Graeme Wearden 

Greek government wins confidence vote – as it happened

Rolling coverage of the Greek debt crisis, as markets welcome signs that Athens will compromise at Wednesday night’s eurogroup meeting
  
  

There are signs of progress in the discussions between Athens and its international creditors.
There are signs of progress in the discussions between Athens and its international creditors. Photograph: Milos Bicanski/Getty Images

Oh, and here’s a photo of Alexis Tsipras voting tonight (note the now-traditional lack of a tie)

Greek government ministers look pleased to have got this confidence vote out of the way.

Summary: Bigger battles ahead

So, Greece’s government has proved that it has the support of a majority in the Athens parliament, and also declared that it will deliver on its electoral promises and renegotiate its debt deal.

That sets up a clash with Europe, starting in Brussels on Wednesday night. It’s going to be a big day, as Bloomberg’s Lorcan Roche Kelly explains here:

Tomorrow is Going to be Huge for Europe

Tomorrow is already today in Athens, and will be in Britain too before too long. So it’s goodnight from us. GW

It’s a wrap.

Sounds like every member of the Greek government backed it tonight -- just as well, really, given they were only sworn in two weeks ago.

Greek government wins confidence vote

Yup, it’s official. Alexis Tsipras has the votes to win tonight’s confidence vote.

That is formal confirmation that his government has enough support in the chamber to press on with its legislative programme.

But tomorrow night’s eurogroup meeting may show just how high the hurdles will be,

The result is coming in too...

Helena’s verdict is in:

Next, the vote of confidence. This shouldn’t be a problem for the government, as it holds 162 of the 300 seats.

That could be tricky to pull off....

The Greek PM is also pledging to meet all his pre-election promises; not leaving much wriggle-room.

Tsipras is now urging Greek people to support him, saying Athens can’t be blackmailed by Europe while they are by his side.

As we flagged up earlier today, Greece’s government insists it is receiving support from America’s government.

Tsipras says that Greece will seek a deal, to allow it to fulfill its debt obligations and allow it to repair its economy and return to growth.

Onto specifics, and Tsipras confirms that his government will seek a short-term arrangement, to give them time and space to agree a longer deal.

No obvious self-doubt in Tsipras’s speech:

Hard to argue with this one:

Hard to argue...

Tsipras warns that the Europe of democracy and solidarity, values and people, could give way to a Europe of “terror, division & destabilization”, if the wrong decisions are taken.

Tsipras is hammering home that Europe has reached a historic point (one of many in the crisis). The decisions taken in the coming days will determine whether Europe can remain united, he says.

The election on 25 January marked the end of a political regime, Tsipras says.

Tsipras: It won’t simply be Yanis Varoufakis at the eurogroup meeting on Wednesday night, but 10 million Greeks, including poor people and neo-immigrants.

Tsipras addresses parliament

Alexis Tsipras tells the Greek parliament that it is essential for all of Europe, not just Greece, that his government succeeds in reshaping its bailout programme.

He also declares that his government has made a cracking start:

Updated

Time for the new PM.....

Samaras ends his speech saying: “There’s something worse than a kolotumba (u-turn) - and that’s taking the country to the rocks [of disaster]”

Former PM Samaras lays into new government

Helena Smith watched former prime minister Antonis Samaras take the stand in countdown to the tonight’s vote in the Greek parliament.

He’s in fine form, she Helena Smith, decimating the new government’s economic policies.

“You’ve been told no regarding to renegotiating the debt, no to the international conference [to discuss the debt] no to everything,” he told the chamber as the man who ousted him Alexis Tsipras looked up.

“And don’t dare endanger our foreign policy that with great effort and toil we worked to achieve,” he says. “Of course we are not going to give you a vote of confidence in policies that bear witness to your wrong views … you will lead the country to the rocks unless you change course, which you will have to do, very soon … Make sure you don’t give ammunition to enemies of Greece.”

The former premier has managed to raise a laugh or two. At one point he actually impersonated the new finance minister Yanis Varoufakis exclaiming “wow, as the finance minister likes to say!.”

Updated

Not sure that Samaras is winning many votes....

Greece’s previous prime minister, Antonis Samaras, is now addressing the chamber, warning that the crisis could explode:

And in a remarkable bare-faced move, Samaras is now lecturing prime minister Tsipras for not (yet) asking for a longer bailout extension -- something *he* turned down in December. Impressive, in its own way.

Hello again. The Greek confidence debate is heading towards a vote.

While we were offline... the economy minister promise that the ERT station would reopen soon, having been forcibly shut in 2013.

And also promised more protection for householders facing eviction

PS: The confidence vote result is due after midnight Athens time (after 10pm GMT), so the blog will burst back into life at some point.

The debate is continuing in Athens, with the head of the health ministry laying out plans to strengthen the service.

Diane has it covered:

Evening summary

With several hours to go until the Greek confidence vote (which Tsipras will surely win), I’m going to suspend proceedings.

Might pop back later tonight if there are major developments.

In the meantime...

The Greek stock market has surged 8%, on hopes that the deal being pulled together by the Athens finance ministry will ease the crisis. Bank stocks rallied by almost 20%.

Finance minister Yanis Varoufakis has just told MPs that Greece is entering the post-bailout world. He promised to walk unbowed into the eurogroup meeting tomorrow night, and slammed 30% of the current bailout as ‘toxic’, saying:

“If you’re not willing to even consider a clash, you’re not negotiating.”

“We’re not seeking a clash. We will do everything to avoid it. But you’re not negotiating if you’ve ruled it out.”

But Germany’s Wolfgang Schäuble has tried to crush hopes of a compromise. He says a deal won’t be agreed at Wednesday night’s eurogroup, and reiterated that Greece must stick to its commitments.

Greek prime minister Alexis Tsipras has held a ‘positive’ call with European Commission chief Jean-Claude Juncker, but that doesn’t guarantee progress....

Some EU officials have also admitted they are ‘infuriated’ by Greece’s stance, suggesting tomorrow’s meeting could be fiery.

Most Greeks support Tsipras, though, according to a new poll.

Check out our lunchtime summary for highlights of this morning’s action, including analysis of the compromise plan we expect Varoufakis to outline to his fellow eurozone finance ministers at Wednesday’s eurogroup.

Lunchtime summary: Hopes grow of Greek deal

Here’s Greek finance minister Yanis Varoufakis telling the Athens parliament that Greece’s post-bailout era starts tonight.

Varoufakis also said that 30% of the austerity programme is “toxic”, and declared:

“If you’re not willing to even consider a clash, you’re not negotiating.”

“We’re not seeking a clash. We will do everything to avoid it. But you’re not negotiating if you’ve ruled it out.”

Updated

Daiwa: Eurogroup may not offer Greece much

Economists at Daiwa Capital Markets have published a preview note of Wednesday’s crunch eurogroup meeting, titled “High noon in Brussels”.

They write this evening:

“The chasm between the positions of Greece and its creditors remains as vast as ever, as illustrated by yesterday’s remark by German finance minister Schäuble, who said that if Greece didn’t want help “that was fine by him”.

Meanwhile, pronouncements by various Greek cabinet members in recent days have also done nothing to smooth over the growing rift. In particular, Varoufakis’ latest warning that a Greek exit may precipitate other member states’ departure from the euro area seems both incorrect and counterproductive, having no doubt incensed several other member states.

We therefore believe that a considerable amount of diplomatic reconciliation is needed, not least at the heads of state level on Thursday, before a substantial agreement on plugging Greece’s near-term funding gap can be found. At tomorrow’s Eurogroup meeting the Commission will reportedly propose a six-month extension of the programme review period in which the ECB could re-admit Greek bonds as collateral in its refinancing operations. But unless there is a credible commitment by Greece to fully implement the programme conditions, we doubt that this proposal will be satisfactory for other member states and the ECB.

Meanwhile, the latest Greek proposal for a bridging solution of ECB profit disbursement and higher T-bill issuance is unlikely to be wholly acceptable to creditors and would also seem unlikely to cover Greek redemptions and loan repayments until August.

Overall, we believe that the Eurogroup is still not minded to offer anything other than a re-activation of the soon-to-lapse bailout review process, possibly with only minor concessions in terms of policy conditionality.

Not sure if this is a good omen, or not, but it’s snowing in Athens tonight.

The head of Greece’s KKE communist party, Dimitris Koutsoubas, did not take up the invitation to support the new government.

Instead, Koutsoubas bluntly argued that the Greece government’s six-month ‘bridging programme’ is effectively a bailout extension (something Alexis Tsipras had ruled out on Sunday night).

