Greece crisis: Tsipras shuffles cabinet after anti-austerity mini rebellion

German lawmakers on Friday cleared the way for potentially difficult negotiations on a new, third bailout package for Greece that is expected to be worth 85 billion euros.

Greek PM expected to shuffle cabinet

German Chancellor Angela Merkel has faced domestic resistance to moving ahead with talks for a new Greek bailout deal. (Markus Schreiber/Associated Press)

Prime Minister Alexis Tsipras has made changes to his government, two days after suffering a widespread party rebellion over an austerity bill that he had to push through Parliament as part of creditor requirements to start talks on a third bailout.

Tsipras removed two ministers who had voted against the government line. He replaced Energy Minister Panagiotis Lafazanis with former labor minister, Panos Skourletis, while Trifon Alexiadis becomes the new alternate finance minister following Nadia Valavani's resignation in the run-up to the vote earlier this week.

The Greek moves come on the heels of a vote in the German parliament that was overwhelmingly in favour of the new bailout plan for Greece after Chancellor Angela Merkel argued that the cash-strapped country would face chaos without a deal.

The German Parliament's vote capped a week in which the proposed bailout agreed by eurozone leaders Monday has cleared a string of hurdles. That has raised expectations that Greece will secure a financial lifeline to allow the country to reopen its banks and get back toward some sort of economic normality.

Following more than three hours of debate, German lawmakers voted 439-119 in favor of opening detailed discussions on the package. There were 40 abstentions.

Earlier Friday, Austrian lawmakers also cleared the way for the talks.

Specific terms of the three-year bailout will now be thrashed out between Greece and its partners in the 19-nation eurozone. The process is expected to last around four weeks and to lead to Greece getting around 85 billion euros to help it pay off upcoming debts.

Germany has been the largest single contributor to Greece's bailouts and has taken a hard line, insisting on stringent spending cuts and tax hikes in return.

"The principle ... of responsibility and solidarity that has guided us since the beginning of the European debt crisis marks the entire result from Monday," Merkel told the special session of Parliament.

Demonstrators in Berlin on Friday hold a poster against the austerity policy of Germany prior to a special session of the German parliament on negotiations with Greece for a new bailout. (Markus Schreiber/Associated Press)

The alternative to an agreement, she added, "would not be a time-out from the euro that would be orderly ... but predictable chaos."

Merkel will have to return to Parliament to seek approval for the final deal when the negotiations are concluded.

"I know that many have doubts and concerns about whether this road will be successful, about whether Greece will have the strength to take it in the long term, and no one can brush aside these concerns," she said. "But I am firmly convinced of one thing: we would be grossly negligent, even irresponsible, if we did not at least try this road."

Shuffle follows party rebellion

In Athens, Prime Minister Alexis Tsipras was widely expected to reshuffle his cabinet Friday or over the weekend, following a rebellion within his party over a parliament vote to approve painful austerity measures demanded for new bailout talks to start.

Early Thursday, 38 of Tsipras 149 radical-left Syriza party lawmakers dissented, with 32 voting against him outright and the other six abstaining. The dissenters included two cabinet members — the energy and welfare ministers — as well as the parliament speaker and the former finance minister, Yanis Varoufakis.

The legislation, which includes consumer tax increases and pension cuts, was part of conditions demanded by Greece's European creditors in order to start negotiations on a third bailout, worth about 85 billion euros ($92 billion). The bill passed 229-64 in the 300-member Greek Parliament, thanks to votes in favour by three pro-European opposition parties.

Elements of the bill were to be implemented immediately, with changes to consumer tax going into effect Monday, the finance ministry said.

Greek banks were also to reopen Monday for the first time in three weeks after capital controls were imposed June 29, ahead of a referendum Tsipras called on creditor proposals for reforms. Greeks will still be limited to cash withdrawals of 60 euros per day.


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