Greek Prime Minister Alexis Tsipras' Syriza party looked set to split after the leader of its far-left faction called on Thursday for a new movement to fight a bailout deal that lawmakers are expected to vote on in the coming hours.
With euro zone finance ministers also due to decide on Friday on the bailout, the International Monetary Fund made clear it would participate in the program only if Europe agreed to ease Greece's huge debt burden.
Days after striking a deal with foreign creditors, Tsipras is asking parliament to approve a bailout agreement that pledges tax rises and spending cuts in exchange for 85 billion euros ($95 billion) in fresh loans. It would be Greece's third financial rescue program in five years.
The vote will test the strength of a rebellion by anti-austerity Syriza lawmakers, which could raise pressure on Tsipras to call elections as early as September.
Parliamentary speaker Zoe Konstantopoulou, one of the Syriza hardliners who opposes the deal, snubbed a request from Tsipras to speed up handling of the bailout bill so that it can be voted on well before the euro zone finance ministers meet in Brussels.
The plenary session finally got underway in parliament at 2 a.m. (2300 GMT) after Konstantopoulou raised a series of procedural questions and objections, meaning no vote can be held at least until well into the early hours of Friday. But lawmakers were still bickering over procedure and debate on the substance of the bailout bill had yet to begin.
The rebels' leader, former energy minister Panagiotis Lafazanis, took a step toward breaking away from Syriza, a coalition of leftist groups which stormed to power in January promising to reverse austerity policies demanded by the euro zone and IMF creditors.
"The fight against the new bailout starts today, by mobilizing people in every corner of the country," said a statement signed by Lafazanis and 11 other Syriza members and posted on the far-left faction's Iskra website.
The statement called for founding a "united movement that will justify people's desire for democracy and social justice", although it did not explicitly call for a new party or a split from Syriza.
The government responded by saying the move "finalizes his decision to choose a different path from that of the government and Syriza".
The rebels insist the government should stand by the promises on which it was elected, to reverse the waves of spending cuts and tax rises which have had a devastating effect on an already weak economy over the past few years.
Parliament, however, is expected to approve the bailout agreement by a comfortable margin when it finally votes since opposition parties have promised their backing for the government to ensure Greece does not return to financial chaos.
Once the bill is passed, the euro zone finance ministers still have to approve the deal for aid to be disbursed before Athens must make a 3.2 billion euro debt payment to the European Central Bank on Aug. 20.
WINNING OVER DOUBTERS
Apparently trying to win over doubters led by German Finance Minister Wolfgang Schaeuble, the European Commission said the reform package would allow Greece to tackle its remaining economic problems to bring the country back to long-term growth.
Germany, the biggest contributor to the bailouts, has deep doubts that Athens will deliver on its reform promises and on the wisdom of pouring billions more into the country.
Acrimonious negotiations had dragged on from January until last month when Tsipras capitulated to the creditors' demands as Greece came close to financial ruin.
The European Commission said in a statement that the creditors had acknowledged "the very good cooperation of the Greek authorities" in the latest round of talks.
Germany's Bild newspaper reported that if the bailout does not win approval on Friday,Greece could get 6.04 billion euros in bridge financing. While Athens opposes such a short-term loan, the money would allow it to avoid defaulting on the ECB debt repayment.
Another uncertainty is whether the IMF will join the new bailout. "The IMF ... will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities' program and debt relief have been taken," IMF Greece mission chief Delia Velculescu said in a statement.
Tsipras has long argued Greece cannot repay all its debts and demanded a partial write-off. The creditors have agreed to consider the issue only after a review in October of the government's implementation of its side of the deal.
An analysis seen by Reuters said the creditor institutions had "serious concerns" about the sustainability of Greek public debt. However, sustainability could be achieved without any write-off by extending grace periods before Athens has to start paying interest and principal on its bailout loans.
Tsipras has faced a rebellion among about a quarter of his 149 lawmakers since agreeing last month to the bailout deal under the threat of a banking collapse and euro zone exit.
He is expected to tighten his grip over most of Syriza when the party holds a special congress to debate its differences, after which he is widely expected to call early elections to seal popular support for the deal.
Finland, one of the euro zone countries most skeptical about pouring more aid into Greece, backed the bailout on Thursday. The German parliament has yet to approve it.