Varoufakis concludes by repeating that he rejects around 30% of the existing austerity programme, and urges opposition MPs to support him in the eurogroup negotiations:

But will Greece walk out the same way?...

Varoufakis may be an expert in game theory, but he insists he’s not playing games in these negotiations:

Yanis Varoufakis rules out accepting any bailout terms that raise Greece’s debt levels:

Varoufakis addresses parliament

Now finance minister Yanis Varoufakis is addressing the Athens parliament.

He declares that Greece is on the brink of the post-bailout era (we’ll see what Germany thinks about that) and also savages the mistakes that caused Greece’s depression.

Updated

Venizelos is also querying exactly what Yanis Varoufakis means when he says he only rejects 30% of the bailout programme:

Back in the Athens parliament, the former deputy prime minister is chiding the new government for not communicating its plans better.

Pasok leader Evangelos Venizelos (who experienced a few debt crisis meetings in his time) said MPs are being asked to support Alexis Tsipras without knowing what will be offered to the eurogroup.

Diane Shugart has the details:

Venizelos also cautions Tsipras against expecting too much:

Jasper Lawler, analyst at CMC Markets, sums up the too-ing and fro-ing in recent days:

Greek politicians are walking a tightrope of shouting condemnation of the previous bailout package loud enough that their voters can hear but also whispering compromises to EU bureaucrats to try and get a deal done.

In the meantime, markets are getting pushed around on every report that indicates a move towards or away from compromise by either side.

Greece’s finance ministry has come out with a statement tonight, denying a report that the government intends to go back on its decision to drop the privatisation of Pireaus port.

The Wall Street Journal had earlier cited a ministry official as saying the sale of Pireaus Port authority would go ahead.

Syriza has made it a cornerstone of its economic programme not to denationalise state assets as Panaghiotis Lafazanis, the country’s energy minister and head of the party’s militant Left Platform, emphasized earlier today (see 10.51am GMT)

Lafazanis came out with some hard talk today about privatisations being put on hold.

As mentioned earlier, Yanis Varoufakis takes a more moderate stance on the issue and has insisted that any privatisation that has already be embarked on will not be stopped (via Helena Smith).

Updated

There will also be demonstrations in support of Greece in other cities on Wednesday night, including in Germany, Italy and Portugal.

And next weekend, there will be a demo in Edinburgh on Saturday, and in London, Amsterdam and Brussels (among others) on Sunday.

There’s a full list here.

Updated

Heads-up. There will be pro-government demonstrations across Greece tomorrow night, to show the eurogroup that Alexis Tsipras’s government has their support.

Teneo Intelligence analyst Wolf Piccoli says Schäuble has punctured excessive expectations.

Reminder: the eurogroup of €-finance ministers also meets next Monday...

Updated

Tsipras and Juncker hold "positive" phone call over bailout

Officials close to Alexis Tsipras are saying that the Greek prime minister has had positive telephone contact with EU commission president Jean-Claude Juncker.

That may be further confirmation that a compromise between Greece and its creditors is in the offing (although Wolfgang Schauble says differently)

The ten-minute chat apparently took place “in a very good climate” and was initiated by Tsipras, our correspondent Helena Smith reports.

Officials were cited as saying that the call was further proof that Athens’ proposed bridging programme was on the table and being discussed.

“Whether it is called that or described as an extension so that it is endorsed by other European parliaments, what is important is that the Greek positions are being taken into account,” they said.

The Greek premier is likely to refer to the negotiations when he delivers a final speech before the 300-seat House ahead of the midnight vote of confidence in his government.

And sources at the Commission have told Reuters that the call was held in a “positive spirit”.

  • PHONE CALL BETWEEN EU’S JUNCKER, GREEK PM TSIPRAS WAS HELD IN “POSITIVE SPIRIT OF COOPERATION”-EU COMMISSION - REUTERS

Jack Lew: Europe has a demand problem

The US Treasury secretary, Jack Lew, has fired a verbal warning shot at Europe tonight, saying fiscal policy should be looser. That’s a clear nudge at Germany.

Lew also cautioned against idle talk of Greece leaving the eurozone.

