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Jul 15, 2015 12:31 AM

Dissent in Greece over austerity deal grows ahead of vote

The Associated Press

ATHENS, Greece (AP) Greek Prime Minister Alexis Tsipras faced a revolt in his left-wing party and workers' calls for strikes ahead of Wednesday's Parliament vote on a bailout deal meant to prevent the country's economy from collapsing.

Now Tsipras must keep his own government from collapsing as he tries to push a deal that he calls "irrational" through Parliament. Talks on a bailout worth 85 billion euros ($94 billion) will start if Parliament agrees by Wednesday to creditors' demands, including painful tax hikes and pension cuts.

Hard-liners in Tsipras' own Cabinet and his radical leftist Syriza party are in open revolt. Unions are calling for or extending strikes to coincide with the Parliament vote.

After a stunning win in a referendum that rejected calls for more austerity, Tsipras remained in a bind this week as he reached a deal with creditors: Greece's cash-starved banks would likely have collapsed, sending the country spiraling out of the euro, Europe's joint currency. So after a marathon eurozone summit, Tsipras agreed to tough new measures that mean economically-battered Greeks will pay more for most goods and services by the end of the week.

The bill is expected to pass with votes from opposition parties. But the Tsipras government's political survival could be in danger if large numbers of its own lawmakers resign their seats or openly vote against the bill. Many in Tsipras' party have indicated they will refuse to vote for the deal because it goes back on election pledges to repeal austerity measures that have been imposed on Greece for years.

Pro-European opposition parties have pledged support for the bailout legislation, but Tsipras could effectively lose his majority in Parliament, weakening his ability to push through measures that he had himself vehemently opposed until a few weeks ago.

Tsipras vowed that he would not step down, despite the open dissent. "I will not run away from my responsibilities," he said in an interview on state TV.

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.

Energy Minister Panagiotis Lafazanis called on the prime minister to cancel the legislation before it reaches Parliament, saying it was forced on Athens by lead eurozone lender Germany and its allies, who had acted like "financial assassins."

"The deal is unacceptable," Lafazanis said in a statement. "It may pass through Parliament ... but the people will never accept it and will be united in their fight against it."

Tsipras' coalition partner, Defense Minister Panos Kammenos, also denounced the new deal.

"There was a coup. A coup in the heart of Europe," said Kammenos, who heads the right-wing Independent Greeks party.

The Tsipras government holds 162 seats in Greece's 300-member Parliament. More than 30 of Syriza's own lawmakers have publicly voiced objections.

Athens was forced to accept harsh terms to remain in the euro after defaulting on its debts to the International Monetary Fund and closing its banks.

On Tuesday, the International Monetary Fund said Greece's finances were even more dire than previously reported. The IMF said Greece's debts would peak over the next two years at 200 percent of the country's economic output; earlier it had said the debt burden would peak last year at 177 percent. The IMF now says Greece needs more debt relief and 85 billion euros in new financing (up from an earlier estimate of around 60 billion euros) through 2018.

The IMF said that "Greece's debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far."

Greece faces a deadline Monday to repay 4.2 billion euros ($4.6 billion) to the European Central Bank. It is also in arrears on 2 billion euros to the IMF.

It will take an estimated four weeks for Greece to access new bailout loans, leaving EU finance ministers scrambling to find ways to get Athens some money sooner.

U.S. Treasury Secretary Jacob Lew is traveling to Europe to confer with leaders about the Greek crisis. Lew will meet Wednesday in Frankfurt with European Central Bank chief Mario Draghi. On Thursday, he will meet the finance ministers of Germany and France.

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.

Greece faced this year's first bailout deadline back in February. Irish Finance Minister Michael Noonan said it could have found itself in a much better situation now had it clinched a deal back then, but Greece got its timing all wrong during the bailout negotiations.

"It would have been much easier to settle this last February, and it would have been much easier to settle this a fortnight ago," when Greece shocked its eurozone allies by calling a referendum and seeking to reject their latest proposals. "From an economic, financial and social point of view it was an absolute disaster, because we all know in democracies that political success and economic success go hand in hand."


Associated Press writers Pan Pylas in Brussels, Anna Psaroudaki in Athens and Paul Wiseman and Martin Crutsinger in Washington contributed to this report.


Follow Gatopoulos at http://www.twitter.com/dgatopoulos and Becatoros at http://www.twitter.com/ElenaBec


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