Greek government suffers defections as austerity vote looms

ATHENS, Greece (AP) — Prime Minister Alexis Tsipras faced a rising wave of hostility from members of his own party Wednesday ahead of a parliament vote on an austerity bill that condemns the country to years of spending cuts but is required to get a new bailout package.

The raft of consumer tax increases and pension reforms has led to growing anger among Greece's governing left-wing Syriza party, while the country's civil servants' union voiced its objections with a 24-hour public sector strike.

The vote will almost certainly see large numbers of Syriza lawmakers dissent and vote against the package, raising questions of the government's survival in its current form. The bill is expected to pass with votes in favor by pro-European opposition parties.

Alternate Finance Minister Nadia Valavani said she would not vote in favor of the bill, and resigned from her government seat.

In a letter she sent Tsipras on Monday morning and released by the finance ministry Wednesday, Valavani said she believed the tactics of the "dominant circles in Germany" was "the full humiliation of the government and the country."

Tsipras agreed to a deal after a marathon 17-hour eurozone summit Monday morning. It calls for Greece to pass new austerity measures his left-wing government had long battled against in return for the start of negotiations on a third bailout worth about 85 billion euros in loans over three years.

The government, a coalition between Syriza and the small right-wing Independent Greeks, holds 162 seats in Greece's 300-member Parliament. More than 30 of Syriza's own lawmakers have publicly voiced objections.

Tsipras has acknowledged the measures he agreed to go against his election pledges to repeal austerity, and described them in a Tuesday night television interview as "irrational."

But he said he had no option if he was to prevent Greece's financial collapse.

The International Monetary Fund, which was involved Greece's previous two bailouts and will also play a role in the third, has long advocated the country's debt is too high and that any deal must include debt relief — something the Greek side has also insisted on.

In a report released late Tuesday, the IMF said Greece's debt was now "highly unsustainable" and would reach "close to 200 percent of GDP in the next two years."

On Wednesday, the European Union's executive Commission echoed that analysis, saying there are "serious concerns" about the sustainability of Greece's debt due to a worsening in the economy.

The Commission says in a report that its main forecasts are for debt to reach 165 percent of GDP in 2020, 150 percent in 2022 and 111 percent in 2030. In an 'adverse' scenario, in which the economy does worse than expected, the debt load would hit a massive 187 percent, 176 percent and 142 percent, respectively

Tsipras has faced strident dissent even from top ministers, with Energy Minister Panagiotis Lafazanis saying in a post on his ministry's website that the deal the prime minister reached was "unacceptable" and calling on him to withdraw it.

The bill was being passed through Parliament with emergency procedures and was debated at committee level Wednesday morning before heading to the full assembly in the evening.

The civil servants' strike disrupted public transport and shut down state-run services across the country. Pharmacies joined in with their own 24-hour strike to object to the austerity deal which will allow some non-prescription drugs to be sold by supermarkets.

Demonstrations were planned for Wednesday evening outside Parliament during the assembly debate.

"These laws will pass through parliament today, because they can't do otherwise," said private sector employee Eleni Sari, 45, as she walked through central Athens.

"Naturally, the people are furious, and they have not allowed them any choice. Unfortunately it's not in our hands anymore. That is, it's no longer in the people's hands. By necessity ... they will pass them in parliament, and by necessity we will bear their burden."

Greeks continued to struggle with limits on cash withdrawals and transfers outside of the country. Banks were shut down June 29 and the finance ministry said they would remain closed through Thursday.

In his state television Tuesday night, the prime minister vowed he would not step down despite the open dissent.

"I will not run away from my responsibilities," he said.

He criticized the deal, but said it was the best Greece could get.

"The policies imposed on us were irrational," Tsipras said. "We faced a tough and punitive position from our partners ... But the (agreement) does offer a way out of the crisis."

With its banks dangerously low on liquidity and the state practically out of cash, Greece desperately needs funds. It faces a Monday deadline to repay 4.2 billion euros ($4.6 billion) to the European Central Bank, and is also in arrears on 2 billion euros to the IMF.

Negotiations on the new bailout will take an estimated four weeks, leaving European finance ministers scrambling to find ways to get Athens some money sooner.

The European Commission has proposed to give Greece 7 billion euros in loans from a special fund overseen by all 28 EU nations so it can meet its upcoming debts. The loan would be made pending the start of a full bailout program, but faces resistance from Britain, a non-euro member of the EU.

U.S. Treasury Secretary Jacob Lew was traveling to Europe to confer with leaders about the Greek crisis, and was to meet Wednesday in Frankfurt with ECB chief Mario Draghi. On Thursday, he meets the German and French finance ministers.


Efty Katsareas in Athens, Greece, and Raf Casert in Brussels contributed to this report.