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Greece's Parliament implements austerity measures

Legislation enabling swift enactment of budget cuts totaling $40 billion and the sell-off of $72 billion in state assets is passed by the Greek Parliament, the second and final piece of austerity legislation put to the test this week.

July 01, 2011|By Anthee Carassava, Los Angeles Times
  • Lawmakers at the Greek Parliament vote on the implementation of austerity measures, including $40 billion in budget cuts.
Lawmakers at the Greek Parliament vote on the implementation of austerity… (Louisa Gouliamaki / AFP/Getty…)

Reporting from Athens — Greece's Parliament on Thursday passed crucial legislation implementing unpopular austerity measures demanded by international creditors to unbolt rescue funds and ease fears of Europe's first sovereign default.

The legislation, enabling swift implementation of $40 billion in budget cuts, plus a $72-billion sell-off of state assets, was backed by 155 lawmakers of the 300-member Parliament. Five abstained, four were absent and 136 lawmakers, mainly opposition conservatives, voted against the bill, the second and final piece of austerity legislation put to the test this week.

Although widely anticipated, the outcome offered some respite for embattled Prime Minister George Papandreou, who strong-armed dissent within his Socialist party to win support for the legislation during four days of heated parliamentary debate.

Passage of the legislation removes the biggest stumbling block to Greece's desperate bid to secure more time and money to fix its faltering economy.

On Sunday, European finance ministers will meet in Brussels to release a $17-billion tranche of funds from a nearly $150-billion rescue package decreed by the European Union and the International Monetary Fund last year to stave off a Greek default. The ministers also will try to stitch together details of a second bailout package of as much as $120 billion.

Without the funds, Athens would be unable to pay its bills in July, sparking a dangerous default and threat to the global financial system.

International financial markets breathed a sigh of relief, sending stocks higher after the vote. Even so, financial experts and investors remained wary of the government's ability to implement the package, including a new wave of tax increases and privatizations.

"None of this is practically feasible," said Yanis Varoufakis, a professor of economics at the University of Athens. "Privatizations at a quick-fire pace will not yield the targeted revenues. It'll be a waste of assets."

What's more, Varoufakis said, "the new tax regime will alienate society even further from the political establishment."

With Greeks seeing no relief in their agonies, thousands have taken to the streets in daily protests.

On Wednesday, demonstrations turned into mayhem as running street battles between stone-throwing youths and police gripped the Greek capital for hours. More than 300 people were injured in the violence; mass cancellations of bookings and events in Athens followed, tourism officials said.

Unions had called for more protests Thursday night, but after the vote, few Greeks seemed to heed the call.

"What's the point?" said Sofia Veneti, a 38-year-old teacher. "These new measures are law now. We'll have to find ways to survive them."

Carassava is a special correspondent.

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