The Netherlands was the last eurozone state to endorse a third bailout for Greece Wednesday (19 August), as both the cabinet and parliament approved the package after a bruising debate. This means that Athens can receive the first installment as early as today.
Although a majority in parliament supported the €86-billion bailout, it is unpopular with Dutch taxpayers, especially Prime Minister Mark Rutte’s own conservative base, just as in Germany whose parliament on Wednesday also ratified the rescue for debt-ridden Greece after a heated debate.
With a payment of about €3.2 billion due to the European Central Bank today (20 August), Greek Prime Minister Alexis Tsipras is counting on the approval from the eurozone parliaments before he can receive the first tranche from his country’s third bailout package, agreed to on 13 July (see background).
The third bailout has already been approved by Greece’s parliament and the Eurogroup finance ministers.
French lawmakers endorsed the bailout agreement in July.
Last week, the Finnish Parliament gave the government approved the bailout. Lithuania’s cabinet approved the deal on Monday (17 August) and Latvia’s Parliamentary EU affairs committee passed the deal the same day. On Tuesday (18 August), the parliaments of Austria, Estonia and Spain gave their stamp of approval.
National legislatures in Belgium, Cyprus, Ireland, Italy, Malta, Portugal, Slovakia and Slovenia don’t have to vote on the plan.
Rutte was left explaining why he had reversed course on a pledge he gave during his successful 2012 election campaign that he would not give “one more cent for Greece”.
Populist Geert Wilders, whose Freedom Party frequently bests Rutte’s Liberals in national polls, dubbed the prime minister “the Pinocchio of the lowlands” and said Rutte would have lost the 2012 vote had he admitted then that he would support another bailout for Greece in a pinch.
“The situation is now totally different than I estimated it in 2012,” Rutte responded. “In politics you have to take responsibility for things, and it sometimes happens that promises can’t be kept.”
Rutte later yesterday survived a no-confidence vote and parliament rejected a motion that Greece should be denied any bailout by an 81-52 margin in the 150-member parliament.
Rutte’s uneven performance may be a hint of troubles ahead. He needs opposition support, as the Netherlands prepares to assume the rotating European Union presidency in January.
His junior coalition partner, Labour, lost half its seats in the Senate in May after a disastrous performance in provincial elections.
Rutte must now win the support of two major opposition parties to achieve a majority in the Senate and pass any law – including the 2016 budget next month. One potential ally, the Christian Democrats, opposed the Greece bailout.
Just in time
Greece is set to receive the first installment of its third multi-billion-euro bailout today, just as a key repayment to the European Central Bank falls due.
A source close to the matter said Greece would receive €23 billion this morning, allowing Athens to make a loan repayment of €3.4 billion due the same day to the European Central Bank (ECB).
“This agreement provides perspective for the Greek economy and a basis for sustainable growth,” said Jeroen Dijsselbloem, the Dutch finance minister who chairs the so-called Eurogroup of eurozone finance ministers, vowing officials would monitor the process closely.
Pending endorsement from key national parliaments, Dijsselbloem and the other eurozone finance ministers had approved the bailout on 14 August in order to keep Greece in the single currency bloc, pay its bills and revive its shattered economy.
European Parliament role?
Greek Prime Minister Alexis Tsipras was mulling whether to hold early elections on Wednesday, after the austerity bailout split his leftist Syriza party, leaving him powerless to push further reform bills through parliament.
A decision is expected next week.
Tsipras rode to power in January on a wave of popular anger against the tax hikes, spending cuts and reforms demanded by creditors in exchange for two previous bailouts costing €240 billion.
He has said that Greece’s creditors – the European Union, European Central Bank, International Monetary Fund and the European Stability Mechanism – have agreed to discuss public debt relief measures when a first assessment of reform compliance is completed in November.
The Greek premier has also called for the European Parliament (EP) to join the quartet of creditors in overseeing the recently approved bailout deal.
The debt currently stands at €312.8 billion euros, the finance ministry said on Wednesday.
Thursday’s initial €23-billion payment will see €10 billion placed in a fund to recapitalise Greek banks, while another €13 billion will be partly used to pay back both the ECB and to cover an EU bridging loan of €7.16 billion, which was given in July to allow Athens to honour previous commitments to the ECB and the IMF.
The bailout accord goes far beyond economic management to include an extensive overhaul of Greece’s health and social welfare systems, its business practices, and public administration.
Seemingly small details of daily life will also be affected by the new rules, from visits to the doctor, to an extension of the expiry dates on pasteurised milk in supermarkets.
Eurozone leaders reached an agreement on a programme to save Greece from bankruptcy after 17-hour talks on 13 July.
If approved by parliaments, this will be the third rescue programme for Greece in five years. It will be managed by the European Stability Mechanism (ESM), the eurozone permanent crisis resolution fund that was initially set up five years ago in an effort to save Athens from bankruptcy.
Here is a look at what Greece must do:
- Request continued support from the International Monetary Fund after its current IMF program expires in early 2016.
- Streamline consumer tax and broaden the tax base to increase revenue.
- Multiple reforms to the pension system to make it financially viable.
- Safeguard the independence of the country's statistics agency.
- Introduce laws by Wednesday that would ensure "quasi-automatic spending cuts" if the government misses its budget surplus targets.
- Overhaul the civil justice system to make it more efficient and reduce costs.
- Carry out product market reforms that include allowing stores to open on Sundays, broadening sales periods, opening up pharmacy ownership, reforming the bakeries and milk market and opening up closed and protected professions, including ferry transport.
- Privatise the electricity transmission network operator unless alternative measures with the same effect can be found.
- Overhaul the labour market. This includes reviewing collective bargaining, industrial action and collective dismissal regulations.
- Tackle banks' non-performing loans and strengthen bank governance.
- Significantly increase the privatization program, transferring 50 billion euros worth of Greek assets to an independent fund, based in Greece, to carry out the privatizations.
- Modernize, strengthen and reduce the costs of Greek administration.
- Allow members of the three institutions overseeing Greece’s reforms - the European Central Bank, IMF and European Commission, previously known as the 'troika" - to return to Athens. The government must consult with the institutions on all relevant draft legislation before submitting it to public consultation or to parliament.
- Reexamine, with a view to amend, legislation passed in the last six months that is deemed to have backtracked on previous bailout commitments.