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Germany approves Greek bailout extension despite unease

Frank Zeller
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People carry a banner reading 'out of EU' and 'cancel the debt' during a demonstration in Athens on February 26, 2015

People carry a banner reading 'out of EU' and 'cancel the debt' during a demonstration in Athens on February 26, 2015 (AFP Photo/Louisa Gouliamaki)

Berlin (AFP) - German lawmakers approved a hard-won bailout extension for Greece's new anti-austerity government in a move Berlin's finance chief called "not easy" but necessary, keeping a crucial lifeline open to Athens.

Greece's left-wing Prime Minister Alexis Tsipras welcomed the German vote Friday as "a political act of common sense and democracy", saying there would be no third bailout for his country and pledging to get to work on reforms.

He promised that now his month-old government would "start working hard, in order to change Greece within a Europe that changes direction".

The four-month bailout extension for Greece, approved by eurozone finance ministers Tuesday, averts a potentially calamitous end-February deadline that could have seen Athens default and exit from the euro.

With worsening Greek economic data heightening the pressure, German Finance Minister Wolfgang Schaeuble had vigorously urged MPs to support giving Athens the additional breathing space.

"I'd like to ask parliament, each lawmaker, not to reject the request by the ministry of finance, which wasn't easy for me either, because this would do great harm to our people and our future," Schaeuble told parliament.


- 'Turned a new page' -


Schaeuble, who has traded barbs with Athens in recent weeks, sought to reassure lawmakers Germany would not have to stump up "new billions" or change the bailout conditions but merely grant "more time to successfully conclude" the plan adopted for Athens in 2012.

As expected, the extension won overwhelming support in the lower house where Chancellor Angela Merkel's left-right coalition has a commanding majority.

While Schaeuble described the extension as an act of "solidarity" toward an EU member in need, Tsipras said that "Europe has now recognised that Greece has turned a new page".

"This is the time for the reforms that our country needs and which no government ever sought, because there were commitments with powerful interests," he told Euronews in an interview.

In Athens Tsipras announced that the first legislation by his "government of social salvation" aimed at easing the "humanitarian crisis" caused by years of cuts would be put to parliament early next week.

This will include providing free electricity for 300,000 poor families and housing for 30,000 people, debt relief, measures to protect "hundreds of thousands" at risk at losing their homes and scrapping a controversial goldmine project, he said.

He added there would be no more agreements of austerity cuts in exchange for further financial support.

"The 'memoranda' are finished," he said, referring to the international bailouts Greece received in 2010 and 2012.

To help replenish state coffers, a bill will also be tabled next week to encourage taxpayers to pay part of their arrears, which currently stand at 76 billion euros ($85 billion) and rising.

The new Greek government has walked a fine line between pledging to meet the demands of international creditors and maintaining the support of voters who swept them to power on promises of ending years of hated austerity.

An anti-government protest involving several hundred anti-capitalists and anarchists in Athens, following the deal Tuesday with eurozone ministers for the bailout extensions, deteriorated into street violence Thursday.

In another protest Friday evening, around 7,000-8,000 people demonstrated outside parliament as Tsipras chaired a cabinet meeting inside.


- 'No more billions' -


On Friday the government faced more bad news when official data showed Greece's economy shrank by 0.4 percent in the fourth quarter of 2014, more than previously thought, and the first quarter-on-quarter contraction since the country exited a six-year recession last year.

With a more than 1.5-billion-euro ($1.7-billion) repayment deadline to the International Monetary Fund looming in March, Finance Minister Yanis Varoufakis acknowledged that "at this moment the coffers are empty".

Greece's debt of 320 billion euros is equivalent to 175 percent of its annual economic output.

To secure the extra time for its bailout lifeline, Tsipras's government has agreed to refrain from one-sided reform rollbacks and published a list of proposed reforms focused on tackling tax evasion and corruption and improving government efficiency.

But Varoufakis on Friday told Antenna TV that the deal sealed after gruelling negotiations with creditors was worded in a "deliberately" vague way to ensure its approval by European parliaments.

The mixed message has fanned scepticism about Greece's ability and willingness to pay back the money, especially in Germany, Europe's biggest economy and effective paymaster.

Seventy-one percent of Germans doubt that Athens will implement the savings and reforms it has announced, a poll for ZDF public broadcaster showed Friday.

Schaeuble starkly warned this week that Greece would not receive "a single euro" until it meets the pledges of its existing 240-billion-euro ($270-billion) bailout programme.

Top-selling tabloid-style newspaper Bild fanned public sentiment with a front-page headline Friday that said "Bild readers say Nein (no)!".

It published photos of readers holding up signs that read "Nein -- no more billions for the greedy Greeks".