Greek Parliament Approves Austerity Plan

The Greek Parliament backed Prime Minister George Papandreou’s bitterly contested package of austerity measures on Wednesday, clearing the way for crucial international lending to stave off default over the summer. But thousands of Greeks took to the streets in protest, and some clashed violently with police officers, who responded with tear gas.

The vote, 155 to 138, removes a serious obstacle to the release of $17 billion by the European Union, the European Central Bank and the International Monetary Fund, funds the Greek government needs to pay its expenses through the summer. Questions remain about whether the measures would ultimately cure the debt-ridden country of its many ills. The shape and size of a second bailout, whose planning can now begin, could become clear at a meeting on July 3 of euro zone finance ministers in Brussels.

Stock markets, which began rallying earlier in the day across Europe and much of Asia amid indications that the measures would be approved, moderated after the vote. Investors had feared that a collapse in Greece might have repercussions throughout the international financial system. Two other European Union countries – Ireland and Portugal – have also turned to international leaders for assistance.

“This is logical and may continue over the next couple of hours and days as markets will quickly realize that this is only a first step on the road to recovery,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets. “We still expect a hot, nervous and volatile summer.” (Reuters)

Only one member of the ruling Socialist Party voted against the measure, and one opposition deputy voting crossed party lines to support the measure. (Five others voted present, and two members were absent.)

The measures approved include tax increases, wage cuts and the privatization of 50 billion euros, or about $72 billion, in state assets. A second vote will be held Thursday to enact the measures, with crucial sticking points expected to include the timing of privatizations, especially of the state electric utility, the Public Power Corporation, whose powerful union has close ties to the Socialists.

Mr. Papandreou and Antonis Samaras, the leader of the main opposition party, New Democracy, clashed in Parliament just before the vote, accusing each other of letting down the country.

“All of Europe knows that your party is responsible for the current situation,” Mr. Papandreou told Mr. Samaras, alluding to the debt that ballooned in 2009 when New Democracy was in power. Mr. Papandreou, who made several failed overtures to the opposition for political consensus on the austerity measures, made a last-ditch appeal to the conservatives to back the program. “Don’t bet on failure,” he said. (New York Times)

The prime minister said the European Union was also to blame for failing to call the previous government on its dubious statistics. But Mr. Papandreou said Greece’s foreign creditors – the European Union and the International Monetary Fund – had given “a vote of confidence in the Greek people” by offering rescue financing. (New York Times)

Mr. Papandreou says his austerity plan is the only way to get Greece back on his feet. “We must avoid the country’s collapse at all costs. Now is not the time to step back,” he told deputies. (BBC)

Outside Parliament, protesters had massed for a second day in Syntagma Square, shouting, “Traitors, traitors!” The police repeatedly fired tear gas to maintain control before and after the vote. The demonstrators, the majority of whom were peaceful, came prepared with surgical masks.

“The air here is just thick with tear gas,” said CBC News reporter Tom Parry outside parliament. “It’s difficult for anyone without a gas mask to breathe. People are coughing, retching, running away from the huge clouds of tear gas that are just floating through the streets.”

Dozens of people have gone to hospitals with breathing problems, police said. Andreas Lourandos, the president of the Pharmacists’ Association of Athens, called on police to “stop using chemicals before we mourn any victims.” (CNN)

On hearing the result of the vote, some outraged protesters waged running battles with police in the streets around the Parliament, television images showed.

“Let the prime minister come down here and see if he can live on 300 euros a month,” one female protester told the BBC outside parliament.

The vote was conducted by roll call after several hours of debate in which most Socialist legislators said they would back the measures, in some cases only grudgingly, and with most stressing that patriotic duty must go before party ideals.

Among the Socialists, only Panagiotis Kouroublis opposed the measures. Another, Alexandros Athanassiadis, who had expressed extreme opposition to the planned privatization of the Public Power Corporation, surprised Greece by voting in favor of the program, saying Mr. Papandreou’s pledges to guarantee transparency in the selloff of the utility had reassured him. “I have not changed my opinion… as things stand, I persist in my decision,” he told The Associated Press. “I don’t think (any other socialist) deputies will vote against. I will be the only one.” (Washington Post)
Elsa Papadimitriou, a legislator from New Democracy, voted for the measures. Breaking ranks with her party and declaring herself an independent, Ms. Papadimitriou said she hoped that the government would not disappoint her, calling her vote “the most difficult but valuable decision of my political career… There is only one act of patriotism: consensus and cooperation,” she said. “Fiscal suicide is not an alternative.”  (New York Times)

The nation’s unions turned up the heat on legislators on Tuesday when they began a 48-hour general strike – the first time they had walked out for moer than 24 hours since democracy was restored to Greece in 1974 after a seven-year military dictatorship. The police called in reinforcements Wednesday to cordon off streets near Parliament to ensure that protesters did not block legislators’ access to the building, with 5,000 officers on the job.

Before the vote, one protester said on Wednesday that Greeks’ lives “are going to change forever” if the measures were approved. “If you belong to the middle class, that doesn’t exist anymore. There’s only rich and poor.” (New York Times)

Another protester, Anastasia Arvanitiki, 57, a pharmacist, said, “What they’re voting on is exactly the opposite of what they were elected to do… They’ll be the worst criminals in history” if the vote goes through, she said. “We want to see them hanged.” (New York Times)

Mr. Papandreou went into the historic vote with a five-vote parliamentary majority. But the outcome was not certain, as the austerity plan strikes at the heart of his Socialist Party base. The center-right New Democracy opposition party struck a populist tone, saying the measures offered too much austerity and not enough stimulus. Last year, Greece’s foreign lenders imposed austerity measures after they provided a first round of aid. Since then, Greece has cut the wages of its 800,000 public workers – a quarter of the work force – by more than 10 percent.

Top EU officials welcomed the result as a “vote of national responsibility”, saying it had pulled Greece away from the “very grave scenario of default” while paving the way for a second passage. “The country has taken an important step forward along the necessary path of fiscal consolidation and growth-enhancing structural reform,” European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy said in a joint statement. (BBC)

“The austerity measures are not only harsh, not only unfair, but they are also ineffective,” Socialist critic Vasso Papandreou, who is not related to the prime minister, told parliament Tuesday. Still, she said, she would grudgingly vote for the bill. “Greece has many problems but the real problem is the eurozone,” said Papandreou, a former EU commissioner. “Europe should be a zone of solidarity, but it is a jungle where the banks can do what they like.” (Washington Post)

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