrying message of Eurozone dominance would certainly help feed the ‘Out’ campaign in the UK – and probably with good reason too.”

Commenting on the Greek bailout proceedings today, Paul Nuttall, MEP for the North West and UKIP Deputy Leader, said: