On 19 August, the European Commission officially signed the new Memorandum of Understanding with Greece, thus giving the final go to the third bailout for the troubled country. The new program, financed through the eurozone´s permanent bailout fund (ESM), will provide Greece with up to €86 billion over the next 3 years, in return for a set of reforms and privatizations, which should bring Greece back to a sustainable economic course.
The same day, the critical step in political terms was also taken – the German Bundestag approved the deal. Although the backing was overwhelming in numerical terms, it was a bitter day for Chancellor Merkel, who failed to unite her CDU party behind the deal.
Once all formalities were in place, and since the Greek parliament had already passed the deal, as well as some reform measures, the eurozone gave its blessing to the release of the first part of the first bailout tranche. Once the money arrived in Athens on Thursday, it was sent quickly back to the ECB as a repayment – thus triggering the program in practice.
Shortly afterwards, on 20 August, in a hardly surprising move, Greek leftist prime minister Alexis Tsipras resigned and asked the President to call snap elections. Mr Tsipras´s political position had become unsustainable. He had lost his parliamentary majority when over quarter of his SYRIZA MPs opposed the new bailout program. Also, quick snap elections might allow him to capitalize on his still high popularity. Although he practically failed in his promise to get rid of the creditors´ oversight – in fact he did exactly the opposite, he managed to maintain his approval rating at some 60%. This is, however, widely expected to fall sharply once the reforms imposed by the bailout deal take effect. Quick elections might secure another SYRIZA victory and a fresh 4-year and more stable government mandate. However, recent polls show SYRIZA head-to-head with the opposition New Democracy.
Until the elections, expected on 20 September, the Greek government will be headed by Supreme Court´s chair Vasiliki Thanos, the first female prime minister in Greek history.
19th January 2019
9th November 2018