Greek Parliament Approves Austerity Plan

Posted June 29th, 2011 at 9:45 am (UTC-5)
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The Greek parliament has approved the first step in sweeping new austerity measures aimed at securing international financing for the debt-ridden nation.

Socialist Prime Minister George Papandreou won passage Wednesday of his $40 billion plan to increase taxes, cut spending and sell state-owned assets.

Lawmakers voted to pass the legislation as protesters opposed to the deal clashed with police for a second day in the streets outside the parliament building in central Athens.

With the austerity measure approved, Greece now stands to collect a $17 billion share of last year’s $156 billion bailout from the International Monetary Fund and the European Union. Without passage, Greece likely would have defaulted on its financial obligations as early as July, which could have, in turn, led to calamity on European and world financial markets.

As the lawmakers neared a vote, Mr. Papandreou made a last-minute appeal for support. He implored parliament to do everything to avoid default. Lawmakers will next vote Thursday on the details of the austerity plan.

Clashes broke out earlier Wednesday between police and protesters trying to surround the Greek parliament, and police fired tear gas to disperse the crowd.

Workers in Greece are in the second day of a 48-hour general strike, and the country is all but shut down by the protest action against the new round of austerity reforms.

Some 20,000 demonstrators gathered in Athens on the first day of the general strike Tuesday. Initially peaceful, the protest turned violent. At least 4,000 police officers armed with stun guns, tear gas and batons fought protesters who hurled rocks and firebombs.

Many protesters feel the $40 billion austerity plan will impose harsh penalties on workers and pensioners, while sparing the wealthy.

EU officials had warned that Greece had no choice but to adopt the austerity plan.