Greek parliament approves bailout reform bill

Greek parliament has approved a reform bill required by its international creditors to secure multi-billion euro bailout funds.

After a heated debate, 153 lawmakers in the 300-seat parliament approved the bill, which included regulations on home foreclosures and tax arrears, including fiscal measures for a withdrawn 23 percent Value Added Tax on private education; a special five cent tax on each lottery game of OPAP SA; and a tax of 40 cents per liter on Greek wine.

Notably the bill addressed non-performing mortgages, which concerns many Greeks who cannot pay their mortgage on their primary residence amidst other tax obligations. Talks on the issue have been dragging on since mid-October between the government and the country’s creditors, the Eurogroup, the EU, the International Monetary Fund and the European Central Bank.

An agreement between the two sides was finally achieved early on Tuesday when the creditors warned that it would not release the next bailout tranche of €2 billion ($2.149 billion) in rescue loans and €10 billion ($10.74 billion) for the recapitalization of Greek banks at the Euroworking Group on Friday if all measures were not approved.

The final agreement includes the protection of 25 percent borrowers and further one in three borrowers (35 percent) based on objective income and assets criteria. This way, home foreclosure protection for primary homes covers about 60 percent of mortgages among an estimated 400,000 homeowners.

The long awaited agreement between the government and creditors caused fierce reactions from opposition parties and losses for the Syriza-Independent Greeks coalition government.

Earlier Thursday, former Syriza spokesman Gavriil Sakellaridis resigned, explaining in a statement that he "cannot contribute to the implementation of government policies".

Syriza parliamentarian Stathis Panagoulis abstained from the vote, while Nikos Nikolopoulos, a lawmaker with coalition partner Independent Greeks, voted against the bill.

Greek Prime Minister Alexis Tsipras ousted Panagoulis from Syriza's parliamentary group and Independent Greeks leader Panos Kammenos took the same action against Nikolopoulos.

Back at the House, the head of opposition party New Democracy, Vaggelis Meimarakis, blamed the government for evicting Greeks from their homes. "I'm curious how Syriza MPs will sleep at night when the first auction will occur," Meimarakis said.

About the tax on wine, Meimarakis also wondered "what interests does it [this tax] serve”. He went on to blame the leftist Syriza ruling party as a “neoliberal and callous left [party] which converts pensions into tips”.

Greek Finance Minister Euclid Tsakalotos argued that after very tough negotiations, the government had managed to bring a new law which covered nearly 94 percent of borrowers with non-performing mortgages against auctions.

Greek Deputy Prime Minister Giannis Dragasakis further explained the importance of the measure amidst the recapitalization of the banks. "Only if it is combined with a treatment of the red loans and a policy for strengthening employment, the recapitalization of banks can be successful,” Dragasakis said, after noting that non-performing loans were not treated at all by previous governments.

But head of socialist Democratic Coalition, Fofi Genimata, was not convinced. “You push people out of their homes through speedy procedures. You sold them lies,” Genimata said.

Tsipras' government is determined to complete the first creditor’s review under the bailout package signed in July, in order to start talks with lenders on debt relief by the end of this year. However, many see a false objective in this strategy.

“Tsipras lies to his MPs, asking them to vote for these measures so as to gain a debt relief,” Vasilis Leventis, president of the Union Centrist’s party, said who then urged Tsipras to resign and establish a new coalition government.

Communist party MP Nikos Karathanasopoulos said: "The management of the red loans is not intended to relieve indebted folk households, which now becomes hostages, but aims at the purge of banks’ portfolio".

Earlier on Wednesday, Economy Minister Giorgos Stathakis defended the government’s negotiation efforts at the parliament.  

“The regulation provides a strong protection for the weakest and support for the middle-class people who have an opportunity to change their strategy,” Stathakis said, referring to the fact that the regulation includes a possible settlement between the bank and the borrower based on the current market value of the property which is now considerably lower than the initial one. This may lead to a form of "haircut" of the loan.

Half way in the debate and in light of strong reactions against the tax on wine since Wednesday, Deputy Finance Minister, Trifon Alexiadis, announced that it was reduced from 40 to 20 cents per liter.

More negotiations are expected to take place in Athens over a second set of bailout reforms, which include changes to the pension system and income tax issues.