Prime Minister Alexis Tsipras battled to win lawmakers' approval on Wednesday for a bailout deal to keep Greece in the euro and avoid bankruptcy, as the IMF pressured Greece's creditors to provide massive debt relief for its crippled economy.
Having reluctantly agreed terms for negotiations on a third bailout from international lenders, Tsipras must face down a rebellion in his anti-austerity Syriza party to push sweeping pro-market reforms and spending cuts through parliament.
Dozens of MPs, including senior Syriza figures and the government's junior coalition partner, could reject or partially reject the bailout, forcing Tsipras to rely on pro-European opposition lawmakers to carry the vote, which is expected after midnight.
A snap election could follow if the prime minister's majority collapses.
Adding to the uncertainty, a newly released study by the International Monetary Fund called for much more debt relief than European countries, particularly Germany, have been prepared to countenance so far.
Tsipras has described the deal as a "one-way street" imposed on Greece and the rest of his government shared his scepticism.
"It's a difficult deal, a deal for which only time will show if it is economically viable," Finance Minister Euclid Tsakalotos told lawmakers ahead of a crucial vote on the package later on Wednesday.
That may cause a dilemma in Germany, which has poured more money than any other country into rescuing Greece and where, after months of bad-tempered negotiations with Athens, there is increasingly vocal opposition to yet another bailout.
Berlin may wince at providing huge debt relief to a country it scarcely trusts to honour its promises, but insists on having the IMF in the negotiations to help keep Greece in line.
Washington has also stepped up pressure on both sides to secure a deal with NATO member Greece. U.S. Treasury Secretary Jack Lew is making a short-notice trip to Frankfurt, Berlin and Paris this week to press for a quick agreement.
Pointing to Washington's importance in the talks, Deputy Prime Minister Yannis Dragasakis said the deal Tsipras struck with creditors might never have happened without U.S. pressure.
Although the bailout package is much tougher than the Greek people could have imagined when they resoundingly rejected a previous offer from the creditors in a referendum on July 5, most want to keep the euro.
"It has become even more clear that the government reached a deal under conditions of unbelievable pressure, blackmailed but also having realized that it had no choice to avert a new humanitarian crisis, a new humanitarian tragedy," Labour Minister Panos Skourletis said.
"Bearing these circumstances in mind, we come to parliament today and we ask for the bill to be voted for... and we are trying to temper the harsh consequences of this deal."
With banks shut and the threat of a calamitous exit from the currency bloc hovering over the country if it cannot conclude a deal, many Greeks see the package as the lesser of two evils.
"We are Europe's bankrupt child and as a child, Europe has been supporting us for five years and told us what we needed to do to get out of this situation," Yannis Theodosia, a 35-year-old civil engineer. "We did nothing and now we are paying the consequences."
French Finance Minister Michel Sapin on Wednesday played down the significance of the IMF's call for more debt relief, saying that was already France's view.
"The IMF is saying the same thing as we are ... we cannot help Greece if we maintain the same debt reimbursement burden on the Greek economy," he told BFM TV. As he understood it, Sapin said the IMF was not calling for an outright haircut.
VOTING NO
Tsipras will put the bailout package to parliament while grappling with noisy opposition from within his own ranks.
Protests on the streets have so far been relatively muted although civil servants and pharmacists -- who are a target in the reforms package -- hold a strike on Wednesday and protest marches by leftwing anti-bailout groups are also planned.
The latest deal was a major capitulation from Syriza, which stormed to power promising an end to austerity.
Among the rebels are the fiery parliamentary speaker and the party's parliamentary spokesman, who both announced on Wednesday they would vote against reforms. Such outbursts had one right-wing newspaper crowing over the "civil war" engulfing the party.
Syriza's junior coalition partner announced it would vote only for certain clauses in the bill, rejecting those reforms that went beyond a previous vote in parliament that had given Tsipras a mandate to negotiate in Brussels.
In recent weeks, negotiations between Athens and its creditors became increasingly fractious, with each side accusing the other of blackmail. Greece painted European countries, particularly Germany, as bullies, while the creditors said their trust in the Greek negotiators had all but evaporated.
"We have improved. In the beginning we thought that by sending a minister and a few consultants we were negotiating, that was very insufficient," Deputy Prime Minister Dragasakis said in an interview with Sto Kokkino radio.
"The crisis was ours, the crisis existed before the bailout memorandum, it was a crisis of the Greek capitalist system. The memorandums were the medicine to this crisis that proved to be worse than the illness it was supposed to cure."
(Additional reporting by Georgia Kalovyrna in Athens, Mark John and Yann Le Guernigou in Paris)
Photograph: Reuters
