With Greece holding up its end of the deal, Europe has moved to re-open funding to Greek’s crippled economy. The European Central Bank (ECB) increased emergency funding for Greece while still maintaining all previous capital controls in place.
 
Finance Ministers from the European Union had met in an emergency meeting and have approved 7 billion euros which ensure the smooth functioning of Greece’s economy. This bridge loan will also ensure that Greece will be able to pay back its bond payments to ECB next week as well as its arrears to the IMF.
 
The finalization of the approval for the loans will rest on the approval of the Germany parliament, Greek’s primary creditor. Greece will be glad to know that a majority of Germany’s conservative lawmakers approve of starting negotiations for further loans.
 
These twin lifelines which will reinvigorate Greek’s economy are thanks to Alexis Tsipras’s efforts in pursuing his colleagues to pass the necessary legislations so as to correct the waywardness of Greek’s financial system.
 
Although Tsipras delivered on his promise, passed the legislations and saved Greece from an economic collapse, his left-wing Syriza party however took a beating for passing the package. It is expected that Tsipras will reshuffle his cabinet and replace those who rebelled against him.
 
Tsipras is purported to have told aids that the rebels had created an "open trauma" in the party. He had no way other than to stick to the deal, in order to save the country from financial collapse. The seriousness of the situation can be gauged from the fact that Nikos Voutsis, the Interior minister’s saying snap polls could be held anytime in September or October "depending on developments".
 
German Finance Minister Wolfgang Schaeuble, who happens to be one of Greece's sternest critics, questioned whether it would ever get a third bailout, even after the parliamentary vote.
 
"We will now see in the negotiations whether there is even a way to get a new program, taking into account financing needs, which have risen incredibly," said Schaeuble on German radio.
 
On their part, Lithuanian and Finnish lawmakers have given their approval to begin talks on negotiations for the third bailout for Greece. Schaeuble said that although he would vote to open talks but he underlined the risks that surround the negotiations which are to be conducted over the next few weeks.
 
With the IMF warning that Greece’s massive public debt it too huge to manage without writing-off portions of it, Schaeuble’s view on this was that a writing-off of debt was incompatible with euro membership and doing so would possibly mean Greece would have to leave the euro, at least temporarily.
 
"But this would perhaps be the better way for Greece," said Schaeuble.
 
Having been on a conference call, Finance Ministers from the European Union agreed “in principle” to start talks for a new bailout package for Greece once it adopts the second set of reforms by 22^nd July.
 
Despite reluctance coming from Britain and from the Czech Republic to contribute to the bridge loan, all 28 countries are expected to follow suit, after a compromise was found to use euro zone funds to guarantee their ring-fenced contributions.
 
The issue of debt relief was highlighted by the IMF in a report that it released last week which states that unless significant portions of Greece’s debt’s are written-off, the only available alternative would be to grant Greece a 30 year “debt service holiday on present and future loans or make large annual fiscal transfers to the Greek budget.” This is clearly not palatable to Eurozone creditors who do not want to tell their taxpayers that their money has been lent to Greece and is not coming back.
References:
http://www.reuters.com/article/2015/07/16/us-eurozone-greece-idUSKCN0PQ0GZ20150716

Alexis Tsipras, the Greek Prime Minister has done what most people thought would be impossible: the Greek parliament has passed sweeping legislation that will ensure a better and a smoother working of the financial machinery, the first part of which involves austerity measures. The restructuring and overhauling of Greek’s financial system was a condition in the multi-billion bailout package proposed by Greek’s creditors.
 
The austerity measures sailed through the Greek parliament with 229 votes in its favor against a total of 300 votes. 64 voted the legislation which 6 votes were absent. With the passing of these legislation, Alexis Tsipras seems to have saved the day, but the future of his party hangs in the balance.
 
Acknowledging that the package will cause hardship, but the lack of any other alternative forced his hands. "I am the last person to shirk this responsibility," he told parliament. Acknowledging a split in the Syriza party, Gabriel Sakellaridis, the government’s spokesperson clarified that there would be no immediate call for new elections.
By passing these legislations, Alexis Tsipras has saved Greece from the brink of bankruptcy and possibly an exit from the European Economy. Thanks to his efforts, 86 billion euros will not flow into Greece and sustain its economy. On the downside Greece will have to endure an increase in value added taxes, adjustment in pension benefits, tighter controls on public spending and an overhauling of its financial systems. It has also agreed to sequester 50 billion euros of public assets in a special privatization fund to act as collateral on the deal.
 
