Greek Banks to Reopen After Cash Pledge From Lenders

Alexis Tsipras

Greece on Thursday won vital pledges of support from bailout lenders needed to keep its economy from collapsing, but officials in Athens said the painful austerity measures demanded in return were likely to force an election within months.

Hours after parliament approved the tough new cuts, the government promised to reopen banks on Monday and gradually restore services — helped by higher cash support from the European Central Bank.

The ECB announced it was increasing emergency credit to Greek banks, adding another 900 million euros ($980 million) in support over one week. And eurozone lenders pledged short-term loans so Greece can cover its debts and negotiations for a new three-year bailout worth 85 billion euros ($93 billion).

The news buoyed world markets and came as a relief in Greece, where banks and the stock market have been closed for nearly three weeks.

Officials in Prime Minister Alexis Tsipras' government, however, were still reeling from the post-midnight vote in parliament that saw one-in-four lawmakers from the ruling Syriza party vote against the raft of tax increases, pension cuts and other economic reforms.

Interior Minister Nikos Voutsis said an early election was now seen as "very likely" — either in September or October.

With another austerity vote planned next week, Voutsis cautioned that the level of dissent shown Thursday had fallen just short of toppling Tsipras' 6-month-old government, which was elected on a pledge to free Greece from debilitating austerity.

In Berlin, Finance Minister Wolfgang Schaeuble insisted that growing calls to ax a portion of Greece's 320 billion euro debt mountain would not be accepted and again raised the idea of a managed Greek exit from the euro.

"No one knows at the moment how it's supposed to work without a debt cut, and everyone knows that a debt cut is incompatible with membership in the currency union," Schaeuble told Deutschlandfunk radio.

However, the head of eurozone finance ministers, Jeroen Dijsselbloem, shot down talk of a Greek euro exit. "Schaeuble," he said, "If you reach an agreement after such long and hard talks, you have to stand behind it, and that goes for all sides."

Germany's insistence on tough terms for Greece even after bailout austerity deepened and extended its six-year recession has earned Schaeuble criticism, even inside Germany.

A Munich-based think tank, Project for Democratic Union, said it was time for Schaeuble to resign.

"Under the Schaeuble regime the eurozone is no union, it is a creditor-debtor relationship," the group said. While negotiating the Greece deal, Schaeuble "changed the political climate in Europe for the worse, which will not be the same for months or maybe years to come."

Meanwhile, the Moody's credit rating agency said the Greek vote meant the country had dodged imminent danger, but that it still faced risks.

"The Greek parliamentary vote averts an immediate disorderly default and potential exit from the euro area, but risk remains elevated given Greece's weak institutions and substantial political skepticism on the bailout conditions," it said.

Because completing a new rescue deal is expected to take up to four weeks, Greece's European creditors also agreed on interim financing.

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