Greece's parliament approved deeply unpopular austerity measures despite worsening violence on Wednesday, in a vote vital towards securing international funds and preventing the euro zone's first sovereign default.
Lawmakers approved a five-year package of spending cuts, tax rises and state asset sales by a comfortable margin of 155 votes to 138 in a roll-call vote, handing a significant victory to embattled prime minister George Papandreou.
'We must avoid the country's collapse at all costs. Now is not the time to step back,' the Socialist premier told lawmakers in a final appeal just before the crucial vote.
The bigger than expected margin suggested the government should be able to push through laws implementing detailed budget measures and privatisations on Thursday.
Outside parliament, fierce clashes raged between stone-throwing masked youths and riot police, who fired clouds of teargas from behind steel crash barriers to keep the rioters at bay. Syntagma Square resembled a battle zone at times.
One group of anarchists armed with sticks and iron bars attacked finance ministry offices just off the square, smashing windows at the entrance and on higher floors. They were driven off by police in more than two hours of cat-and-mouse clashes.
With the country on the brink of bankruptcy and social unrest mounting, it remains unclear whether the government can stick to a tight EU/IMF-imposed schedule to implement the harsh measures, even if it wins all this week's parliamentary votes.
The full pain of pay and benefit cuts and swingeing tax increases has yet to be felt, and public anger is boiling.
Many economists and investors still expect Greece to default in the medium-term. A senior German ruling coalition politician, Free Democratic floor leader Rainer Bruederle, said on Wednesday a debt restructuring was inevitable.
Only one PASOK party deputy voted against the plan, and he was immediately expelled from the party by Papandreou.
At least one opposition deputy broke ranks with the main conservative New Democracy party to vote 'yes' on the austerity package and one of three PASOK rebels changed heart.
PASOK now holds 154 seats in the 300-member chamber and was helped by the abstention of a small centre-right splinter group of five deputies led by former foreign minister Dora Bakoyanis.
Chancellor Angela Merkel of Germany, Europe's reluctant paymaster and the main contributor to the Greek bailout, was first to praise the 'brave' Greek vote on the fiscal package.
The decision was 'brave as well as necessary,' Merkel told a meeting on financial regulation in Berlin, adding: 'I find it especially regrettable that the Greek opposition is not supporting the reform package.
Expectations of the positive vote and progress in talks between banks and euro zone governments on a rollover of privately held Greek debt lifted the euro and global stocks.
Yields on bonds issued by the euro zone's weaker states fell on expectations that Athens will push the key austerity measures through parliament. European shares gained for a third straight day, led by bank stocks, as investors bet parliament would pass the plan.
'A lot of work has been done behind the scenes to ensure the proposals get passed, and that optimism is getting reflected in the share prices,' said Graham Bishop, equity strategist at RBS in London.
'The passage of the austerity plan will certainly help, but that's not to say there are not any more hurdles. The next hurdle will be the implementation of the measures, and the government will be closely watched on that,' he said.
Despite a threat by trade unions staging a 48-hour general strike to prevent lawmakers entering the colonnaded parliament building, deputies were able to reach the chamber to debate the austerity programme.
The EU and the International Monetary Fund have said Greece must adopt the austerity plan, with 28.6 billion euros (25.6 billion pounds) in savings, and the implementation measures to receive the next 12 billion euro slice of emergency loans by mid-July.
Without them, Athens would run out of cash within weeks.
The EU and IMF bailed out Greece with a 110 billion euro deal in May last year and later jumped in to keep Ireland and Portugal afloat as the euro zone reeled from high government debt in the wake of the global financial crisis.
The EU's top economic official, Olli Rehn, stressed that any further financial assistance for Greece hinged on parliament adopting the austerity package.
Newly appointed IMF chief Christine Lagarde called on Greek lawmakers to join together in supporting the austerity plan, although Greece's main Conservative opposition leader Antonis Samaras reiterated his objections.
If the implementation legislation passes, euro zone finance ministers meeting in Brussels on Sunday are likely to agree to release the next aid tranche, with the IMF following on July 5.
Source : New Age
No comments:
Post a Comment