Emilio Morenatti / AP

Anti-austerity protests erupt as Greek parliament set for bailout vote

Anger on streets comes as IMF says emergency package would be insufficient in alleviating country’s economic woes

Protsters clashed with police in Athens on Wednesday as Greek lawmakers prepared for a midnight vote on an austerity bill that would sentence the country to years of onerous budget cuts in exchange for a bailout package aimed at helping avert financial collapse and a possible eurozone exit.

Demonstrators hurled petrol bombs in the most serious street confrontation since the Greek financial crisis began. It formed part of a popular backlash to proposals foisted onto the Greek government by its eurozone creditors, which Prime Minister Alexis Tsipras has struggled to rally fellow lawmakers behind.

The raft of tax increases and pension reforms has led to growing anger among his governing left-wing Syriza party, which swept elections in January on an anti-austerity platform, civil servants and the public, with many protesting and even clashing with police hours before the scheduled vote.

The vote will almost certainly see large numbers of Tsipras' party dissent and vote against the bill, raising questions of his government's survival in its current form.

More than half of Syriza's central committee signed a statement on Wednesday slamming the bailout deal Greece reached with its European creditors earlier this week, describing it as a coup against their nation by European leaders.

The statement, signed by 109 of the committee's 201 members, says the agreement was "the result of threats of immediate financial strangulation" and is a new bailout with "humiliating terms of supervision, destructive for our country and its people."

If Tsipras' government collapses, a snap election could follow. In an early sign of trouble ahead, Greece’s deputy finance minister abruptly submitted her resignation on Wednesday and the energy minister said he would not back the deal.

"The choice between a bailout or catastrophe is a choice made in the face of terror," said Energy Minister Panagiotis Lafazanis.

Adding to the difficulty the leftist government faces in selling the bailout package to members of the Greek parliament, a report (PDF) on Tuesday suggested that emergency cash being offered in the deal would be insufficient in alleviating the country's economic woes.

The report by the International Monetary Fund (IMF), one of Greece’s primary creditors, said Athens would need greater debt relief than eurozone partners have been prepared to offer.

"The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date — and what has been proposed by the ESM," the IMF said, referring to the European Stability Mechanism bailout fund that Greece has applied to for funds.

Earlier this month, the IMF said Greece needed about $66 billion through 2018 to stay afloat. But that ballooned to $94 billion during the past two weeks of crisis as the IMF updated its projections of Greece's financing needs and concluded the debt situation was "unsustainable," a senior IMF official told Reuters late Tuesday. 

That means the country's European creditors need to either write down the debt they are owed or give Greece a grace period of as long as 30 years.

The official, who spoke on condition of anonymity, said that greater debt relief would give Greece a chance to recover and would be needed if the fund was to stay involved with any new Greek program.

IMF rules prohibit lending to a country unless public debt is considered to be on a sustainable path. Greece has missed a payment to the IMF and would also have to clear those arrears.

"We have made it clear ... we need a concrete and ambitious solution to the debt problem," said the official. "I don't think this is a gimmick or kicking the can down the road... If you were to give them 30 years grace you are allowing them in the meantime to bring down debt by ... getting some growth back."  

Responding to the IMF report, German Finance Ministry spokesman Martin Jaeger suggested Wednesday that Greece issue IOUs to address short-term financing for domestic needs and pay off its debt to the European Central Bank (ECB) and IMF. 

Despite the IMF’s warning, the bill on Wednesday is expected to pass with votes in favor by pro-European opposition parties.

The government, a coalition between Syriza and a small number of right-wing independent Greeks, holds 162 seats in Greece's 300-member Parliament.

Prime Minister 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 the bailout package will start only if Greece's government takes certain steps, including pushing through Wednesday's bill.

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.

In a potential sign that Greece's eurozone neighbors would be receptive to the deal, France's National Assembly on Wednesday approved the $94 billion bailout. French Prime Minister Manuel Valls called the plan "vital to give Greece the breathing room it needs to imagine a future that's not only about paying back its debt."

'The people are furious'

A civil servants strike against the bailout package on Wednesday disrupted public transportation and shut down state-run services across Greece. 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.

Clashes broke out at a demonstration attended by about 12,500 anti-austerity protesters rallying outside parliament hours before the Wednesday night vote. Riot police fired tear gas to fight back groups of youths hurling Molotov cocktails from within the crowd.

"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 before the demonstrations.

Riot police stand amongst the flames from exploded petrol bombs thrown by anti-austerity protesters in front of parliament in Athens, Greece July 15, 2015.
Yannis Behrakis / Reuters

"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.

In a late-night interview on state television Tuesday, Tsipras 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 $4.6 billion to the ECB, and is also in arrears on over $2 billion to the IMF.

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.

Al Jazeera and wire services

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