MS Risk Blog

Greek Banks Reopen

Posted on in Greece title_rule

Greek banks have opened their doors for the first time in three weeks, signifying a tentative step towards normalcy and a possible turnaround in the fortunes of prime minister Alexis Tsipras, who has found himself at the centre of a revolt within the ruling Syriza party over the tough terms of the bailout agreement.

Opposition to the proposed reforms has come from all sectors of society, with shops closing their doors in protest and civil servants going on 24 hour strike. On Thursday 16 July, ahead of a key vote on Greece’s bailout deal, anti-austerity protestors clashed with police outside the parliament in Athens, trading petrol bombs for tear gas in some of the most serious acts of public disorder seen in over two years. Earlier in the day, thousands of people took to the streets in a series of mostly peaceful demonstrations, protesting against the bailout agreement that will require the implementation of numerous unpopular reforms, including tax hikes, pension cuts, limits to public spending, a review of collective bargaining laws and the transfer of 50 billion euros of state assets into a special privatised fund.

Not even the Syriza party – which was elected in January on an anti-austerity platform – has been able to present a unified front in the face of such vehement public opposition, with much internal wrangling over the four bills the government will need to adopt in order to secure the 86 billion euro bailout. While Thursday’s vote saw the Greek parliament approve the bailout package, Tsipras was forced to rely on opposition support after 39 Syriza party members refused to back the government. Deputy finance minister Nadia Valavani even went so far as to resign her position in protest against the changes taking place, saying: “I’m not going to vote for this amendment and this means I cannot stay in the government.”

A second vote on measures relating to justice and banking reforms is due to be held on Wednesday and while they are expected to pass, the Syriza party’s internal ructions have cast some doubt on Tsipras’s future as leader. Under Greek constitutional law, a political party must have at least 120 seats before it can form a minority government. Before the defection of 39 Syriza party members, Tsipras and his coalition partner, the Independent Greek’s party, held 162 seats in the 300 seat parliament. This has now been cut down to 123 seats. Should this number be reduced any further, a leadership crisis seems likely to follow. As Tsipras said to his Syriza colleagues before Thursday’s vote: “I am prime minister because I have a parliamentary group that supports me. If I do not have its support, it will be difficult to be prime minister the day after.”

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