Germany Approves Greek Bailout, Athens Prepares to Tighten Belt

While it is likely that the Bundestag will pass the measures in line with the eurozone and the German cabinet, several lawmakers from Chancellor Angela Merkel’s Christian Democratic Union (CDU) are expected to break ranks and vote against Greece’s third bailout.

German Finance Minister Wolfgang Schaeuble urged lawmakers Wednesday to back Greece’s third bailout in five years in light of a marked change in the Greek government’s approach.

Resentment about sending more aid to Athens runs deep in Germany which has already contributed more than any other euro zone country to Greece΄s two previous bailouts since 2010.

But the bailout is still expected to be ratified by MPs in the vote on 19 August, as the Social Democrats (SPD) and the opposition Greens are in favour of pushing it through in the 631-seat Bundestag.

Greece will now receive the funds it needs to meet its liabilities for the next three years, removing the spectre of “Grexit” from financial markets for the time being. 454 deputies voted in favour, 113 voted against and 18 abstained.

The mass circulation Bild newspaper had reported that up to 120 conservative members of parliament might vote against the bailout package Greece agreed with its creditors, or abstain.

Although a majority in parliament supported the bailout, it is unpopular with Dutch taxpayers, especially Rutte’s own conservative base, just as in Germany.

Under the terms of the deal, Greece has to make further spending cuts, hike taxes and implement major reforms.

Schaeuble, who last month told parliament that talks on the third bailout were a “last attempt” to solve the Greece crisis, threw his weight behind the package before Wednesday’s vote and said Athens was ready to reform. Greece has suffered through an economic depression in the past six years and seen unemployment jump to over 25 percent.

The government’s U-turn on pre-election promises to secure its new bailout has sparked a rebellion within Tsipras’ governing left-wing Syriza party, increasing the possibility of early elections being called as early as next month.

Hardliners within his party have accused him of capitulating to unreasonable demands that will plunge the Greek economy further into recession.

“This agreement provides perspective for the Greek economy and a basis for sustainable growth“, Eurogroup chief Jeroen Dijsselbloem said yesterday. “I was struggling with the decision no less than anyone else”, said Schaeuble, who had previously openly doubted the effectiveness of the new aid and suggested an option of temporary exit of Greece from the eurozone.

The European Commission, European Central Bank, European bailout fund and the global Monetary Fund now do that.