DESPITE the demonstrations and the rioting on the streets of Athens, the austerity measures were yesterday approved by Greece’s parliament. Party discipline prevailed as only one deputy from ruling PASOK voted against the €28-billion package. Today there will be a vote on a change in law that would allow the package to be put in place. It will probably pass with the same number of votes.
In his speech, at the close of the debate, Prime Minister George Papandreou warned that a defeat of the austerity package would be catastrophic as schools and hospitals would shut down, while public employees and pensioners would see their pay reduced by 70 to 80 per cent. He said the “country’s collapse must be avoided at all costs”, a point he repeatedly made, but was ignored by all but one of the deputies of opposition New Democracy.
Brussels as well as individual eurozone countries would have been relieved to hear the news, as defeat of the measures would have sent the euro and the money markets into free-fall. The positive vote will allow the release of the fifth tranche of its emergency loan package, worth €12 billion, by mid-July, and allow EU officials to finalise the details of the second bail-out (€120 billion) that would enable Greece to pay its debts for another two-and-a-half years.
Of course this is assuming that Papandreou is not faced with a popular revolt. Unions, which are vehemently opposed to the measures, held a 48-hour strike from Tuesday which brought the country to a standstill – there was no public transport, banks and government offices were closed and hospitals were operating on skeleton staff. Yesterday demonstrators set up road-blocks around parliament to stop deputies from getting there while some 5,000 police had to be deployed to quell violent rioting in the centre of Athens.
According to opinion polls the vast majority of Greeks are opposed to the austerity package and the protests could only intensify once the measures, which envisage public sector job cuts and higher taxation for all wage earners, are implemented. It would be easier for the government to deal with these protests if there were a united political front, but it appears New Democracy is banking on early elections, a far from welcome prospect.
It is doubtful Papandreou is thinking that far ahead. For now, he is likely happy that the austerity package was approved and the second bail-out secured. Papandreou knows there are countless difficulties ahead, but he has shown that he is capable of providing the strong leadership so desperately needed by Greece.
