Greek PM axes rebel ministers

  • 18/07/2015
Alexis Tsipras (Reuters)
Alexis Tsipras (Reuters)

Greek Prime Minister Alexis Tsipras has axed ministers who rebelled over draconian bailout terms, putting his house in order before a fresh round of tough negotiations with creditors including EU hawk Germany, which has approved the deal.

The most prominent victim was energy minister Panagiotis Lafazanis, the head of a hardline faction within Tsipras's party that has demanded the country leave the eurozone. His ally, the deputy minister of defence, was also axed.

The reshuffle came just hours after the EU approved a short-term 7.16 billion euros (NZ$11.88 billion) loan to Greece, allowing it to make huge payments as early as next week to its creditors while a new eurozone debt bailout is being hammered out.

It also followed a crucial green light from German lawmakers for Chancellor Angela Merkel to begin negotiations on a new 86-billion-euro bailout package.

The loan, to be given through the EFSM rescue fund, will allow Greece to make a critical payment of 4.2 billion euros due Monday to the European Central Bank needed to keep the country in the euro.

The Greek prime minister fuelled hopes of a fresh boost to the negotiations after stamping down on a lawmaker mutiny in his radical left Syriza party which had weakened the government and raised fears of early elections.

The reshuffle, which saw nine changes overall, replaced the junior ministers of finance and foreign affairs, who had resigned over the bailout deal. The new members of the cabinet were set to be sworn in at a ceremony on Saturday.

Merkel, who like Tsipras, faced rebels in her own party ranks, told German lawmakers that the deal with Athens was the last chance to prevent "chaos" in the crisis-hit country.

In the end she won broad approval from the Bundestag, where her "grand coalition" commands an overwhelming majority, with 439 voting in favour, 119 against and 40 abstentions.

Addressing the chamber before the vote, Merkel had argued that "we would be grossly negligent, indeed acting irresponsibly, if we did not at least try this path".

She said the alternative would have meant "watching on as the country virtually bleeds out, people no longer getting their money, where chaos and violence could be the result".

The German 'Yes' vote came a day after European Central Bank chief Mario Draghi boosted a vital cash lifeline to Greece's struggling banks with 900 million euros that will allow them to open their doors for the first time in almost three weeks on Monday.

To prevent a catastrophic "Grexit", the parliament in Athens early Thursday adopted reforms on pensions, taxes, labour laws and state asset sales that were harsher than those Greeks had rejected in a July 5 referendum.

The about-face sparked violent street protests and speculation of early elections in Greece, where the hard-left Syriza party came to power in January polls on a mandate to reject austerity.