The Greek parliament’s speaker who is very vocal with his views, termed the move as social genocide. Some scenes of protests were heard outside parliament at the time of the debate in parliament. The former finance minister, Yanis Varoufakis, who was sacked also denounced the deal as "a new Versailles Treaty". The Deputy labor minister as well as the energy minister voted against the bill.
 
There is rampant speculation that both Panagiotis Lafazanis, the Energy Minister, and Dimitris Stratoulis, the Deputy Labor Minister would not be holding their portfolios once the Greek Prime Minister decides to go in for a reshuffle.
 
"We support Syriza in government and we support the Prime Minister. We don't support the bailout," said Lafazanis diplomatically.
 
Tsipras made it loud and clear, that he was supporting this package only because Greece had no better alternative.
 
"I acknowledge the fiscal measures are harsh, that they won't benefit the Greek economy, but I'm forced to accept them," he clarified.
 
With Greek’s parliament keeping its part of the deal, the ball is now in Germany’s court so that it can pass legislation that approves the start of the bailout package, so that funds, which is the blood of the economy, will again flow into Greek’s coffers and Greek banks, which were shut as a measure of capital control, can carry out their business.
 
Eurozone finance ministers are due to hold a conference call on Thursday at 10 a.m. (0800 GMT) to discuss the vote.
 
Despite objections from Czechoslovakia and Britain, a 7 billion euro loan will be provided to Greece from the European Financial Stability Mechanism (EFSM).
 
A study conducted by the IMF has concluded that Greece needs more debt relief than what its creditors, especially Germany, is prepared to accept so far. With Greece holding its end of the promise, all eyes are now on Germany to see whether it can honor its promises.
 
While ruling out any writing-offs, the European Commission has published its own assessment of the Greek scenario. While it has agreed to debt-restructuring it says debt re-profiling is also possible.
 
The bailout package is much tougher than what most Greek’s anticipated during the July 5^th referendum. Most Greeks however want to be part of the European Union family. Many Greeks now see the bailout package as the lesser of two evils.
 
"We are Europe's bankrupt child and as a child, Europe has been supporting us for five years and told us what we needed to do to get out of this situation," said Yannis Theodosis, a 35-year-old civil engineer. "We did nothing and now we are paying the consequences."
 
References:
http://www.reuters.com/article/2015/07/16/us-eurozone-greece-idUSKBN0P40EO20150716

With Greek’s Prime Minister running on a clock to pass a series of pro-market legislations and smother dissent from hardliners from his own party, time will tell whether he will be able to bail out Greece from the bleak providence it may face if Mr. Alexis is not able to stick to the clock.
 
Staring at a near financial meltdown, it is imperative that Tsipras meet the demands of his international creditors and face the anger of his lawmakers as well as the public which rejected tougher measures of reform in the July 5^th referendum.
 
The ruling party – Syriza, has already met its junior coalition partners in a series of separate meeting to ensure the smooth sailing of his proposed legislation in parliament. This includes the unsavory items such as pension reforms, tax hikes and tighter supervision of government finances.
 
For the Suriza party, it was a spectacular 180 degree turnaround: voted to power in January it promised the end of tax hikes, while now it has to digest the bitter pill of even more stringent financial reforms. There is rampant speculation in the press that the Greek Prime Minister could resign.
 
Comparing the challenge facing the Greek government to the mythological Gordian Knot that was impossible to untie, Nikos Voutsis, the Interior Minister had confidence that Tsipras will be able to muster the number to see the legislations sail through parliament.
 
"The decisions that will facilitate a return to normality will take place," said Voutsis.
 
Investors were however understandably edgy. European shares edged lower after a four-day rally amidst uncertainty over whether the proposed legislations will make it in time.
 
Suriza’s junior coalition partner has diplomatically promised to support the government so far as the bailout measures which were agreed in Brussels are concerned.
 
"We are committed to voting for what we decided in the council of the political leaders and only that, no other measures that are imposed," said Panos Kammenos, head of the right-wing Independent Greeks.
 
The parliamentary speaker will be a key player during the passing of the legislations. He has been a ferocious critic of the deal handed out by Greek’s creditors. In case she needs to be by-passed, Tsipras could move a vote of no-confidence against her, but that would eat up precious time as well as political capital.
 
The center-right Kathimerini newspaper reported, "The government finds itself in quicksand after the deal with creditors. Mr. Tsipras needs to solve a difficult equation as dissenters on Wednesday's vote may reach or exceed 40."
 
Tsipras needs 151 of 300 lawmakers on his side in order to pass the legislations. His party along with his allies have theoretically the magic number of 162.
References:
http://www.reuters.com/article/2015/07/14/us-eurozone-greece-idUSKBN0P40EO20150714