Greek Confidence Vote Casts Shadow Over Bailout

Unofficial reports that the Greek government is poised to announce a vote of confidence in the next few days is casting a shadow over the country’s third bailout program as fellow euro zone members prepare to vote on the deal.

Although Athens has not made any official announcement regarding a vote, which was first hinted at last Friday after a stormy session in the Greek parliament on the bailout deal, it has been alluded to by ministers and members of parliament alike.

In addition, sources close to the situation told CNBC a vote of confidence could be announced as soon as August 20 – the day when Greece has a 3.2 billion euro ($billion) debt payment to the European Central Bank.

A spokesperson for the ECB said it would not comment on political matters but said the bank expected the payment to be made on Thursday, following German and Dutch parliamentary votes on the latest rescue – which is expected to be approved.

On Monday, Energy Minister Panos Skourletis said a vote of confidence in the Greek government was “self-evident,” given that almost a third of deputies in the ruling Syriza party voted against the latest 86 billion euro ($95 billion) deal last Friday, in a rejection of the the deep austerity, reforms and spending cuts that it entails.

Referring to that vote when speaking on Greece’s Skai television Monday, Skourletis said: “I consider it self-evident after the deep wound in Syriza’s parliamentary group for there to be such a move.”

Although the majority of the Greek parliament backed the bailout deal last Friday, Greek Prime Minister Alexis Tsipras had to rely on opposition parties’ support to get the reforms approved. As such, his position as leader would be doubt if a confidence vote occurs.

Rival socialist party PASOK has already joined the main opposition party New Democracy and has refused to back Tsipras in any confidence vote, saying that it blames him and his coalition partner for leading Greece into yet another “onerous bailout.”

“All the negative consequences for the country and its citizens bear the signatures of Mr Tsipras and Mr Kammenos (the leader of Syriza coalition partner, Independent Greeks),” the party said in a statement on its website.

“We have no confidence in the Tsipras-Kammenos government and of course will not give it if we are asked.”

All this and a bailout is not even a done deal yet. The Dutch and German parliaments are due to vote on a third bailout for Greece on Wednesday and although the bailout is expected to be approved, there have been loud grumblings from some German lawmakers about giving Greece yet more money.

After months of fraught negotiations between the Greek government and lenders over the bailout, in which the country came close to the precipice of leaving the euro zone and bankruptcy, analysts are worried that the hard-fought bailout deal could quickly unravel if a confidence vote is held.

“The constant murmurings out of Greece regarding a confidence vote and possible snap elections this year do remain a concern,” Craig Erlam, senior market analysts at currency trading platform OANDA, said in a note Tuesday.

“The country needs political stability right now and a government that is committed to implementing the necessary measures to ensure the bailout runs smoothly. The economy suffered enormous damage during negotiations this year and it can’t be expected to go through more of the same.”


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.