Fierce debate in Athens over bailout deal

In a marathon session lasting into the early hours Friday, Greek lawmakers are debating over whether to accept an 85-billion-euro ($95 billion) bailout package that the government says is key to keeping the country solvent. A vote is expected early in the morning.

But as in the previous two bailouts, the money has strings attached in the form of painful austerity measures that would force Athens to cut public spending and privatize more state industries.

Reviled austerity back on agenda

Former energy minister Panagiotis Lafazanis, a member of the ruling Syriza party who lost his cabinet position last month after voting against another bailout-related bill, has emerged as a leader of a rebellion within the party trying to scuttle the deal.

The rebels insist the government should stand by the campaign promises on which it was elected to reverse spending cuts and tax rises, which have had a devastating effect - driving up unemployment and shrinking an already weak economy - over the past six years.

"The fight against the new bailout starts today, by mobilizing people in every corner of the country," said a statement signed by Lafazanis and 11 other Syriza members posted on the far-left faction's Iskra website.

But Finance Minister Euclid Tsakalotos stressed the importance of the vote, with eurozone finance ministers to discuss the deal Friday afternoon in Brussels.

The bill is expected to win approval due to support by Tsipras ideological rivals in right-wing opposition parties.

Economists skeptical

Months of bitter negotiations between Athens and creditors have shaken an economy which last year had been pulling out of a long depression before turning down again.

The current Greek government has long argued the nation of 11 million people cannot repay all its debts and have demanded limited debt forgiveness. Creditors have agreed to consider the issue only after a review in October of the government's implementation of its side of the deal.

Data on Thursday showed the economy returned to growth in the second quarter, confounding economists' expectations of a deepening recession. But many analysts predict it is likely to have worsened since then as the government imposed capital controls on June 29 to save the Greek banking system from collapse.

Eurozone members watch closely

Germany, which was the largest single contributor to Greece's two previous bailouts, has been the country's harshest critic and has maintained a cautious stance ahead of the vote.

German deputy finance minister Jens Spahn said Thursday that "Germany isn't the only country that is still asking questions at the moment."

Spahn told Deutschlandfunk radio that the Greek government clearly recognizes its country must change if it wants to remain in the eurozone - "a lot has been achieved." But he said it was normal "that questions are asked."

Spahn stressed the importance to Germany of getting a clear signal from the International Monetary Fund (IMF) that it will remain a part of the bailout program, and said there still needs to be discussion about details of a planned privatization fund that will sell off Greek state-owned property.

Germany's parliament is likely to hold a special sitting early next week to vote on the Greek bailout, if the eurozone finance ministers agree on Friday to the rescue plan, Bundestag President Norbert Lammert said in a Wednesday email to lawmakers.

IMF to wait and see

But the International Monetary Fund made it clear late Thursday that it would only make a decision on providing further financing for Athens after its eurozone partners commit themselves. It said it has concerns that steps are taken to make its debt burden more sustainable.

"The IMF... will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities' program and debt relief have been taken," IMF senior official Delia Velculescu said in a statement.

On the streets, hundreds of anti-austerity protesters have marched through Athens though no major unrest was reported.

jar/jr (AP, Reuters, AFP, dpa)