  • US TREASURY SECRETARY LEW SAYS EUROPE NEEDS MORE FISCAL POLICY, THERE IS A DEMAND SHORTFALL
  • US TREASURY SECRETARY LEW SAYS THERE SHOULD NOT BE CASUAL TALK ABOUT A RESOLUTION THAT WOULD LEAVE GREECE OR EU IN UNSTABLE POSITIONS

Wolfgang Schäuble: No chance of a deal tomorrow

Here we go.... Germany’s finance minister has declared that the eurogroup won’t agree a new deal for Greece on Wednesday night.

Sounding as uncompromising as ever, Wolfgang Schäuble declared that Greece is solely responsible for its problems, and insisted that Athens needs to deliver a binding, credible programme to its creditors.

Updated

Greek market surges 8% higher

Hopes of a breakthrough in Brussels tomorrow night have driven the Athens stock market up by 8% tonight, bouncing back from yesterday’s selloff.

Bank shares surged by as much as 20%, as investors showed optimism that the compromise plan being devised by finance minister Yanis Varoufakis and colleagues might help ease the crisis.

However, the Athens closed just before those reports from Brussels that officials are infuriated with Greece. This story has some way to run yet...

Updated

Back in the British Chambers of Commerce annual conference, deputy prime minister Nick Clegg has wheeled out Greece to defend the government’s record.

<cough> Except, of course, that Britain’s debt/GDP ratio was nowhere near Greece’s, and the Bank of England was prepared to swallow up government debt to keep borrowing costs down.

Greeks back government stance

It’s early days of course, but Alexis Tsipras’s government does appear to enjoy strong public support for its bailout stance. Even among some supporters of the previous government, according to a new poll tonight.

Updated

Now this is interesting... Officials in Brussels are apparently ‘infuriated’ by some of the claims being put around by Greece ahead of tomorrow night’s eurogroup meeting.

That’s via MNI:

The carefully orchestrated dance between the new Greek government and its European creditors appeared to crack Tuesday, with top Brussels officials infuriated by what they see as wildly misleading claims coming from Athens.

Apparent claims from Athens officials to other governments suggesting that the U.S. Treasury supports a plan by the Syriza-led government to alleviate Greece’s debt, and that the European Commission president Jean-Claude Juncker either backed the plan or had an alternative himself, have enraged senior economy officials in Brussels.

A senior European official, who spoke on condition of anonymity, described the situation as “berserk” and said, “there is no plan.”

He added that the European Commission and U.S. Treasury were both perturbed at the way they had apparently been represented externally by Greek officials. A team from the U.S. Treasury led by Daleep Singh, deputy assistant secretary for Europe & Eurasia, was in Athens late last week.

“The Greeks are digging their own graves,” the EU official said.

#developing....

The US stock market has opened higher, on optimism that Greece and its creditors are moving towards a deal.

The Dow Jones index is up by 80 points, or around 0.5%, in early trading.

We shouldn’t forget that the European Commission had originally proposed a six-month bailout extension late last year.

Instead, former PM Antonis Samaras took a two-month window. That gamble failed after MPs rejected his candidate for the presidency, triggering the election won by Syriza.

Updated

The German chancellor Angela Merkel’s lightning visit to Washington yesterday is being seen as playing a big role in getting Berlin to “see sense,” analysts and officials are telling our correspondent Helena Smith in Athens.

US president Barack Obama said he was looking forward to hearing how Merkel foresaw kickstarting growth in Greece, after the two leaders held talks on Monday.

“I look forward to hearing Angela’s assessment of how Europe and the IMF can work with the new Greek government to find a way that returns Greece to sustainable growth within the euro zone,” he told a news conference underling how critical such growth was to the global economy and the United States.

“Geopolitically Greece is very important,” the former foreign minister Dora Bakoyannis told Helena in parliament where she was attending the debate ahead of tonight’s confidence vote.

“The situation in the Ukraine and with ISIS is very very serious …. I don’t think any of our partners in Europe wants to see catastrophe in Greece.”

Updated

Lunchtime summary: Greek compromise hopes are building

Hopes are rising that Greece and its creditors will hammer out a compromise deal to extend its bailout programme, warding off the immediate threat of a default.

The European Commission is rumoured to be proposing a six-month extension to Greece’s existing bailout programme.

According to the MNI news service, the EC might also ease up on Greece’s budget surplus targets, from 4.5% of GDP to 1.5%-2%. That’s much closer to Alexis Tsipras’s own targets.

Nothing’s official yet.

But the reports have driven shares higher in Athens, and pushed the yields on Greek bonds sharply lower.

