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Greece moves ahead on bailout reform votes, but will Tsipras pay the price?

Greece's parliament looks set to pass the reforms demanded by the country's foreign creditors in exchange for a third bailout. The question now is whether Prime Minister Tsipras will politically survive.

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A pedestrian passes a Greek flag in Athens on Wednesday. Greek lawmakers began another emergency debate on further economic reforms demanded by international creditors in return for a new bailout, a vote that could threaten the survival of the coalition government and trigger fresh fears over the country's future in the euro.

Giannis Papanikos/AP

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On the streets of Athens, Greeks are taking a long breath after the daily uncertainties and worries of the last few weeks, when for a while it appeared increasingly likely that their country could drop out of the euro zone.

Banks reopened Monday, and though individuals are still limited to withdrawing 60 euro a day, they can now withdraw it in one weekly lump sum. The long lines in front of ATMs, broadcast around the world, have disappeared, and the sense of immediate crisis has passed.

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But the stakes remain very high for Prime Minister Alexis Tsipras and his far-left Syriza party.

While passage of the tough austerity measures demanded by the country’s international creditors in exchange for another round of financial bailouts appears likely, the toll for that passage may come at the cost of Mr. Tsipras' government. Some are describing the Greek parliamentary vote set for Wednesday night, which will move the proposed 86 billion euro ($94 billion) bailout forward, as a make-or-break moment for Tsipras and Syriza.

“The measures will certainly pass, but the vote will be a signal on whether Tsipras can hold on. If he loses two or three deputies on a not-so-controversial set of measures, he won’t be able to postpone elections,” says Romolo Gandolfo, a political expert based in Athens.

The cost of the bailout

Last week Tsipras had to watch as a fifth of his left-wing Syriza Party, totaling 39 members of parliament, voted against, abstained, or didn’t show up to vote on changes to the country’s tax, labor, and pension laws that had been demanded as part of the bailout deal. Tsipras had to rely on votes from opposition members of parliament to pass the laws. A few days later he turned key dissenters out of their ministerial positions.

The current measures on the table are related to banking and justice, and include measures on deposit guarantees and the speeding up of civil judicial procedures. Though they are hardly controversial topics, the vote has taken on added significance in this current, deeply divided political climate.

An emergency debate early Wednesday started with Greece’s Finance Minister Euclid Tsakalotos urging lawmakers to support the government so that the country could move forward with its third bailout since the crisis began in 2009. “It’s extremely important to wrap up this prior actions procedure so that we can start negotiations [on the new bailout deal] on Friday,” he told the gathered assembly.

Absent from the set of reforms being voted on Wednesday are those related to pensions and curbing early retirement, as well as increasing the tax rate paid by farmers by around 10 percent. These are far more controversial demands from the international creditors, and are likely to spark strong opposition when they eventually go before parliament.

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That opposition is not likely to be limited to inside the halls of government. Earlier Wednesday it was announced that two central subway stations in Athens would be shut over concerns that thousands of protesters would gather outside parliament when lawmakers met inside to vote. Last week, when parliament voted on the first set of reforms, Molotov cocktails were thrown by some in the crowd on the streets outside, the first time that recent protests had turned ugly.

The Greek civil servants’ union ADEDY have announced plans to stage anti-austerity protests Wednesday evening outside parliament, to demand an end to austerity measures and that the “barbaric” bailout not pass.

Elections on the horizon

Meanwhile, Tsipras has looked increasingly under strain, and many analysts say the prime minister will be forced to call early elections later this year, less than 12 months after the last elections, though he remains popular and would be expected to win reelection.

“There is a growing consensus that some point in the fall there will be elections again,” says Mr. Gandolfo. “But the government’s aim is that this will happen after the agreement with the creditors is reached. For this to happen, Syriza needs to show it isn’t losing votes, and that it can maybe get back some of those who abstained last week.”

Following last week's vote, European authorities released billions of euros in emergency funding to Greece; however most of this went immediately to pay off the country’s creditors, including 2 billion euro to the IMF. The country is expected to see its economy contract by 3 to 4 percent this year, as thousands of Greek businesses shrink or go under as a result of the ongoing economic crisis.

As people wait to see what tonight will bring, life goes on in Athens, as tourists and locals alike escape the summer heat in terraces and cafes.

“I think this new deal with the creditors is practically signed,” says Loukas Mamalis, an engineer. “The government fought for a better deal, but they lost, and now the best thing is to try to make things better in the long term, not short-term blaming.”