Greece Backs Down – But Other EU States May Still Force It Out of Euro

AP Photo/Emilio Morenatti
AP Photo/Emilio Morenatti

The Greek parliament last night backed a series of punishing tax rises and spending cuts in last ditch attempt to reach a deal for a new bailout.

The country has requested a financial lifeline of €53.5bn to prop up its banking system and prevent it having to crash out of the euro.

However, despite the apparent climb down, other EU states may still veto the proposals, with German Chancellor Angela Merkel now in serious trouble with her own party.

Ralph Brinkhaus, deputy parliamentary leader of Merkel’s Christian Democratic Union, said: “I’m asking myself how seriously I can take these proposals when it was the Greek government that campaigned against them.”

“On Sunday they were still having a campaign in which they damned everything that they’re now proposing,” he added. “The question is, therefore, will everything be implemented that’s decided on in parliament, or are these just empty promises?”

Another member of Merkel’s alliance, Hans-Peter Friedrich, told German radio he did not trust the Greek proposals: “Either the Greek government is tricking its own people, or us once again.” He was also scathing of EU Commission President Jean-Claude Juncker, saying: “You could send him an old newspaper with a signature on it and then he would say: ‘great, great, great. That is a basis from which to work’.”

According to The Guardian, Artur Fischer, joint head of Germany’s stock market also voiced his scepticism, saying that Merkel could find herself forced out of her job if she supported another bailout deal for Greece.

“She is facing huge internal difficulties that have the potential to end her chancellorship. The trouble is, if we trust Greece again and go for a bailout, Merkel could find herself back in the same position again in six months’ time, and again a year’s time from now – and that would be extremely bad for her.”

If EU leaders back a new bailout deal, the German parliament – along with the parliaments of five other EU nations – will have to vote before it can be approved. If any one of them rejects it, Greece could still be left with no choice but to leave the euro.

Merkel’s own party may be deeply divided on the issue, but Axel Schafer of the Social Democrats said that many in his party will back a new deal, helping it pass.

Even if the measures do pass the German parliament, and Merkel survives the rebellion from her own party, other EU states could still seal Greece’s fate.

Latvian Prime Minister Laimdota Straujuma told German radio: “It will be very hard for me to persuade the parliament. And for the parliament it will be difficult to vote for it, because the average pension in Latvia is considerably less than in Greece, and if you were to ask the Latvians today whether they are willing to lend money to Greece, you can probably guess what their answer would be.”