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Tsipras Resigns and Calls Snap Elections

“I’m putting everything I’ve done [in the past seven months] to the judgment of the Greek people,” Mr Tsipras said.

His move makes way for the appointment of an interim administration to oversee an election likely to be held on September 20, officials said.

Fresh elections — called on the very first day of Greece’s new €86bn international bailout programme — will plunge Greece back into short-term political uncertainty. But they could allow Mr Tsipras to capitalise on his enduring popularity in the hope of yielding a more stable government that is not held back by far-left critics of the rescue terms.

Officials raised the possibility of holding a snap poll last week after lawmakers from Syriza’s extreme left faction voted against a new three-year rescue package, wiping out the government’s majority.

The package was approved thanks to support from three pro-European opposition parties but the Left Platform’s rebellion left the Syriza-led coalition hostage to the centre-right New Democracy party in any future vote.

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In his address, Mr Tsipras acknowledged that he did not obtain the bailout terms that he had wanted but said the deal was the best that could be secured in the circumstances. He had resisted pressure to cut pensions and privatise Greece’s electricity utility, he added.

Mr Tsipras’ decision to go to the polls came hours after the finance ministry announced that the European Stability Mechanism, the EU’s rescue fund, had approved disbursement of €13bn from Greece’s €86bn new bailout package — enough to cover Greece’s funding needs for the next two months.

The European Central Bank confirmed that Athens had repaid €3.2bn in bonds that came due on Thursday.

Athens has caved in to an ultimatum from its creditors and agreed to rush through long-resisted economic reforms in return for a third bailout

Greece was obliged to swallow a series of exacting economic reforms and austerity measures as part of the bailout programme, approved in two waves of legislation by the Greek parliament.

The election campaign is expected to delay the implementation of fiscal and structural reforms agreed with creditors since the interim government will lack a mandate to take political decisions.

Slow progress on reform could in turn complicate talks due later this autumn on debt relief for Athens and a decision by the International Monetary Fund on whether to contribute financially to Greece’s third bailout.

In spite of his capitulation to creditors’ tough demands in return for a further rescue, Mr Tsipras remains popular in Greece because he is regarded as having fought hard to secure the best possible terms. The latest Metron Analysis survey — which dates from late last month — gave him a 61 per cent approval rating. Syriza is comfortably Greece’s most popular party on 34 per cent, but it is unlikely to be able to form a majority administration on its own.

“While the election is disruptive in the short term, the likelihood is that it will result in a coalition that is less dysfunctional than the one we have now, and better able to provide stability in implementing the reform programme,” said Nicolas Véron, senior fellow at Brussels-based think-tank Bruegel. “The current coalition has essentially collapsed anyway.”

FT