Greece is less than 2% of the economy of the eurozone, but earlier phases of the six-year-old Greek crisis created financial pressure for other indebted countries who found their market borrowing costs rising.
(AP Photo/Thanassis Stavrakis). Greece’s Prime Minister Alexis Tsipras reacts during a parliament meeting in Athens, Thursday, July 16, 2015. Regling has previously said the program will require about 50 billion euros in ESM borrowing. Tsipras has been pushing for debt relief, and while some European nations are open to adjusting the terms, German Chancellor Angela Merkel has ruled out simply reducing Greece’s debt, which stands at more than €300 billion.
Finance ministers from countries using the euro currency have planned a conference call to consider rescue financing for Greece. It has taken a hard line, insisting on stringent spending cuts, tax hikes and wide-ranging economic reforms in return.
The speaker of the Parliament described what had been put upon Greece as a “crime against humanity” – a “social genocide”.
Finland had been seen as having one of the toughest stances against a third bailout loan for Greece, with a number of ministers having previously expressed the view that Greece should instead exit from the eurozone.
It means Greek banks, which have been closed for almost three weeks (since June 29), could reopen in the next few days. “This agreement is backed by the 28 member states”, Valdis Dombrovskis told reporters, adding that the bridge loan would allow Greece to meet a huge payment to the European Central Bank on Monday.
Merkel will have to return to Parliament to seek approval for the final deal when the negotiations are concluded.
The left-wing Syriza party, led by Alexis Tsipras, promised to revise the austerity measures after securing victory in the January parliamentary elections.
Addressing the chamber before the vote, Merkel had argued that “we would be grossly negligent, indeed acting irresponsibly, if we did not at least try this path”.
There were worries that ATMs could soon run out of money altogether until the European Central Bank yesterday said that it would raise the level of its emergency funding to the banks, which paved the way for their reopening. Greeks also voted to reject milder creditor reform proposals in a hastily called referendum July 5.
A report by The Wall Street Journal on Thursday said the Greek government could be facing too much opposition from within the ruling leftist Syriza – which came to power on an anti-austerity platform, a situation that could potentially cost the government more than it can handle. Elements of the bill are implemented immediately, with changes to consumer tax coming into effect Monday, the finance ministry said. “If we don’t have the courage to end it – Greece won’t make it in the euro zone – there will be a fourth and a fifth bailout for Greece”, said conservative Euroskeptic Klaus-Peter Willsch, reflecting growing popular resentment of Greece among Germans.