Greek Parliament passes austerity measures

May 8, 2010 - 0:0

ATHENS — The Greek Parliament passed a package of tough austerity measures on Thursday, trying to stave off economic collapse and help prevent debt contagion from spreading.

The vote, taken one day before leaders of the 16-member euro zone meet in Brussels to discuss final details of a rescue package for Greece, was seen as crucial in helping the country secure the aid.
But with protesters gathering outside Parliament’s doors, the measure’s passage stirred immediate concerns about a long summer of social unrest that could undermine the government’s resolve, push the already devastated Greek economy into deeper recession and put the $140 billion rescue package in jeopardy.
The deaths of three bank workers polarized Greece, where demonstrations have long been a way of life and played a pivotal role in the overthrow of the military regime in 1974. In December 2008, thousands of rioters clashed with security forces for weeks over the fatal shooting by the police of a 15-year-old boy.
172 of the 300 MPs approved the bill, while 121 opposed the bill worth about $38 billion through 2012. They include public sector pay cuts, higher taxes on alcohol and cigarettes and tighter retirement rules.
The vote caused a substantial political fallout in PASOK and New Democracy, reported Greek daily Kathimerini.
The government needed just a simple majority to see the bill through, but it received the support of the MPs from the right-wing Popular Orthodox Rally (LAOS), whose leader Giorgos Karatzaferis said that he could see no other option. The Communist Party (KKE) and the Coalition of the Radical Left (SYRIZA) voted against the measures.
Meanwhile, the German parliament has approved Berlin’s $30 billion contribution towards the bailout, to steady the euro, comes ahead of a summit of euro-zone countries later on Friday, reported
European leaders may be hoping their gamble on a massive bailout for Greece will be enough to shore up a wobbly euro, but the markets have reacted with less than enthusiasm.
With Greece having passed a slew of harsh austerity measures, its 15 partners in the common currency area, the euro zone, were to formally agree to the €110 billion bailout at a summit in Brussels on Friday evening. A vote in the German parliament earlier in the day will pave the way for approval of the joint EU-International Monetary Fund rescue package designed to prevent Greece from going bankrupt.
Ahead of Friday's summit, German Chancellor Angela Merkel and French President Nicolas Sarkozy wrote an open letter stressing their commitment to preserving ""the solidity, stability and unity of the euro zone.""
But in a sign of the challenges ahead, few were willing to take responsibility for the profligacy of a country where tax evasion is rampant and a spending spree by successive governments has led to nearly $400 billion in debt.
Photo: Prime Minister George Papandreou of Greece spoke at the parliament in Athens as it prepared to pass new austerity measures on Thursday. (Photo: Kostas Tsironis/Bloomberg News