CFR Dailly News Brief: TOP OF THE AGENDA Greek Parliament Backs Bailout Terms

July 16, 2015 Daily News Brief

TOP OF THE AGENDA Greek Parliament Backs Bailout Terms Greek lawmakers voted (EU Observer) 229 to 64, with six abstentions, to approve tough austerity reforms in exchange for a third, multi-billion euro bailout program Wednesday. Clashes erupted between police and protesters in Athens, and Greece's interior minister said that the country may hold snap elections (Reuters) in September or October after the thirty-nine members of Prime Minister Alexis Tsipras's ruling Syriza party voted against the terms of the new bailout. The Greek economy has shrunk by 25 percent over the last five years. Meanwhile, eurozone finance ministers reportedly authorized (Bloomberg) a 7 billion euro bridge financing loan to Greece, as Greece faces a July 20 deadline for a 3.5 billion euro payment to the European Central Bank.

ANALYSIS "In the immediate future, if there is any politician who can steer Greece away from the temptations of the hard right, or forces well to the left even of Syriza, [Tsipras] is probably the one. Still, even if he behaves perfectly, and even if Grexit doesn’t come back onto the table, it seems hard, to people in Athens as much as Brussels or Berlin, to see how the shattered relationship between the Greeks and their (northern) European neighbours will be repaired," writes the Economist. "Even Franco-German co-management may not be up to striking a workable compromise. The change behind the scenes is that the Paris-Berlin bond can no longer take strength from the shared project of European integration: France’s 2005 rejection of the proposed EU constitution was a turning point. The relationship has instead become utilitarian and as a result the EU’s days of ever closer union may be at an end," writes Francoise Heisbourg in the Financial Times. "The needs of countries in crisis are growing faster than the resources of the [IMF] (creating large financing gaps), and swings in capital flows can leave sovereigns with high levels of debt.  From this perspective, the failure of Congress to pass IMF quota reform, and broader constraints on increasing quotas, leads to an inherent tension for the Fund, whose rules were drawn up in simpler times.  Greece represents an important, but by no means unique, test of their capacity to adapt," writes CFR's Robert Kahn in a blog post.