New clashes as Greek parliament passes austerity package | Europe| News and current affairs from around the continent | DW | 06.05.2010
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New clashes as Greek parliament passes austerity package

Amid fresh protests on the streets of Athens, the Greek parliament has passed the controversial austerity package to get the country out of its financial mess. The deal is a precondition for help from Europe and the IMF.

Athens Acropolis with Greek flag

The cuts are expected to save Athens some 30 billion euros

The Greek parliament in Athens on Thursday voted in favor of an unprecedented austerity package to fight the country's crippling national debt. The bill passed with 172 out of 296 votes. 121 members of parliament voted against the measures, three abstained.

Outside parliament, protesters clashed with police who were using teargas to disperse the demonstrators. On Wednesday, three people had died in the Greek capital after rioters set fire to a bank. Protests against the sharp spending cuts and tax hikes have lead to national strikes and unrest across the country.

But Greek Prime Minister Papandreou told parliament that "neither rocks nor violence will get Greece out of the guardianship" of the EU or the International Monetary fund - both of which have demanded the tough budget cuts as a precondition for a bailout.

"The situation today is simple - either we vote and implement the deal or we condemn the country to bankruptcy," he said.

"The future of Greece is at stake. The economy, democracy and social cohesion are being put to the test."

The strict new measures are expected to save the government 30 billion euros ($38.3 million). They include a further reduction in public sector pay and pensions, a 2-percent rise in value added tax to 23 percent and a 10 percent hike in fuel and alcohol taxes.

Greek Prime Minister Papandreou

Papandreou told parliament that Greece had no choice

Berlin to be biggest eurozone donor

The combined international effort by eurozone members and the IMF amounts to a 110-billion-euro rescue package.

Greece needs its first cash infusion by May 19 when Athens faces a deadline on a debt it says it cannot repay with new funds.

Germany will be the biggest of the eurozone contributors with a proposed 22.4 billion euros. However, on Thursday Chancellor Angela Merkel failed to persuade opposition parties to vote in favor of the German share for the bailout. Berlin is hoping to pass the legislation required for the bailout by the end of the week.

European leaders are to further coordinate their aid package for Athens at a Brussels summit scheduled for Friday. The EU hopes the three year rescue package for Athens will calm markets and give the Greek government breathing space to overhaul its indebted economy.

Violent protests in Athens

After winning over parliament, the government still needs to convince the Greek people that there's no option but to implement the widely unpopular austerity measures

Greek default "out of the question"

Concerns that the Greek fire might spread to other eurozone members such as Portugal, Spain, and Italy were strongly dismissed on Thursday by ECB President Jean Claude Trichet.

At a meeting of the European Central Bank in Lisbon, he insisted that Athens and Lisbon were not in the same fiscal situation.

Trichet also said that a Greek default was "out of the question."

For the eurozone, Trichet predicted moderate but uneven growth amid "high uncertainty" for 2010.

However, the euro has already suffered significantly as a consequence of the crisis. On Thursday, the single currency was down again, trading at a 14-month low of $1.27.

ai/dpa/AFP
Editor: Rob Turner

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