New Greek coalition wins confidence vote

By Elena Becatoros

Associated Press

Published: Wednesday, Nov. 16 2011 12:01 p.m. MST

Greek Prime Minister Lucas Papademos delivers a speech during a parliament's meeting in Athens, Wednesday, Nov. 16, 2011. Greece was negotiating with international bankers Wednesday over the details of a euro 100 billion ($135 billion) writedown of its debt, as the country's new prime minister geared up to win a confidence vote on his coalition government.

Thanassis Stavrakis, Associated Press

ATHENS, Greece — Greece's new coalition government easily won a confidence vote in parliament Wednesday, backing a pledge by Prime Minister Lucas Papademos to speed up long-term reforms and secure a massive new bailout deal involving banks and rescue creditors.

The government formed last week by the majority Socialists, rival conservatives and a small right-wing nationalist party won the vote with 255 in favor and only 38 against in the 300-member parliament.

Papademos' government, which is temporary and only expected to be in power for a few months, is tasked with pushing through the €130 billion new debt deal agreed on last month and securing a vital installment of Greece's initial bailout loan, without which the country faces a potentially catastrophic default in a month's time.

He must also oversee the implementation of a raft of austerity measures already passed, including increased taxes and the suspension of about 30,000 civil servants on partial pay.

Papademos' coalition won support from the vast majority of deputies in both main parties and the right-wing party, as well as from a number of independents. All left-wing and communist party deputies voted against.

Greece is at the heart of a vicious debt crisis that has brought it to the brink of bankruptcy. Since May 2010, the country has survived on installments from a €110 billion ($150 billion) rescue loan package from its European partners and the International Monetary Fund. When it became obvious that even that sum was not enough, European leaders struck a new bailout deal on Oct. 26, worth a total €130 billion ($176 billion). In addition, it was agreed that banks and other private holders of Greek bonds would write off 50 percent of their Greek debt holdings.

In return for the bailout loans, the previous government had to force through a deeply resented austerity program, which has seen repeated tax hikes, and cuts in pensions and civil service salaries.

Figures released by the Finance Ministry on Wednesday underlined the massive task Papademos' coalition faces. The country's state budget deficit widened by more than 11 percent in the first 10 months of the year compared to the same period in 2010, reaching €20.1 billion compared to €18 billion last year.

The increasing budget gap came despite extra tax measures imposed this year, with the ministry attributing it mainly to the deeper than initially projected recession. The figures are on a cash basis and not those used as the benchmark to assess the country's economic policy program as they do not include spending such as social security and local administration.

Speaking just before the vote, Papademos called for unity in order to ensure Greece remains within the eurozone, and stressed that his brief government's task is "disproportionally large" compared to the time it would be in power. He also said that "there are no magic solutions." Elections have been tentatively set for Feb. 19.

"We must fight the battle with confidence in our strength, with decisiveness, with unity. The path to collision, especially in today's critical circumstances, doesn't help solve our problems," Papademos said shortly before the confidence vote.

"It is a difficult path. And that is why I appeal not only to those of you who will give a vote of confidence to the unity government, but also to those of you who won't. ... Be critical of the government, but do not reject the joint effort," he said.

The votes of support, the new prime minister said, "represent a responsible decision to avoid placing our country's membership of the eurozone in danger."

Papademos, a former vice president of the European Central Bank, was meeting Wednesday evening with Charles Dallara of the International Institute of Finance, a global bank lobbying group that is negotiating Greece's voluntary debt reduction.

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