Austerity for Greece as rioting continues
GREECE’S lawmakers yesterday approved the deeply unpopular austerity bill needed to avert default next month, despite a second day of rioting on the streets of Athens that left dozens of police and protesters injured.
The passage of the bill was a decisive step for the country to get the next batch of bailout loans from international creditors and was met with relief in markets and by Greece’s partners in the eurozone. A Greek default could potentially trigger a banking crisis, particularly in Europe, and turmoil in global markets.
Another bill has to be passed today for the government to secure the money.
The bill to cut spending and raise taxes by 28 billion euros ( US$ 40 billion) over five years, and raise 50 billion euros in privatizations over the same period, has provoked widespread outrage, coming after a year of deep cuts that have seen public sector salaries and pensions slashed and unemployment rising to above 16 percent.
While deputies voted, stun grenades echoed across the square outside the Parliament building and acrid clouds of tear gas hung in the streets. The violence continued sporadically after the vote and smoke was billowing from beneath the Finance Ministry.
Authorities and emergency services said 26 police and 15 protesters were injured and taken to hospital, while 29 people were detained and nine arrested.
The European Union and the International Monetary Fund have demanded both bills pass before it releases 12 billion euros of the country’s 110 billion euros bailout fund. Without it, Greece was facing defaulting on its debts by the middle of next month.
Even with the installment, Greece is still in financial trouble and has been in talks with its international creditors for a second bailout, which Prime Minister George Papandreou has said will be roughly the same size as the first.
“We must avoid the country’s collapse with every effort,” Papandreou said before the vote. “Outside, many are protesting. Some are truly suffering, others are losing their privileges. It is their democratic right. But they and no one else must never suffer the consequences and for their families of a collapse. We must do everything so that there is no freeze in payments.”
The Greek vote was greeted positively in Europe’s capitals, which have been fretting about the impact of a potential Greek default on their banking systems and on the future of the euro currency itself.
“That’s really good news,” German Chancellor Angela Merkel said when told of the vote on her way out of an economic forum in Berlin. Germany is Greece’s biggest creditor.
EU leaders hailed the vote as an act of “national responsibility” and urged Greek lawmakers to follow up with another positive vote today.