Europe

Greece bailout: Merkel faces rebellion by MPs as key vote looms

Chancellor Merkel with CDU colleagues, 17 Aug 15 Image copyright EPA
Image caption Chancellor Merkel is trying to sell the bailout deal to sceptical Germans weary of the Greek crisis

A German parliamentary vote on the controversial third Greek bailout on Wednesday has been overshadowed by an expected rebellion in Chancellor Angela Merkel's centre-right party.

The Christian Democrats (CDU) and their Bavarian CSU allies are divided over the €86bn ($95bn; £61bn) bailout.

Some MPs suspect that part of the Greek debt will be written off - a "haircut", which could hit EU taxpayers.

They also want an assurance that the IMF will contribute to the bailout.

The rebellion in the Bundestag (lower house) on Wednesday could rise to 100 MPs, German commentators say - a third of the total in Mrs Merkel's bloc. That could weaken her authority nationally.

But a majority is still expected to pass the Greek bailout, as the Social Democrats (SPD) and Greens want it to go ahead.

Debt relief?

Finance Minister Wolfgang Schaeuble has described an International Monetary Fund role in the bailout as "indispensable".

But the IMF is avoiding any commitment to it until October, when Greece's progress in fulfilling tough reforms will be assessed.

Image copyright AP
Image caption Anti-austerity protests continued in Athens last week - but MPs backed the bailout and further austerity measures

IMF chief Christine Lagarde says Greece's massive debt is now unsustainable. She has called for significant debt relief, "well beyond what has been considered so far" for Greece.

Chancellor Merkel says debt restructuring is on the table for Greece, which could mean extending the repayment period or reducing the interest rates it pays.

But German conservative critics say too much taxpayers' money has already been poured into Greece.

Last month 65 CDU/CSU politicians refused to support even starting negotiations for a third bailout.

Mr Schaeuble says he backs the new bailout deal - although he had earlier put forward a plan for Greece to take a "time out" from the euro, in order to stabilise its precarious finances.

Pressure on Tsipras

Doubts remain about the Syriza government's commitment to the bailout conditions, because it previously pledged to oppose austerity.

Many Syriza MPs believe Prime Minister Alexis Tsipras allowed the eurozone lenders to dictate unacceptable terms to Greece, violating the country's sovereignty.

On Tuesday the Greek government said it had agreed the sale of 14 regional airports to German transport company Fraport Slentel for €1.23bn.

It is the first privatisation measure to be implemented by the leftist Syriza party since it took office in January.

In exchange for the bailout - and keeping Greece in the euro - Mr Tsipras agreed to further painful state sector cuts, including far-reaching pension reforms.

The new loans will be spread over the next three years. The first tranche will be €26bn - €10bn to recapitalise Greek banks and €16bn in several instalments, the first of which - €13bn - will be made by 20 August, when Greece must repay about €3.2bn to the European Central Bank (ECB).