Austerity approved
June 30, 2011
It was another victory for embattled Greek Prime Minister George Papandreou on Thursday when parliament passed the second and final part of its austerity package. As expected, lawmakers voted in favor of the implementation law for a five-year austerity plan approved on Wednesday.
That austerity plan involves some 28 billion euros ($40 billion) in cuts and tax hikes and 50 billion euros in privatizations and remains divisive in Greece. Papandreou's government has come under fire and just recently survived a vote of confidence. Tens of thousands protested in Athens on Wednesday and the demonstrations turned ugly as they stretched into the evening.
Greece's international creditors, the European Union and the International Monetary Fund, had, however, made a desperately needed 12-billion-euro tranche from Greece's bailout package conditional on the approval of the austerity plan and its implementation. Wednesday and Thursday's votes are set to open the doors for that cash injection.
If Greece does not get the money, many observers think the country could default, sending shockwaves throughout the global economy.
Greece is entering its third year of the worst recession since the 1970s and must face down a 340-billion-euro mountain of debt. Investor and analyst are still concerned about the risk of default in the medium- and long-term.
Next steps
Eurozone finance ministers are scheduled to meet on Sunday and are expected to give the green light to the next round of funding.
"I am very satisfied because now I can go to eurogroup strengthened by a vote of confidence and two approved bills," Finance Minister Evangelos Venizelos told the news agency Reuters.
"We can now move to the next stage of finding a viable solution," he added.
The EU's top officials welcomed the news that the austerity plan's implementation had been approved.
"The conditions are now in place for a decision on the disbursement of the next tranche of financial assistance for Greece and for rapid progress on a second assistance package," European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy said in a joint statement.
Greece's problems are far from over and the country needs a second bailout worth roughly the same as the first 110-billion-euro bailout agreed to in May 2010.
Author: Holly Fox (AFP, Reuters)
Editor: Andreas Illmer