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Greek banks given fresh cash injection ahead of crunch vote

Published 22/07/2015

Greece's Prime Minister Alexis Tsipras is seeking parliamentary support for bailout reforms (AP)
Greece's Prime Minister Alexis Tsipras is seeking parliamentary support for bailout reforms (AP)

Greece's liquidity-starved banks have been given a new cash injection from the European Central Bank - just hours before a key vote in parliament on further economic reforms demanded by international creditors in return for a third bailout.

A European banking official said the ECB decided to increase emergency liquidity to Greek banks by 900 million euro (£628 million) - the second such cash injection in just under a week.

Fearing a run by depositors flocking to take their savings out of Greek banks, the government imposed capital controls more than three weeks ago which restrict daily withdrawals to 60 euro (£41) per account holder. Extra ECB liquidity means Greek banks will still be able to hand out cash.

Prime Minister Alexis Tsipras's radical left-led government faces its second crunch test in parliament in a week later tonight. Failure to pass the economic measures could undermine his coalition and trigger fresh fears over the country's future in the shared euro currency.

The vote on changes to Greece's judicial and banking sectors is one of the requirements that Greece's European creditors have insisted upon in order for negotiations on a third bailout for Greece worth around 85 billion euro (£59.5 billion) to begin.

After losing the support of a large chunk of his own party's politicians during a vote last week on creditor-demanded austerity measures, Mr Tsipras has to rely on support from pro-European opposition parties to pass the new measures.

Many in Mr Tsipras's Syriza party, including former finance minister Yanis Varoufakis, voted against last week's austerity measures, which included big increases to sales taxes that took effect on Monday.

If more than a handful of others join the dissent in tonight's vote, then Mr Tsipras's government could be in trouble.

At least five Syriza politicians said today they will vote against the draft law - including the firebrand parliament speaker Zoe Konstantopoulou.

In a letter to Greece's president and Mr Tsipras, Ms Konstantopoulou said the measures constitute a "violent attack on democracy", arguing that parliament is being given very little time to study the 1,000-page Bill.

Negotiations with creditors are expected to start soon after the vote.

The Greek government hopes the new bailout talks can conclude before August 20, when Greece must repay a debt worth more than 3 billion euro (£2.1 billion) to the ECB.

Syriza's traditional trade union base is angry at what it sees as Mr Tsipras's betrayal of his electoral mandate. A union representing civil servants is planning an anti-government protest outside parliament before tonight's vote.

But Mr Tsipras has accused party critics of acting irresponsibly.

"I've seen a lot of reactions and heroic statements, but so far I haven't heard any alternative proposal," he told his party yesterday, according to a senior government official.

Mr Tsipras also said those supporting the country's exit from the eurozone or handing so-called IOUs to retirees "should come out and say it, instead of hiding behind the safety of my signature".

The reforms being considered today are aimed at reducing the country's court backlog and speeding up revenue-related cases. Parliament has also been called to approve reforms related to banking union mechanisms, aimed at reducing the risk for European governments from bank crises.

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