The EC’s move follows last night’s hints from the Greek government that it is also willing to compromise.

The Athens finance ministry is expected to ask for a bridge loan to cover its funding needs until September, and also to propose new economic measures to replace around 30% of the existing bailout. It also hopes, in the long run, to execute a debt swap.

There’s a full breakdown of the Greek compromise plan, with analysis, here.

Finance minister Yanis Varoufakis has told the Guardian that his team are working day and night to get a deal. He says:

Because are committed to finding a solution we will do what we can to achieve a mutually beneficial solution.

We will not be dogmatic … we are prepared to discuss everything except two things: perpetuating and producing this never-ending debt deflationary spiral and disavowing our own critique of this programme.

But some MPs appear unwilling to compromise. Panagiotis Lafazanis, a government minister, has warned that Greece will not be blackmailed by Germany, and vowed to block the privatisations agreed under the old bailout progamme.

Lafazanis also said the government would “legally” oppose a controversial Canadian gold mine project, suggesting a harder line on deals with foreign investors.

Despite that, some financial analysts are hopeful that a deal can be done.

Nick Kounis, head of macro and financial markets research at ABN Amro, says the key is for Greece to commit to reforms.

“Even on the German side you can see the possible contours of a deal.

“For me, what’s very important is the Greek Finance Ministry saying they are willing to embark on a new program of reforms. You could see a liquidity package on the basis there is enough space and commitment to reform. That would give them a few months to reach a bigger and longer deal.”

Richard McGuire, head of European rates strategy at Rabobank International in London, also sees a willingness to compromise.

We’re optimistic a resolution of some form will be forthcoming and possibly by the end of this month before the current bailout expires, which could see a marked retracement of the selloff we’ve seen since the elections.”

But Gary Jenkins of LNG Capital cautions:

It may well be that eurozone leaders view Mr Tsipras’s speech on Sunday as being primarily for domestic purposes and that behind closed doors the Greek government will be prepared to compromise.

However it is very unlikely that Ms Merkel will be prepared to allow the Greek government to set the economic policy for the Eurozone as a whole: the probability of her changing course 180 degrees is remote.

Updated

Janis Emmanouilidis, director of studies at the European Policy Centre in Brussels, is optimistic.

Yanis Varoufakis: We're working day and night to get a deal

Greek officials backing up the growing talk that if it does come, a breakthrough will be found at next Monday’s eurogroup meeting.

Our correspondent Helena Smith reports.

In parliament this morning, MPs (from both the ranks of the government and opposition) said whatever happened lenders would need time to digest any proposals that Athens made.

For his part, the finance minister Yanis Varoufakis, told the Guardian that he and his team are working “day and night” to fine tune the proposal he will put on the table when his eurozone colleagues meet in Brussels tomorrow.

Others, including the American economist Jamie Galbraith, have flown in to help.

“I’m fully aware that we need face-saving narratives and I will work day and night to produce them and to suggest those narratives to them,” Varoufakis told me, adding that the new government’s programme was fiscally fully responsible.

What Athens was going to offer would be a “pretty good plan,” he said.

“Lots of people are helping us. We are staying up to six, seven o’clock in the morning to try to put this together,” he explained, describing Wednesday’s arbitrary deadline set by creditors, following the ECB’s shock decision to no longer accept Greek bonds as collateral for further loans, as a “ incredible pressure and a challenge to democracy.”

Varoufakis added:

Because are committed to finding a solution we will do what we can to achieve a mutually beneficial solution.

We will not be dogmatic … we are prepared to discuss everything except two things: perpetuating and producing this never-ending debt deflationary spiral and disavowing our own critique of this program.”

Updated

Heads-up: the Greek PM might be chatting to the head of the European commission shortly. Another sign of a deal coming?

Updated

The Greek stock market is rallying on the back of MNI’s report that the EC will offer Greece a six-month extension.

The main index is up almost 3.5%. Bond yields continue to recover too.

Reports: EC proposes six-month Greek bailout extension

Things appear to be moving fast for Greece.

There are reports coming out of Brussels that the European commission will propose a six-month extension of the existing Greek bailout programme, at tomorrow night’s eurogroup meeting.

That’s via the MNI news agency.

It’s not clear what terms are involved, but it sounds like the two sides might be edging towards some kind of compromise.

Updated

A breakthrough between Greece and the rest of the eurozone is more likely to come at next Monday’s eurogroup meeting, rather than tomorrow night’s emergency gathering.

