Greek MPs will vote on Wednesday on two laws that could make or break the country’s prospects of an international bailout. Greece is poised to begin talks with its international creditors on a proposed €86bn (£60bn) bailout, but first the Greek parliament has to vote through two measures – a banking reform law and an overhaul of Greece’s civil code.
Introducing these laws was a demand of Greece’s creditors and remains the final hurdle Athens must clear before embarking on a demanding schedule of bailout talks.
A Greek government spokesman said negotiations would start immediately after the vote, with the aim of concluding talks by 20 August, the day Greece must repay €3.2bn to the European Central Bank.
Greece has already spent nearly all of a €7bn emergency bridging loan from the EU in paying debts and is depending on a bigger bailout to service future payments. Wednesday’s vote will be a test for the weakened Syriza government, already damaged by a series of rebellions and resignations over the latest deal with Greece’s creditors.
Alexis Tsipras is expected to rely on the support of three opposition parties to get the measures through. In a vote on the first package of reforms, which introduced higher VAT rates and a later retirement age, the prime minister lost the majority support of his ruling Syriza coalition, as 39 lawmakers on his side either voted against the plan, abstained or didn’t turn up to vote.
That pattern is expected to be repeated in Wednesday’s vote, when parliament will vote on two laws that creditors are insisting on. The first is the adoption of a new code of civil procedure, with the aim of speeding up court processes and reducing costs. Greece’s current code of civil procedure has been little amended since it was introduced in 1967 and the country’s international creditors have been pressing for change.
Some civil and commercial disputes can take two or three years to come to court and litigants have few options for out-of-court settlements. The new code, which reduces the number of special procedures and replaces paperwork with electronic alternatives, was originally meant to be adopted in May 2014.
The next task mandated by the eurozone is to put the bank recovery and resolution directive, one of the EU’s post-crisis banking rules, into Greek national law. The directive aims to ensure creditors and shareholders, rather than taxpayers, bear the losses of future bank failures. Greece already has a legal obligation to adopt the plan.
Greece was one of 12 EU member states that missed the December 2014 deadline to write the directive into national law. Other eurozone offenders include France, Italy, the Netherlands and Lithuania. The European commission – the guardian of EU law – has called on all countries to write the rules into their national law or risk a fine, but none will have to act as quickly as Greece.
The passing of these laws will herald the return of the representatives from Greece’s three creditor organisations – the commission, the IMF and the European Central Bank – to Athens on Friday.
Many analysts think Tsipras could be forced to call elections as soon as September. Greece had reached an “unprecedented configuration in its political history”, said George Saravelos of Deutsche Bank. He added that no government since 2010 had shown less commitment to implementing the terms of its bailout agreement. “The strongest pressure against programme implementation [is] emanating from within, rather than outside, the ruling party,” Saravlos added.
