Muddying the political picture in Greece, however, a parliament deputy speaker announced on Friday that far-left rebels in Syriza had broken away to form a new party with 25 lawmakers. He only managed to pass the program through Parliament with the help of opposition parties, as hard-liners in Syriza refused to support it, setting the stage for the split and the call for an election.
“The certainty is that the need for elections has arisen”, Energy and Environment Minister Panos Skourletis said on state television.
The election could hamper or delay a review planned for October of Greece’s progress under its new bailout programme and rekindle concerns about Athens’ ability to honour its pledges, Fitch ratings agency warned. Alexis Tsipras promised to overturn austerity and move Greece out of the troubled waters that it was in. German Bund yields fell as the prospect of snap elections in Greece increased demand for safe-haven assets, which were also buoyed by concerns about a deepening economic slowdown in China.
However, in a first reaction to the developments the leader of the main opposition conservative New Democracy party Vangelis Meimarakis said during an emergency press briefing that his party will make the utmost effort to avoid the polls for the benefit of Greek people. The New Democracy chief argued that Tsipras had resorted to holding a national election to deal with the rift in his party.
Even with a new government, Tsipras will have little room for manoeuvre on the austerity agenda imposed by Europe and the International Monetary Fund – creditors have said that Greece must swallow budget cuts and introduce reforms in exchange for the bail-out.
If they fail, the president then names a caretaker administration, usually under a senior judge, to hold early elections.
Greece’s European creditors did not appear dismayed by Tsipras’ move, which was widely expected.
“The country can not take more bailouts”, Mr Lafazanis told a news conference.
The all-clear came after the new bailout was approved by European parliaments, including the Bundestag of Germany.
Mr Lafazanis has led a group of dissident lawmakers in splitting from the outgoing Prime Minister’s Syriza party to contest a snap election which is expected next month.
A tumultuous summer in Greece could lead to an uncertain autumn as voters may have to decide who would best navigate the next phase of the country’s financial struggle.
He wants to overturn the bail-out, which took months to painstakingly negotiate, and to have most of Greece’s debt written off.
“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, vowing officials would monitor the process closely.