Greece And Europe Are On The Brink Of A Deal. Here Is How It Could Still Be Dead On Arrival.

06/25/2015 09:12 am ET | Updated Jun 25, 2015

After months of high-stakes negotiations, the Greek government and its creditors are reportedly within striking distance of a lasting new bailout deal.

But even if Greek Prime Minister Alexis Tsipras inks an agreement with German Chancellor Angela Merkel and the other creditors, it could still be dead on arrival in the parliaments of either Germany or Greece. Hardliners within Merkel's and Tsipras' parties have been particularly skeptical of a deal.

A new bailout package may face challenges in other eurozone countries as well, but a vote in Germany, which is Greece's largest creditor and Europe's top economy, could prove decisive.

Members of Merkel's right-of-center Christian Democratic Union party are reluctant to approve any deal they believe rewards Greece's fiscal irresponsibility. The Christian Democrats' disdain for Greek demands is evident in their preference for a Greek default and subsequent "Grexit," or Greek exit from the eurozone, over a deal they deem too generous. In May, German Finance Minister Wolfgang Schaeuble, considered the senior-most hardliner, indicated he wouldn't have a problem with a Grexit. Other Christian Democratic members of parliament (MPs) have been less delicate. On June 15, MP Erika Steinbach tweeted, "Greece is a cancerous growth on the European Union if it remains in the eurozone!"

The looming June 30 deadline, when Greece's 1.6 billion euro repayment to the International Monetary Fund is due, makes a deal's passage in Germany harder still. There is no time left in the parliamentary schedule for "normal parliamentary procedure" for a vote on a deal before the June 30 deadline, the German Finance Ministry said in a document sent Monday to other eurozone leaders that Bloomberg Business obtained. This raises the threshold for a deal considerably, because it means that lawmakers must instead agree to vote on it in a fast-track process.

In order to reassure German lawmakers that they would not be fast-tracking a deal they dislike only to have Greece reject it, the German Finance Ministry concluded, the Greek parliament must sign off on any deal before Germany and other eurozone parliaments.

If the German document is sincere, a vote on the deal in the Greek parliament will be the most important vote, since Greece's approval is a prerequisite to consideration by other parliaments. And the Greek parliament's approval of the deal is hardly assured.

Yannis Koutsomitis, a Greek political analyst for Germany's NTV and BBC Radio, told The Huffington Post that Prime Minister Tsipras would only strike a deal with the creditors if he thought it could receive the support of a majority of the 300 members of parliament. Koutsomitis believes Tsipras could rely on the votes of legislators from the center-right New Democracy party if he had to. Other analysts believe New Democracy would balk at the corporate tax increases that have made it into the most recent iterations of the deal.

Regardless, much like Merkel's ruling party in Germany, the greatest threat to a deal is from Tsipras' own governing coalition. Within the Syriza party, both the hardline Left Platform bloc, which controls 30 percent of the seats on Syriza's central committee and a subgroup known as "53" indicated their strong opposition to a Tuesday version of the deal, according to the Greek news site Iefimerida. George Saravelos, an analyst at Deutsche Bank AG, told Bloomberg Business that between 10 and 40 Syriza lawmakers have expressed their opposition to the deal Tsipras appears to have endorsed -- and likely will also oppose the final one, which could include more Greek concessions.

In addition, one of Syriza's coalition partners, the right-wing Independent Greeks party, has said that it will only back a deal that includes some debt relief. The Independent Greeks' leader, Panos Kammenos, also said the party would be willing to leave the government if a VAT increase were extended to Greek islands that currently enjoy an exemption. As of Wednesday, it was unclear whether the promise of debt relief and the preservation of the discounted VAT for Greek islands would survive last-minute negotiations.

In sum, Tsipras could win a parliamentary majority without the backing of his governing coalition, but his government would fall, which could endanger the deal anew. Koutsomitis describes three different scenarios for how a vote could play out in Greece's parliament:

1. The parliament approves the debt deal with the backing of the Syriza-led coalition. This is the simplest scenario, and guarantees durable approval of the agreement. Even if a marginal number of Syriza parliamentarians vote against it, it would not be enough to topple the Tsipras government.

2. The parliament approves the debt deal without the backing of the Syriza-led coalition. The government collapses. Tsipras breaks with the hardliners. In this scenario, the law passes thanks to opposition members of parliament. Immediately thereafter, the Syriza-led government collapses, and Tsipras calls for snap elections to decide a new government. Tsipras breaks with the left-wing hardliners, maintaining his support for a deal with the troika of creditors -- the European Commission, the European Central Bank and the IMF. To form the new government, he either wins an absolute majority with a new incarnation of Syriza that has fewer hardliners, or forms a government with more centrist parties.

3. The parliament approves the debt deal without the backing of the Syriza-led coalition. The government collapses. Tsipras co-opts the hardliners. It is possible that Tsipras could assuage his hardline colleagues by finding an as-yet-unexplained way of securing a better deal from the troika. A more likely possibility is that to co-opt Syriza's hardliners, Tsipras would have to embrace a Grexit, seemingly dooming a deal.

One possibility that Koutsomitis does not entertain is Tsipras losing the premiership.

"He is very popular," Koutsomitis notes.

Recent polling shows that public support of Syriza under Tsipras' leadership remains strong. In a June poll by Greek polling firm Metron Analysis, 45 percent of Greeks said they would vote for Syriza if elections were held at the time of polling, marking an increase in support from the January elections that would allow Syriza to govern without the right-wing Independent Greeks. The same poll showed that 59 percent of Greeks approved of the government's negotiating style.

More on the Greek debt talks:

Greece Prepares For Key Vote
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