The Malta Independent 11 July 2015, Saturday

Updated (2): Greece faces uphill task to convince creditors it means business

Associated Press Saturday, 11 July 2015, 14:07 Last update: about 50 minutes ago

After swaying a skeptical parliament to back a harsh austerity package to stave off financial collapse, the Greek government on Saturday faced an uphill task of persuading its international creditors that it could be trusted to enact the reform promises in full.

Finance ministers and top officials of the eurozone arriving for a key meeting on Greece's package said they needed more than a 13-page plan lacking full details and commitments before they could approve providing billions in aid and debt measures to keep the country afloat.

"We are still a long way out, both on the issue of content as on the tougher issue of trust," said Eurogroup President Jeroen Dijsselbloem. "On paper it is not good enough yet — and even if it is good on paper, then we still have the question: will it really happen?"

Austria's Finance Minister Hans Joerg Schelling asked: "What guarantees can Greece give that what is currently on the table will also be implemented?"

His Italian counterpart Pier Carlo Padoan said the sides were not yet on the cusp of a final deal. "It is not about striking a deal tonight," he said ahead of the meeting.

On Sunday, government leaders of the eurozone and, later, of the 28-nation European Union, are set to have summit meetings on what many have said was the last day to avoid a financial implosion.

If there is to be a deal, "trust will be decisive," said French Finance Minister Michel Sapin.

Greek Prime Minister Alexis Tsipras at least got his parliament to pass the bailout proposals package with 251 votes in favor and 32 against early Saturday during a raucous session, in the face of opposition stronger than the vote implies.

Tsipras said that the legislature "has given the government a strong mandate to complete the negotiation," adding that "what matters now is the positive outcome."

European Commissioner Pierre Moscovici said a collapse of the Greek financial system would be felt far outside of Europe. "There must be reform, solid reform and they have to be put in place quickly," he said. "It is also important for the global and European economy," Moscovici said as he arrived for the meeting.

Making more concessions, though, will be tough on the Greek government since the shadow of severe dissent from governing lawmakers was already hanging over it. The plans contain tax hikes and deep spending cuts, including on pensions, that the six-month-old left-wing government had so far resisted.

Without a deal Greece, already desperately low on cash, its banks shut for the past two weeks and its population restricted on cash withdrawals, risks crashing out of Europe's joint currency, the euro. It would be the first country to do so, and the consequences for the country and global markets would be unpredictable.

The austerity measures Tsipras is proposing are so far from his radical left Syriza party's policies that he faced severe dissent in a late-night parliamentary debate that culminated in a 3:30 a.m. (0730 GMT) vote Saturday.

It comes less than a week after 61 percent of voters opposed similar reforms, proposed by creditors, in a referendum last Sunday.

All opposition parties except the Nazi-inspired Golden Dawn and the Communist Party voted in favor.

Tsipras said his government had made mistakes but that he had negotiated as hard as he could.

"There is no doubt that for six months now we've been in a war," he said. "Now I have the feeling we've reached the ... line. From here on there is a minefield, and I don't have the right to dismiss this or hide it from the Greek people."

The proposed measures are certain to inflict more pain on the Greek public. But if approved by Greece's international creditors, the deal would also provide longer-term financial support for a nation that has endured six years of recession, and address the country's debt which the government has long argued is unsustainable.

If approved, Greece would get a three-year loan package worth nearly $60 billion (53.5 billion euros) as well as some form of debt relief. The country has relied on bailout funding since losing access to financing from bond markets in 2010.

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