Greece crisis: Parliament approves draft 3rd bailout after all-night debate

Greek lawmakers approved their country's draft third bailout on Friday after a nearly 24-hour marathon parliamentary procedure culminated in a vote that saw the government coalition suffer significant dissent.

The government needed the bill to pass in time for Finance Minister Euclid Tsakalotos to head to Brussels to meet his eurozone counterparts, who will decide Friday afternoon whether to approve the draft agreement.

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The rescue package would give Greece about 85 billion euros ($93 billion US) in loans over three years in exchange for harsh spending cuts and tax hikes. Unable to borrow on the international markets, another bailout is all that stands between Greece and a disorderly default on its debts that could see it forced out of Europe's joint currency.

The bill passed with 222 votes in favor, 64 against, 11 abstentions and three absent in the 300-member parliament.

Although approved by a comfortable majority, the vote was a blow to Prime Minister Alexis Tsipras, who saw more than 40 of his 149 radical left Syriza party lawmakers vote against him. He has come under intense criticism from party hardliners for capitulating to the creditors' demands for budget cuts austerity measures he had promised to oppose when he won elections in January.

The bill includes reforms increasing personal, company and shipping taxes, reducing some pensions, abolishing tax breaks for some groups considered vulnerable and implementing deep spending cuts, including to the armed forces.

Early Greek election possible

The mounting discord within Syriza is threatening to split the party and could lead to early elections.

State television said Tsipras was expected to call a vote of confidence in his government, but that was not confirmed.

"Truly today we had a large majority that voted for the agreement, but we also had a number of lawmakers who chose a different course," said government spokeswoman Olga Gerovasili. "Therefore, as the prime minister said during his speech, everything that is necessary will be done, adhering always to the regulations [of parliament]and the constitution."

Gerovasili refused to give details on a potential early election, but said any action would come after Aug. 20, when Greece has to make a large debt repayment to the European Central Bank.

Culture Minister Nikos Xydakis, speaking on state television, said early elections were now likely.

"The agreement has cost the government its majority ... As things have turned out, the clearest solution would be elections," he said.

The deal will also need approval from the parliaments of several other countries, including that of Greece's harshest critic, Germany, before any funds can be disbursed. Some nations, such as Finland, have already given their approval.

Syriza dissenters angrily challenged the government during the all-night parliamentary session.

"I feel ashamed for you. We no longer have a democracy ... but a eurozone dictatorship," prominent party member and former energy minister Panagiotis Lafazanis said before the vote. Lafazanis co-signed a declaration along with another 12 left-wing politicians Thursday declaring they would start a new anti-austerity movement. He stopped short of quitting Syriza.

The terms of the new bailout were agreed earlier this week with creditor negotiators from the European Central Bank, European Commission and International Monetary Fund.

"We took a painful decision of responsibility, and took a step back," Tsipras said in his defense of the bailout. "Our position cannot be served by escape or by fantasy. We took the decision to remain alive instead of committing suicide and complaining how unfair it was."

Tsipras said Germany, and in particular its finance minister, Wolfgang Schaeuble, was attempting to undermine Greece and its position in Europe's joint currency, and would rather see Greece kicked out of the euro.

"In a few hours ... using unfair arguments and unfair demands, there will be an effort from the side of Mr. Schaeuble to take back what has been agreed," he said, referring to Friday's finance ministers' meeting. "That would not be a defeat for Mr. Tsakalotos, or for Greece, but for Europe."

Some creditors have proposed giving Greece an interim loan to be able to make its Aug. 20 debt repayment and give them more time to fine-tune the deal.

Europe to draft 'contingency plan'

Senior EU finance officials have tasked the European Commission with drawing up a "contingency plan" for an interim loan as a safety net, said an EU official who was not permitted to speak on the record due to departmental rules.

Greece does not want an interim loan and is hoping to tap the full bailout package by next week.

Germany has so far maintained a cautious stance.

Its deputy finance minister, Jens Spahn, on Thursday stressed the importance of getting a clear signal from the International Monetary Fund, which participated in Greece's two previous bailouts, that it will remain a part of the rescue program.

The IMF, however, insists Greece needs debt relief of some sort as it estimates that the country's debt, currently at 180 per cent of GDP, is unsustainable.

It says the IMF will decide on whether to participate in the new bailout once it has been set up and Greece's European partners have decided on how to ease the country's debt burden.

It estimates that would occur after the first review of the new bailout, about three months after it begins.