Prime Minister Alexis Tsipras resigned on Thursday after dealing with a possible revolt in his party over an unpopular bailout program. He is expected to call early elections for September. The prime minister planned to submit his resignation formally to the country’s president later Thursday to clear the way for elections within a month, most likely on Sept. 20. Until the elections, Greece will be run by a caretaker government.
Tsipras felt compelled to act after a large portion his own Syriza party refused to back a third bailout package in parliament last week that secured Greece 86 billion euros ($96 billion) in rescue funds. Faced with a near collapse of the Greek financial system which threatened the country’s future in the euro, Tsipras was forced to accept the creditors’ demands for yet more austerity and economic reform – the very policies he had promised to scrap when he was elected in January.
Some analysts had thought Mr. Tsipras might postpone snap elections until October, after the country faces the first review of its progress in meeting the terms of the bailout. Under the deal, Greece on Thursday received billions of euros in new aid from other eurozone countries, which the government used to repay existing debt, including a payment due on Thursday to the European Central Bank.
Greece’s complex constitution has special stipulations for holding elections less than 12 months after the previous vote, meaning the president should first give major opposition parties three days each to try to form a government. Early on Thursday, as rumors began to circulate that Mr. Tsipras would call for early elections, Finance Minister Euclid Tsakalotos, speaking in Parliament, said early elections would not lead to political instability and called on Greeks to return their savings to banks. Energy Minister Panos Skourletis said on state TV earlier in the day that elections were needed to deal with the split in Syriza. “The political landscape must be cleared up. We need to know whether the government has or doesn’t have a majority.”
The popular, 41-year-old prime minister campaigned against the bailouts in the last parliamentary elections, but then accepted the latest plan, which mandates tax increases and spending cuts to avoid a collapse of the country’s banking system. Complicating matters, former Greek finance minister Yanis Varoufakis published a detailed blog post on Monday in which he trashed the recent bailout agreement, calling it a “humiliating capitulation” that will push Greece deeper into recession, the Greek Herald reports.
The announcement by Tsipras, who came to power only last January, comes a month after Parliament agreed to severe economic measures — such as raising certain sales taxes and overhauling the pension system — so that Greece could receive a fresh bailout worth as much as 86 billion euros ($95 billion). Greece remains under strict capital controls, with weekly limits on cash withdrawals for Greek citizens.