Greece to vote on cuts after riots

By Derek Gatopoulos

Associated Press

Published: Thursday, June 30 2011 2:30 a.m. MDT

Riot policemen chase a protester during clashes at Athens' main Syntagma square,in central Athens, Wednesday, June 29, 2011. Greek deputies passed on Wednesday a deeply unpopular austerity bill that has provoked days of rioting in the streets of Athens, with the result of the vote determining whether the country can avoid a potentially disastrous default in the coming weeks.

Kostas Tsironis, Associated Press

ATHENS, Greece — Greek lawmakers are set to pass a bill Thursday to fast-track fresh austerity measures demanded by creditors, following two days of rioting in Athens that left some 200 people injured.

Greece's international creditors have insisted that Greece back an austerity package and the associated implementation bill in return for giving more money to the country. On Wednesday, parliament approved the five-year €28 billion ($40 billion) package of spending cuts and tax increases, leaving details of the cuts to be approved Thursday.

Once, and if, Thursday's bill to implement the austerity measures is cleared, the eurozone and the International Monetary Fund will be in a position to release the €12 billion ($17 billion) that is due from last year's package of rescue loans for Greece.

Without the financial assistance, Greece was facing bankruptcy as soon as the middle of July. A Greek default on its debts could trigger a major banking crisis and potential turmoil in global markets, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.

As a result, markets around the world breathed a sigh of relief after Wednesday's vote.

The €12 billion will tide Greece over till mid-September, according to government officials, but it looks like it will need a lot more money in the years to come. Creditors are considering giving Greece a second, major support package to cover upcoming financing gaps.

Last year's €110 billion ($159 billion) package was predicated on Greece being able to tap bond market investors for cash next year but with the country's interest rates at exorbitant levels, that looks highly unlikely.

The austerity measures being imposed in Greece in return for outside help are being met with resistance.

On Wednesday, riots erupted for a second day outside the parliament in Athens, with police clashing and firing tear gas at protesters after a failed attempt to blockade the building.

Government officials said they were unhappy with policing of the riots which lasted nearly 10 hours Wednesday, but police spokesman Thanassis Kokkalakis said they had succeeded in protecting parliament and preventing serious injuries and property damage.

No major protests were planned Thursday, and power company workers called off a strike which had caused days of rolling blackouts.

A civil servants' union said it would stage a central Athens rally later Thursday.

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