Greek compromise plan: the key points

Gary Jenkins, City analyst at LNG Capital, reckons Greece’s creditors could support some parts of its compromise plan, but aren’t likely to agree to a debt swap.

Here’s his view of the key points – as laid out by the Kathimerini newspaper. It’s quite long, but worth reading ahead of tomorrow’s Eurogroup meeting.

1) 30% of the memorandum be scrapped and replaced with 10 new reforms, which Greek officials are to agree with the Organization for Economic Cooperation and Development.

Obviously the devil would be in the detail and it is impossible to comment without that. However, it is possible that some new reforms could be agreed upon and some old ones amended, so it is at least a negotiating point.

2) A reduction in Greece’s primary surplus target of 3% of GDP to 1.49%.

To some degree this is linked to (3) below, but considering the economic hardship endured by Greece it is difficult to believe that there would be no movement on this point. It may depend upon exactly what the money would be utilised for of course, but a reduction of this kind is unlikely to be the straw that breaks the eurozone’s back.

3) A reduction of Greek debt through a swap plan.

This is likely to be some kind of swap where the debt (or a portion of it) becomes linked to economic growth. Here we have a potential sticking point: Whilst I think that the Greek debt burden is too high, the fact is that the eurozone may regard it as ‘sustainable’ because of the duration of the debt and the interest rate. Thus they may think that it is ‘sustainable’ even if they do not think it is ‘repayable’.

Therefore, they may not wish to consider any change to the debt load or any material changes to the terms at this stage. They may well agree to a further extension and / or a lowering of the interest rate (either now or at a later date if Greece sticks to the new deal), but they are unlikely to consider a write-down at this stage. The idea of linking the debt to GDP may be favoured by many economists, but the EZ may believe that the kind of monitoring that would be required would be beyond their relationship with the new government at this stage.

However, this is a proposal that the EZ could push back on to demonstrate that they have not just rolled over to all of the Greek government’s demands, and that the Greek government could sell to their people as ‘work in progress’, whilst pointing out all the concessions that they have won.

4) Greece’s “humanitarian crisis” is to be eased using measures set out in the government’s policy program which was unveiled by prime minister Alexis Tsipras on Sunday night.

This is linked to the other points and again the devil is in the detail. If the Greek government is allowed to run a lower primary surplus and use that money for ‘humanitarian’ purposes, it is difficult to see why the EZ would turn them aside.

5) Greece wants to secure the €1.9bn in profits from the Greek bonds held by the Eurosystem and will seek to issue T-bills, some €8bn above the €15bn limit which Greece has exceeded. Authorities are also keen to raise the threshold for emergency liquidity assistance from the European Central Bank.

I’m not sure about the ‘profits’ as to whether they are realised or mark to market. The T–bills may be an acceptable compromise but I would imagine that the ELA would continue to be very tightly monitored.

6) A further portion of a pending €7.2bn loan tranche could also be drawn if required, essentially reversing the previous insistence by the government that it does not want the money.

The EZ may not want the Greek government to draw down additional funds unless they publicly state that they remain in a programme. This is probably more about political face-saving for both parties and it would be surprising if some kind of wording could not be drawn up that was acceptable to both parties. However it could all fall down on the point of being in a programme or not.

Updated

Greek bond yields are still falling today, on hopes of a compromise deal being agreed.

But as this chart shows, they’re still much higher than before the current crisis began.

Newsflash from Brussels – the European commission isn’t confident of a big breakthrough this week:

Updated

Ed Balls, Labour’s shadow chancellor, has told the British Chambers of Commerce annual conference in London that eurozone leaders have serious issues to tackle (but he didn’t speak specifically about Greece).

Updated

Greek minister: We won't be blackmailed

A Greek minister has declared that the new government will not be blackmailed by Germany into abandoning its anti-austerity programme.

Panagiotis Lafazanis told the Athens parliament that there should be “no doubt” that Alexis Tsipras’s government will fully implement its “radical, progressive” programme.

Lafazanis, the minister for productive reconstruction, environment and energy, also said that restoring industrial growth will be at the “core” of the government’s strategy.

He also insisted that various planned sales of state assets will be cancelled. Such privatisations were simply nationalisations, to foreign powers, he said. But that may not please Greece’s creditors, as privatisations are a key part of the bailout programme.

