The financial rescue of Greece crossed two other crucial steps

premier-ministre-grec-alexis-tsiprasThe financial rescue of Greece has made progress on Friday, German lawmakers have overwhelmingly given their support to a new bailout plan, while the European Union (EU) confirmed that it would provide enough money to Athens allow it to meet its short term obligations.

Both developments occurred after a week in which the plan approved by the 19 leaders of the euro zone on Monday took a series of obstacles.

It is therefore expected that Greece gets a new rescue plan over three years, which should allow it to regain some economic normalcy, after weeks of crisis marked by the closure of banks and a daily limit of 60 euros imposed on withdrawals from ATMs.

After more than three hours of debate, the German MPs voted 119 to 439 against in favor of opening negotiations on the bailout after Chancellor Angela Merkel had warned that Greece might sink into chaos if no agreement was concluded.

Germany is the single largest creditor of Greece rescue plans and adopted a hard line, insisting that Athens has significant cuts in spending, increases taxes and conducts extensive reforms in exchange for a new bailout plan.

The vote was followed by confirmation by the EU that the European Financial Stability Mechanism would provide a bridge loan of 7.16 billion euros to Greece by Monday.

Athens must repay Monday at the European Central Bank a slice of 4.2 billion euros. Without this loan, Greece would be unable to honor its commitments.

“We are witnesses of European solidarity in action”, said Vice-President of the European Commission responsible for the euro, Vladis Dombrovskis, who announced the news about the short-term loan.

“Politicians of the 27 countries have invested their own political benefit to accelerate national decisions to support Greece in this difficult period for the country,” he added.

Details to be negotiated

Although the outlines of the new rescue plan have been established Monday, details will now be negotiated between Greece and its European creditors. The negotiation process should take about four weeks and allow Greece to get about 85 billion euros to make the next payment on its debts.

Angela Merkel will again get the support of German MPs the final agreement when negotiations with Greece are concluded.

In Greece, the government said banks would reopen Monday for a limited number of transactions for the first time in three weeks, after the imposition of capital controls on June 29 before the referendum on the proposals organized by the creditors Prime Minister Alexis Tsipras.

Late Friday, Mr. Tsipras announced changes in his government after a rebellion within his party during the parliamentary vote to approve the austerity measures demanded by creditors, earlier this week.

The Prime Minister dismissed two ministers who had voted against the government’s position. It replaced the Minister of Energy, Panagiotis Lafazanis, by a former Labour Minister Panos Skourletis. Trifon Alexiadis becomes the new Deputy Minister of Finance after the resignation of Nadia Valavani.

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