Greece: Pressure eases on Syriza as ECB releases €900m in fresh funding

In a conference call, ministers agreed a €7 billion (£4.8 billion) bridging loan to fund the crisis-hit nation until a bailout is approved.

Meanwhile, the European Central Bank (ECB) announced it will provide an additional €900 million (£628 million) liquidity.

However, the political tensions in Greece continue, with interior minister Nikos Voutsis raising the possibility of a snap autumn election.

In the text of a radio interview released by his office, Voutsis said: “It is very possible that elections take place in September or October, depending on developments. That will be the product of a comprehensive review, not only by government, on developments in general.”

He added: “Even if we do go to elections, we will seek a mandate to adopt our programme. Part of it are the commitments arising from the deal.”

The comments came after lawmakers from the governing Syriza party revolted, forcing the administration to rely on opposition votes to pass the bailout bill.

The left-wing party lost its majority when 38 of its MPs rejected to reforms on taxation increases and pension restrictions demanded by eurozone leaders as a condition for the bailout, worth up to €86 billion (£60 billion).

The bridge loan, which will allow Greece to repay its debts to the International Monetary Fund (IMF), will come from the European Union’s emergency European Financial Stability Mechanism (EFSM) and is expected to be confirmed in an EU Council vote today.

Violent demonstrations were held in Athens on Wednesday night as politicians voted to accept the terms offered by lenders, with tear gas and petrol bombs thrown outside the parliament.

Ahead of the midnight vote, Prime Minister Alexis Tsipras told parliament he had been forced to bend to European will for the good of the nation, saying: “We had a very specific choice: a deal we largely disagreed with or a chaotic default.”

The austerity package also includes sales tax rises, hikes on levies for swimming pools and boats and an end to early retirement by 2022, with the retirement age increasing to 67.

Above, A bank employee distrubutes tags with queue positions to pensioners as they wait outside the national bank of Greece to withdraw their allowance in central Athens yesterday

Almost one in four Syriza members of parliament defied the whip to abstain or vote against the plan.

They include former finance minister Yanis Varoufakis, who led the bailout strategy until he was replaced ten days ago, and speaker Zoe Konstantopoulou, who said the package amounted to “social genocide”.

Following the vote, credit ratings agency Moody’s said Greece had averted an “immediate disorderly default and potential exit from the euro area”.

However, it added: “Risk remains elevated given Greece’s weak institutions and substantial political scepticism on the bailout conditions.”

It is almost three weeks since Greek banks closed amid rising financial uncertainty, with cash machine withdrawals limited to just €60 (£42) per person per day after the ECB froze emergency lending assistance.

The additional liquidity announced yesterday could see banks reopening on Monday, and yesterday ECB president Mario Draghi denied that the actions of his institution had exacerbated Greek troubles.

HE told a press conference that the ECB had released more than €10 billion (£6.9 billion) of assistance to Greece in June, but had withdrawn only €8 billion (£5.5 billion), adding: “We take this criticism very seriously, but I think it is unwarranted and unfounded to say that ECB actions started a bank run in Greece.”

Draghi also said his institution is willing to use all stimulus measures at its disposal to prevent market turmoil from destabilising the economic recovery in the 19 eurozone countries.

Greece amounts to less than two per cent of the eurozone economy, but earlier phases of the country’s crisis, which is now in its sixth year, created financial pressure for other indebted nations, who found their market borrowing costs rising.

Draghi said: “It’s uncontroversial that debt relief is necessary and I think that nobody has ever disputed that.

“The issue is what is the best form of debt relief within our framework, within our legal institutional framework.

“I think we should focus on this point in the coming weeks.”

Yesterday Greek government spokesman Gabriel Sakellaridis said the latest bailout vote marked a “serious division” amongst members, indicating that the Syriza members who broke rank would be replaced in a reshuffle.

Sakellaridis said parliament had backed “difficult measures”, adding: “The prime minister’s and the government’s priority is the successful conclusion of the agreement in the immediate future.”

Unions representing civil servants, municipal workers and pharmacy owners are among those to strike in opposition to further austerity measures.

However, discontent with the deal has also been shown elsewhere, with several countries, including Britain, lobbying against the plan to use EFSM cash to increase stability in Greece.

IN 2011, David Cameron secured a commitment that the fund would not be used for bailouts.

However, the news agency Reuters reported that the EFSM would raise the money from the private sector and that it would be repaid in three months, following the agreement of the new bailout, which will also involve the IMF.

In a report earlier this week, the IMF said Greek debt had become “highly unsustainable” and would reach “close to 200 per cent of GDP in the next two years”.

The Greek parliament is expected to pass further reforms on Wednesday, including major changes to the civil justice system.

With a review of collective bargaining and industrial action as part of the package, further demonstrations are likely.

MPs are also expected to commit to further privatisation and yesterday eurogroup president Jeroen Dijsselbloem, who is also the Dutch finance minister, told an emergency session of the Dutch parliament it was “realistic” to expect to raise €50 billion (£34.9 billion) from the sale of Greek state assets.

However, he cautioned that this would have to be drawn out over several years, stating: “Rather than a fire sale, privatisation will be pursued slowly in order to ensure better returns are achieved.”

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