Greece repays ECB as snap poll pressure rises

Odile Duperry with Alex Pigman in Brussels
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Greece has repaid 3.4 billion euros ($3.79 billion) due to the European Central Bank

Greece has repaid 3.4 billion euros ($3.79 billion) due to the European Central Bank (AFP Photo/Aris Messinis)

Athens (AFP) - Greece repaid a huge debt to the ECB on Thursday, effectively starting its third mammoth bailout, as deepening political rifts in Athens pressured Prime Minister Alexis Tsipras to call snap elections.

The government cleared 3.4 billion euros ($3.79 billion) owed to the European Central Bank, a source close to the matter said, confirming a truce between leftist-run Athens and its European creditors after a seven-month battle of wills that almost saw Greece thrown out of the eurozone.

Greece won the final green light on Wednesday to start repaying its debts and reviving its crippled economy after eurozone finance ministers formally approved the loans-for-reforms package of up to 86 billion euros.

The all-clear to unblock a first payment of 23 billion euros came once the bailout -- the third in five years -- was approved by European parliaments, including Germany's Bundestag.

"This agreement provides perspective for the Greek economy and a basis for sustainable growth," said Jeroen Dijsselbloem, the Dutch finance minister who chairs the so-called Eurogroup of eurozone finance ministers.

"We are certain to encounter problems in the coming years but I trust we will be able to tackle them," he added.

The decision unlocked 13 billion euros for Athens and set aside another 10 billion euros to recapitalise the country's cash-starved banks.


- Merkel's 'cowardly performance' -


With the bailout now on track, Tsipras came under pressure to call snap elections as early as next month.

Tsipras met with members of his cabinet in Athens as speculation swirled that he was to step down and call early elections in a bid to regain office with a stronger hand.

The Kathimerini newspaper said certain close advisors were urging Tsipras to call elections on either September 20, or September 27 at the latest, so the government can swiftly overcome a rebellion from within his hard-left Syriza party.

Tsipras suffered an unprecedented setback in parliament on Friday, with 43 of his 149 Syriza MPs choosing to either oppose or abstain from the latest wave of creditor-demanded austerity.

Greek stocks fell on Thursday amid the political uncertainty, down 3.5 percent. Frankfurt and Paris were down by 2.0 percent.

Last week, the eurozone's finance ministers approved in principle the bailout to keep Greece in the single currency bloc, pay its bills and revive its shattered economy.

The German parliament voted by an overwhelming majority on Wednesday to back the third bailout, with Chancellor Angela Merkel spared her own major rebellion of deputies opposing the aid.

But Germany's top-selling Bild newspaper ran an unforgiving headline denouncing "Merkel’s cowardly performance" after she remained silent during the parliamentary debate.

But it celebrated the 67 lawmakers in her coalition who voted against the bailout, dubbing them the "righteous ones".

Tsipras rode to power in January on a wave of popular anger against the tax hikes, spending cuts and reforms demanded by creditors in exchange for two previous bailouts costing 240 billion euros.

He has said that Greece's creditors -- the European Union, European Central Bank, International Monetary Fund and the European Stability Mechanism -- have agreed to discuss public debt relief measures when a first assessment of reform compliance is completed in November.

Greece's debt currently stands at a towering 312.8 billion euros, the finance ministry said Wednesday, a level the IMF said is unsustainable and requires relief.

The bailout accord is the most far-reaching yet, including an extensive overhaul of Greece's health and social welfare systems plus its business practices and public administration.

Seemingly small details of daily life will also be affected by the new rules, from visits to the doctor to an extension of the expiry dates on pasteurised milk in supermarkets.