By Paul Carrel
BERLIN (Reuters) - German lawmakers gave their go-ahead on Friday for the euro zone to negotiate a third bailout for Greece, but a warning from Chancellor Angela Merkel that the alternative was chaos failed to prevent a hefty rebellion in her own party.
The Bundestag, the lower house of parliament, whose backing was essential for the talks to start, decisively approved the move by 439 votes to 119, but almost a fifth of Merkel's conservatives voted 'No'.
Popular misgivings run deep in Germany, the euro zone country that has already contributed most to Greece's two bailouts since 2010, about funnelling yet more aid to Athens.
Merkel's finance minister, Wolfgang Schaeuble, had suggested that Greece might be better off taking a time-out from the euro zone to sort out its daunting economic problems, although the creditors' offer to Athens includes the conditions for more austerity and economic reform that Berlin had demanded.
But Merkel argued for a new deal to be negotiated to prevent a Greek exit from the euro that might undermine the entire currency union, and said neither Greece nor the other 18 euro zone member countries were willing to accept a suspension.
"The alternative to this agreement would not be a 'time-out' from the euro ... but, rather, predictable chaos," she told the Bundestag. "We would be grossly negligent, and acting irresponsibly, if we didn’t at least attempt this way."
Schaeuble lined up with his boss and urged lawmakers to vote to start the negotiations, adding: "It's a last attempt to fulfil this extraordinarily difficult task."
Although a bridge loan was put in place on Thursday to tide Greece over a payment due to the European Central Bank on July 20, time is short to agree the actions required of Athens to allow its next bailout to be ready before a further payment falls due in mid-August.
The European Stability Mechanism, the euro zone's bailout fund, promptly decided on Friday to formally open negotiations on a third bailout programme, which could total 86 billion euros (60 billion pounds) over three years.
The chairman of euro zone finance ministers, Jeroen Dijsselbloem, had said he expected the negotiations to take four weeks.
"It's not going to be easy. We are certain to encounter problems in the years to come. But I believe we will be able to resolve them," he said in a statement.
Greece's left-wing prime minister, Alexis Tsipras, has been forced to accept a host of austerity measures that he promised to oppose when he was elected in January, in order to keep Greece in the euro zone.
Having secured parliamentary approval with opposition support on Thursday for pension cuts, tax increases and a sell-off of state assets, on Friday he sacked the ministers among the 39 hardline Syriza lawmakers who refused to back him.
BANKS KEPT AFLOAT
Energy Minister Panagiotis Lafazanis and two deputy ministers were removed from their posts, but the main economic portfolios were unchanged, with Euclid Tsakalotos remaining finance minister and George Stathakis economy minister.
Greek parliamentary approval had opened the way for the European Central Bank to increase emergency funding to keep the country's banks, already shut for three weeks, from collapse. It is still not clear if they will be able to reopen next week.
Merkel for her part saw a total of 60 of her conservatives vote against starting negotiations on a third bailout, more than twice the number who in February opposed extending the previous bailout package.
"If we don't have the courage to end it - Greece won't make it in the euro zone - there will be a fourth and a fifth bailout for Greece," said conservative Eurosceptic Klaus-Peter Willsch, reflecting growing popular resentment of Greece among Germans.
The mass-selling daily Bild ran the headline "Seven reasons why the Bundestag should vote 'No' today", listing "Grexit is the better solution" and "Our grandchildren will pay" among its reasons.
However, a Forsa opinion poll indicated that 53 percent of German voters had wanted parliament to back the negotiations, with 42 percent against.
(Additional reporting by Michelle Martin, Caroline Copley, Andreas Rinke, Ingrid Melander and James Mackenzie; Writing by Kevin Liffey; Editing by Hugh Lawson)