Greek parliament to vote on painful new austerity bill

ATHENS, Greece (AP) – Greece’s lawmakers were debating an austerity bill set for a midnight vote Wednesday that will condemn the country to years of more budget savings but is needed to get a new bailout and avert financial collapse.

The raft of consumer tax increases and pension reforms has led to growing anger among Greece’s governing left-wing Syriza party, while the country’s civil servants’ union voiced its objections with a 24-hour public sector strike.

The vote will almost certainly see large numbers of Prime Minister Alexis Tsipras’ own Syriza lawmakers dissent and vote against the package, raising questions of his government’s survival in its current form.

The bill is expected to pass with votes in favor by pro-European opposition parties.

The government, a coalition between Syriza and the small right-wing Independent Greeks, holds 162 seats in Greece’s 300-member Parliament. More than 30 of Syriza’s own lawmakers have publicly voiced objections.

Tsipras has acknowledged the measures he agreed to after a marathon summit with eurozone leaders on Monday go against his election pledges to make life easier for Greeks, and described them in a Tuesday night television interview as “irrational.”

But he said he had no option if he was to prevent Greece’s financial collapse.

Talks on a bailout package worth 85 billion euros ($94 billion) over three years will start only if Greece’s government takes certain steps, including pushing through Wednesday’s bill.

The International Monetary Fund, which was involved Greece’s previous two bailouts and will also play a role in the third, has long advocated the country’s debt is too high and that any deal must include debt relief – something the Greek side has also insisted on.

In a report released late Tuesday, the IMF said Greece’s debt was now “highly unsustainable” and would reach “close to 200 percent of GDP in the next two years.”

Tsipras has faced strident dissent even from some of his top ministers, with Energy Minister Panagiotis Lafazanis saying in a post on his ministry’s website that the deal the prime minister reached was “unacceptable” and calling on him to withdraw it.

The bill was being passed through Parliament with emergency procedures and was being debated at committee level Wednesday morning before it heads to the full assembly in the evening.

The civil servants strike disrupted public transport and shut down state-run services across the country. Pharmacies joined in with their own 24-hour strike to object to the austerity deal which will allow some non-prescription drugs to be sold by supermarkets.

Demonstrations were planned for Wednesday evening outside Parliament during the assembly debate.

“These laws will pass through parliament today, because they can’t do otherwise,” said private sector employee Eleni Sari, 45, as she walked through central Athens.

“Naturally, the people are furious, and they have not allowed them any choice. Unfortunately it’s not in our hands anymore, that is, it’s no longer in the people’s hands. By necessity … they will pass them in parliament, and by necessity we will bear their burden.”

Greeks, meanwhile, continued to struggle with limits on cash withdrawals and transfers outside of the country. Banks were shut down June 29 and the finance ministry said they would remain closed through Thursday.

Tsipras’ radical left Syriza party was to hold a meeting of its lawmakers early Wednesday afternoon.

In a late-night interview on state television Tuesday, the prime minister vowed he would not step down despite the open dissent.

“I will not run away from my responsibilities,” he said.

He criticized the deal, but said it was the best Greece could get.

“The policies imposed on us were irrational,” Tsipras said. “We faced a tough and punitive position from our partners … But the (agreement) does offer a way out of the crisis.”

There was speculation Tsipras might choose to reshuffle his Cabinet, which would remove dissenters from key positions.

With its banks dangerously low on liquidity and the state practically out of cash, Greece desperately needs funds. It faces a Monday deadline to repay 4.2 billion euros ($4.6 billion) to the European Central Bank, and is also in arrears on 2 billion euros to the IMF.

Negotiations on the new bailout will take an estimated four weeks, leaving EU finance ministers scrambling to find ways to get Athens some money sooner.

U.S. Treasury Secretary Jacob Lew was traveling to Europe to confer with leaders about the Greek crisis, and was to meet Wednesday in Frankfurt with ECB chief Mario Draghi. On Thursday, he meets the German and French finance ministers.

The months-long standoff between Greece and its creditors has taken a heavy toll on an economy that had begun the year with a 2.9 percent growth forecast. On Tuesday, a Greek small business association said that the new austerity measures would likely cause the economy to shrink for a seventh year, with a 3.5 percent drop in output.