Diane Shugart, who is doing a phenomenal job live-tweeting the confidence debate, has the details:

Updated

Peter Spiegel of the Financial Times has written a (typically) excellent Q&A on the Greek crisis.

In it, he explains that European officials are worried that Greece could run out of money in March, rather than cling on until the summer.

That’s because Greek tax revenues are thought to have fallen sharply amid the political upheaval, leaving it short of cash for an IMF loan repayment.

With no way to raise cash on the capital markets, and no bailout financing in place, Athens could literally go bust. A developed country defaulting on an IMF payment would be unprecedented.

That’s exactly why Athens wants a bridging loan, but there’s a problem...

This would seem an obvious and simple solution, but no such thing exists in the eurozone arsenal. The European Stability Mechanism, the eurozone’s new €500bn bailout fund, can fund full-scale bailouts, bank recapitalisation programmes and even purchase sovereign bonds on the open market. But it has no tool to offer a short-term loan.

Besides, given demands from Berlin and elsewhere for Athens to stick to its bailout commitments, it is unlikely a bridge loan — even if it existed — would come without tough conditions akin to the current bailout.

More here: Q&A: Greece and the bridge to nowhere

More commentators are waking up to the fact that Greece is likely to compromise at tomorrow night’s eurogroup [as readers of this blog learned yesterday afternoon].

But, as the Telegraph’s Ambrose Evans-Pritchard points out, we don’t know if Greece’s lenders will play ball.

Updated

Greece’s defence minister has also waded into the bailout crisis, suggesting that Athens could tap “another source” for funding.

Panos Kammenos told Mega television that Greece could seek funding from “the United States at best” or even China or Russia, if a eurozone deal cannot be agreed.

Kammenos declared:

“What we want is a deal.”

“But if there is no deal and if we see that Germany remains unbending and wants to blow Europe apart, then we have the obligation to go to Plan B. Plan B is to get funding from another source.”

That sounds alarming, but there are two reasons to be cautious. Kammenos’s remit doesn’t run to the finance ministry, and as the head of the Independent Greeks (the junior coalition partner) he may not be privy to Alexis Tsipras’s inner thoughts.

Updated

Back at the G20 meeting in Istanbul, Canada’s finance minister has argued that Greece isn’t the same threat to world stability as in 2012.

Reuters has the details:

Regulatory and financial reforms have helped diminish the risk Greece may pose to the euro zone, Canada’s finance minister said on Tuesday, amidst growing concern about Athens’ determination to ease austerity measures.

Speaking to reporters on the sidelines of the G20 meeting of finance ministers and central bankers, Joe Oliver also said the mood at the talks was ‘determined’, but not optimistic.

One of the new Greek government’s loudest media critics isn’t too impressed by the compromise plan being drawn up in Athens:

So, what is this compromise plan that is calming the Greek crisis this morning?

As we wrote in yesterday’s liveblog, it revolves around Wednesday night’s Eurogroup meeting of eurozone finance chiefs.

Finance ministry sources have told us that Yanis Varoufakis will suggest a bridging loan until September, which Greece’s creditors may well view as an extension of its existing bailout [which runs out in under three weeks].

That will create a window to haggle out a proper long-term deal with creditors.

Varoufakis will accept 70% of the existing bailout programme, and offer 10 new measures to cover the 30% gap. Those new measures will be devised with the OECD (whose head, Angel Gurria, is in Athens today)

And Greece will also hope to tap some of the €7bn bailout payment that is being withheld until Athens meets previous bailout targets.

It sounds like the framework for a deal. But there’s one major problem – no eurozone partner has said they’ll back it. And Germany’s Angela Merkel and Wolfgang Schäuble were adamant on Monday that Greece must stick to its bailout programme. So Varoufakis may find he has little room to manoeuvre.

Greek bond yields drop amid compromise hopes

Another sign of rising confidence -- Greece’s three-year and five-year bonds are also recovering this morning along with the benchmark 10-year bond.

That is pushing down their yields too:

  • GREEK THREE-YEAR BOND YIELDS FALL 165 BASIS POINTS TO 20.20% - TRADEWEB
  • GREEK FIVE-YEAR YIELDS FALL 98 BPS TO 15.59%

As flagged in the introduction, this follows yesterday’s reports that Greece will ask for a bridging loan until September, and offer 10 new measures to replace existing austerity measures.

