Greece’s ruling Syriza party edged towards a formal split yesterday, hours before rebel leftist lawmakers plan to vote against a new bailout deal to keep the country afloat.
With opposition support, the government is asking parliament to approve a €85bn billion euro bailout deal that Greece needs to avoid defaulting on a debt repayment next week.
The vote, expected in the early hours Today, will test the strength of a rebellion by anti-austerity Syriza lawmakers, which could raise pressure on Prime Minister Alexis Tsipras to call snap elections as early as September.
The rebels’ leader, former energy minister Panagiotis Lafazanis, took a step towards breaking away from Syriza, a coalition of leftist groups which stormed to power in January promising to reverse austerity policies demanded by the euro zone and International Monetary Fund creditors.
“The fight against the new bailout starts today (Thursday), by mobilising people in every corner of the country,” said a statement signed by Lafazanis and 11 other Syriza members posted on the far-left faction’s Iskra website.
The statement called for founding a “united movement that will justify people’s desire for democracy and social justice” although it did not explicitly call for a new party or a split from Syriza.
Parliament, however, is expected to approve the bailout agreement by a comfortable margin since opposition parties have promised their backing for the government to ensure Greece does not return to financial chaos.
Tsipras has faced a rebellion among about a quarter of his 149 lawmakers since agreeing last month to the bailout deal under the threat of a banking collapse and euro zone exit.
He has long argued Greece cannot repay all its huge debts and demanded a partial write-off. However, the Troika creditors - the European Commission, European Central Bank and IMF - have agreed to consider the issue only after a review in October of the government’s implementation of its side of the deal.
An analysis seen by Reuters on Thursday said the creditor institutions had “serious concerns” about the sustainability of Greek public debt.
However, the creditors’ analysis said sustainability could be achieved without the need for any write-off by extending grace periods before Athens has to start paying interest and principal on its bailout loans.
The IMF favours some sort of debt “haircut” but the government in Germany, where public opinion is hostile to any help for Greece, implacably opposes such relief. Berlin is more open to extensions of debt, however.