Greek Parliament Passes Austerity Bill as Athens Burns

Greece’s parliament approved a deeply unpopular austerity bill Monday to secure a second EU/IMF bailout and avoid national bankruptcy, as buildings burned across central Athens and violence spread around the country.

Greek riot police battle demonstrators in downtown Athens during rebellions against the imposition of a new round of austerity measures in the European state. Photo: Abayomi Azikiwe/Flickr

The historic vote paves the way for Greece’s European partners and the International Monetary Fund to release $170 billion (euro130 billion) in new rescue loans, without which Greece would default on its mountain of debt next month and likely leave the eurozone – a scenario that would further roil global markets, reports The Huff Post.

The new austerity measures include, among others, a 22 percent cut in the benchmark minimum wage and 150,000 government layoffs by 2015 — a bitter prospect in a country ravaged by five years of recession and with unemployment at 21 percent and rising.

Altogether 199 of the 300 lawmakers backed the bill, but 43 deputies from the two parties in the government of Prime Minister Lucas Papademos, the socialists and conservatives, rebelled by voting against It. They were immediately expelled by their parties, according to Reuters.

But the chaos on the streets of Athens, where more than 80,000 people turned out to protest on Sunday, and in other cities across Greece reflected a growing dread — certainly among Greeks, but also among economists and perhaps even European officials — that the sharp belt-tightening and the bailout money it brings will still not be enough to keep the country from going over a precipic

Prime Minister Lucas Papademos urged calm.

“Vandalism and destruction have no place in a democracy and will not be tolerated,” Papademos told Parliament just before the vote. “I call on the public to show calm. At these crucial times, we do not have the luxury of this type of protest. I think everyone is aware of how serious the situation is.”

Angry protesters in the capital threw rocks at the police, who fired back with tear gas. After nightfall, demonstrators threw Molotov cocktails, setting fire to more than 40 buildings, including a historic theater in downtown Athens, the worst damage in the city since May 2010, when three people were killed when protesters firebombed a bank.

According to The New York Times, there were clashes in Salonika in the north, Patra in the west, Volos in central Greece, and on the islands of Crete and Corfu.

Sunday’s clashes erupted after more than 100,000 protesters marched to the parliament to rally against the drastic cuts, which will ax one in five civil service jobs and slash the minimum wage by more than a fifth.

At least 45 businesses were damaged by fire, including several historic buildings, movie theaters, banks and a cafeteria, in the worst riot damage in Athens in years. Fifty police officers were injured and at least 70 protesters were hospitalized. Sixth-seven suspected rioters were arrested and a further 70 detained.

Athens Mayor Giorgos Kaminis said rioters tried to storm the City Hall building, but were repelled. “Once again, the city is being used as a lever to try to destabilize the country,” he said.

Greece and its foreign lenders are locked in a dangerous brinkmanship over the future of the nation and the euro. Until recently, a Greek default and exit from the euro zone was seen as unthinkable.

Now, though experts say that the European Union is not prepared for a default and does not want one, the dynamic has shifted from trying to save Greece to trying to contain the damage if it turns out to be unsalvageable.

Since May 2010, Greece has survived on a $145 billion (euro110 billion) bailout from its European partners and the International Monetary Fund. When that proved insufficient, the new rescue package was approved.

The deal, which has not yet been finalized, will be combined with a massive bond swap deal to write off half the country’s privately held debt.

The new cutbacks, which follow two years of harsh income losses and tax hikes amid a deep recession and record high unemployment have been demanded by Greece’s bailout creditors in return for a new batch of vital rescue loans.

European Union finance ministers, who were expected to approve the agreements with Greece at a meeting in Brussels last Thursday, instead sent a vote of no confidence, asking Greece for another $400 million in spending cuts.

German Finance Minister Wolfgang Schaeuble was quoted as telling the Welt am Sonntag newspaper on Sunday that Greece “cannot be a bottomless pit.”

Asked whether Greece has a long-term future in the eurozone, Germany’s Vice Chancellor Philip Roesler said “that is now in the hands of the Greeks alone.”

“It is not enough just to give financial aid – they must tackle the second cause of the crisis, the lack of economic competitiveness,” he told said ARD television. “For that, they need … massive structural reforms. Otherwise Greece will not get out of the crisis.”

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