Greek Parliament Adopts Austerity Plan After a Day of Protests

Posted October 20th, 2011 at 5:20 pm (UTC-5)
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The Greek Parliament adopted new austerity measures Thursday to satisfy its international creditors after a day of violent street protests against the government's latest move to boost taxes and cut wages.

All but one of the ruling Socialist lawmakers voted for the budget-cutting plan. The vote virtually ensures that Greece will secure an $11 billion segment of its $159 billion bailout from last year and avoid a default next month on its international loans.

European leaders are set for a summit in Brussels this weekend. Ms. Merkel and Mr. Sarkozy said they would seek to strengthen the continent's bailout fund, boost funding for banks and reinforce “economic integration” throughout the eurozone.

U.S. President Barack Obama held a video conference with Ms. Merkel, Mr. Sarkozy and British Prime Minister David Cameron Thursday to discuss Libya and the European financial crisis . The White House issued a statement saying he praised the French and German leaders for working diligently to develop a comprehensive and sustainable solution to the crisis.

The Greek vote came after hours of violent anti-austerity protests in Athens.

At least 50,000 mostly peaceful, anti-austerity protesters gathered in Syntagma square outside parliament on the second day of a nationwide general strike that idled a vast swath of Greek commerce and government services.

But the scene turned chaotic as some clashed with police, and violent protesters hurled fire bombs and stones at rival demonstrators. Protesters and masked youths armed with clubs fought each other as riot police fired tear gas volleys in an attempt to restore order. The government said one demonstrator died of a heart attack Thursday, while dozens of protesters have been injured in the last two days.

The hugely unpopular austerity plan will increase taxes and eventually eliminate 30,000 government jobs. Greece's international creditors had demanded passage of the austerity plan in exchange for release of the 2010 bailout funds.

The creditors say the money should be released to Greece as soon as possible. But they also warned that a second Greek bailout approved in July may not be big enough to save the country from bankruptcy.

European leaders are considering several ways to end the crisis, possibly increasing the eurozone's $596 billion bailout fund for debt-ridden governments to as much as $2 trillion. They are also looking for ways to stabilize the bloc's banks even as they are forced to assume bigger losses on the Greek loans they hold.