Greek Parliament Approves Budget Cuts as Nation Mourns
Greece’s parliament approved austerity measures demanded by the European Union and International Monetary Fund as a condition to secure a 110 billion-euro ($140 billion) bailout, as the nation mourned three victims of Athens protests against the plan.
A total of 172 lawmakers voted in favor and 121 against, Parliament Speaker Filippos Petsalnikos said in remarks carried live on state-run Vouli TV today. The in-principle vote will be followed by an article-by-article debate and then a final vote.
“The issue is simple,” Prime Minister George Papandreou told the legislature, where the ruling socialist Pasok party holds a 10-seat majority. “We either vote for and implement the deal or we condemn the country to bankruptcy.”
Greece agreed to the package on May 2, pledging 30 billion euros in wage and pension cuts and tax increases in the next three years to tame the euro-region’s second-biggest deficit. Papandreou was forced to seek the aid after soaring borrowing costs left Greece cut off from markets. During a strike against the measures yesterday, three employees were killed when a small group of protesters set fire to their bank.
Finance Minister George Papaconstantinou told parliament that the package was imperative to avoid default.
“In less than two weeks, a 9 billion-euro bond comes due and the state coffers don’t have this money,” he said. “As we speak today the country can’t borrow it from foreign markets and the only way to avoid bankruptcy and a halt on payments is to get this money from our European partners and the IMF.”
Papandreou got parliamentary approval a day before an EU summit in Brussels on the plan that will help ready the funds for distribution. The country faces 8.5 billion euros in bond redemptions on May 19.
The yield premium investors demand to buy Greek 10-year bonds over comparable German debt reached 815 basis points today. The Athens stock exchange, which fell 3.9 percent yesterday, rose 1 percent.
Europe is scrambling to activate the aid package to stop the fallout from spreading to other high-deficit countries such as Spain and Portugal. Yield premiums on those countries’ debt have also jumped and the euro has slid more than 10 percent this year to the lowest in more than a year.
Asking for Help
“We are asking for loans from countries that also have deficits,” Papaconstantinou said. “We are asking for loans from countries that are also under speculative attack. And to be able to secure them, we must convince them that we are putting our house in order as well.”
Antonis Samaras, leader of the opposition New Democracy party defeated by Papandreou in October, had vowed that his party would vote against the measures in a symbolic protest of the premier’s handling of the fiscal crisis. The government “brought us to this point, that we can’t borrow from the markets,” he said yesterday.
Papandreou ousted three deputies from his party after they cast blank ballots, according to Petsalnikos. A total of 296 lawmakers voted. Papandreou’s proposal was also backed by former foreign minister Dora Bakoyannis, who was then expelled from New Democracy, as well as the nationalist LAOS party.
Chancellor Angela Merkel appealed to the German Parliament yesterday to approve the nation’s share of the loans, saying the euro’s stability was at stake. Germany will pay 22.4 billion euros, almost 30 percent, of the euro-region funds offered to Greece over three years, and public opposition to the bailout is running high. German lawmakers will vote tomorrow on the aid.
The debate in the Greek parliament is overshadowed by yesterday’s violence. Protesters, who police described as self- styled anarchists, threw firebombs at a branch of Marfin Egnatia Bank SA, killing two women and a man trapped inside the building. Papandreou yesterday called the act “brutal murder.”
Ta Nea, the most widely-read newspaper, published a photo of one victim, a pregnant woman, crouched on the balcony before smoke overtook her. “The Abyss and Those Responsible,” ran the headline.
Athens police swept through the anarchist stronghold of Exarhia yesterday, arresting 25 and detaining 70, according to a police statement. A total of 41 officers were injured in yesterday’s protests, the statement said.
OTOE, the federation of bank unions, is holding a 24-hour strike today to mark the deaths. Marfin’s branches will shut tomorrow at 11 a.m. to allow employees to attend the funerals of the employees, according to a statement today. Athenians flocked to the burned-out bank today to lay flowers.
Opposition leaders warned Papandreou not to try to exploit the deaths to push through the austerity measures and unions said they will continue their opposition to the measures they’ve described as “savage.”
Greece’s two biggest labor groups were rallying this evening outside parliament. GSEE and ADEDY, which together represent about 2.5 million workers, said the rally was also meant to condemn yesterday’s “cold-blooded murder.”
Elected in October on pledges to raise wages for public workers and step up stimulus spending, Papandreou revised up the 2009 budget deficit to more than 12 percent of gross domestic product, four times the EU limit, and twice the previous government’s estimate. EU officials revised the deficit further on April 22, to 13.6 percent.
Papandreou has said the austerity measures are needed to lower the shortfall to within the EU limit of 3 percent in 2014. Still, they will deepen a yearlong recession and lead to a 4 percent economic contraction this year. Unemployment is already at a six-year high of 11.3 percent.
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