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Greek stocks rally

Greece’s stock market is rising in early trading, clawing back some of yesterday’s big selloff.

The main Athens index has gained more than 3%, with Greece’s banks bouncing back [bank share prices have either jumped or tumbled by 10% on most days since Syriza won the general election last month]

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Greek bonds are rising, a little, in early trading, suggesting that investors are a little less worried about the crisis.

This has pushed down the yield (or interest rate) on Greece 10-year bond to 10.9%, down from 11.3% on Monday night. That’s still a worryingly high yield; anything over 7% means a country is basically locked out of the markets.

But it suggests that yesterday’s rumours that Greece might make some concessions at tomorrow night’s eurogroup meeting may be creating some calm.

George Osborne’s warning may not reassure the City, where traders are already fretting about the Greek crisis.

Investors have been unnerved by Sunday night’s speech by Greece’s prime minister, in which Alexis Tsipras vowed to overturn austerity and pursue Germany for war reparations.

Stan Shamu, analyst at IG, says:

After a period of relative calm following the ascension of Syriza to power, the type of rhetoric that investors were initially fearing is beginning to flow through.

In the City, the FTSE 100 has dipped by 15 points in early trading.

John Longworth, the head of the British Chambers of Commerce, sounds less worried than George Osborne about the Greek crisis. He reckons British business wouldn’t actually be severely hurt if Greece left the eurozone.

In a TV interview as the BCC’s conference begins, Longworth said the UK exports relatively little to Greece. And with the European financial system stronger than in 2012, a Grexit probably would be containable.

However... it would be a very different matter if the crisis then spread to other European countries, Longworth added.

I suspect George Osborne’s comments may not go down too well with the rest of Europe.

Our Europe editor, Ian Traynor, reports that top diplomants in Brussels reacted with bemusement to David Cameron’s emergency Grexit meeting on Monday. Is the UK making too much fuss?

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George Osborne: Danger of 'very bad outcome' from Greek crisis is growing

Britain’s chancellor of the exchequer has warned that the risks of a “very bad outcome” from the ongoing Greek debt crisis has risen.

Speaking in Istanbul, George Osborne told Bloomberg TV that there is a growing danger that the deadlock over Greece’s bailout programme spirals out of control.

And he cautioned that this could , potentially causing serious damage to the European economy, and the UK’s too.

Osborne raised the pressure on Athens, and its creditors, hours before tonight’s Greek confidence vote, by declaring:

“It’s clear that the risks to the world economy, the risk to the British economy of this standoff between the euro zone and Greece, is growing each day.

The risks of a miscalculation or a misstep leading to a very bad outcome are growing as well.”

Osborne said the UK had been arguing for both sides in the ongoing Greek crisis to “find some common ground”, during the G20 meeting of finance ministers in Turkey.

This comments come a day after prime minister David Cameron chaired a meeting of senior officials to discuss the impact on the UK of possible Greek exit from the eurozone.

Osborne was blunt about the risks that a disorderly Grexit would pose to the global economy. There’s “no doubt” that the UK economy would be affected by a renewed eurozone crisis, he told Bloomberg.

Incidentally, Osborne is flying back to the UK today to appear at the annual conference of the British Chambers of Commerce in London, so we may hear from him again....

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Greek government faces vote of confidence

Good morning, and welcome to our rolling coverage of the Greek debt crisis, and other events across the world economy, the financial markets and business.

It’s another big day for Greece. The new government must win a vote of confidence late tonight, following another day of debate over Alexis Tsipras’s new anti-austerity programme.

The new coalition should win (it’s got the votes), but the vote comes as Greece prepares for a crunch meeting of finance ministers on Wednesday night. As we reported in the blog yesterday, there are signs that Athens may be looking to compromise.

Finance ministry sources suggest Greece will ask for a longer bridging loan, until September, and also propose new measures to replace the ‘unacceptable’ parts of the existing bailout. But there’s no suggestion, yet at least, that European leaders will back it, for all Tsipras’s optimism that he’ll keep Greece in the euro:

Last night’s story: Greek banks hit by downgrades as PM vows to strike deal to stay inside euro

Angel Gurría, the head of the Organisation for Economic Co-operation and Development, is in town today. He’s likely to support Tsipras’s push for pro-growth reforms, to tackle Greece’s humanitarian crisis.

I’ll be tracking all the main events through the day, as usual....

 

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