IN THE second of two key votes, the Greek parliament yesterday passed a law to implement a fresh round of austerity and privatisation measures, paving the way for an injection of existing and new bailout funds into the country.
Under the hugely unpopular measures, the government expects to raise €28 billion (12 per cent of gross domestic product) in tax hikes and spending cuts and €50 billion through privatisations before 2015, with the goal of reducing the country’s deficit from an expected 10.6 per cent this year to 2.6 per cent in 2014.
Yesterday’s enabling law was passed – with 155 in favour and 136 against – in a vote that followed strict party lines, with backing coming only from MPs of Greek prime minister George Papandreou’s socialist Pasok party.
However, MPs from the main opposition conservative New Democracy party, which opposed the law as a package, endorsed 21 of its 49 articles, mainly dealing with privatisation, transparency and reducing spending.
Greek finance minister Evangelos Venizelos, reiterating comments that the votes were “real proof of the country’s credibility”, expressed his belief that Greece was now going to Sunday’s meeting of euro-zone finance ministers with a much stronger hand.
With the passing of the laws, Sunday’s meeting is expected to approve the payment of a €12 billion tranche to Athens under its existing bailout mechanism, as well as approving the terms of a second bailout for the country.
During yesterday’s debate, MPs traded accusations over what led to the widespread violence that marred anti-austerity demonstrations the previous day.
Since Wednesday evening, a steady stream of photographic and video footage has emerged on the internet depicting alleged police brutality against protesters, a theme which overshadowed the parliamentary debate in the Greek media yesterday.
Commenting on the video clips, New Democracy leader Antonis Samaras said they represented “bizarre scenes that reeked of para-state activity”.
Responding to the allegations, Greek citizen protection minister Christos Papoutsis defended the actions of the police, saying they were confronted with dedicated rioters determined to push Greece into bankruptcy.
However, police union representatives condemned the actions of some officers during the protests. “I apologise to citizens. It is shameful,” police union president Christos Fotopoulos told a private radio station.
European Council president Herman Van Rompuy and European Commission president José Manuel Barroso said after yesterday’s vote: “The conditions are now in place for a decision on the disbursement of the next tranche of financial assistance for Greece and for rapid progress on a second assistance package.”
Although the euro-zone ministers will take stock on Sunday of the effort to enlist private creditor support for a second rescue, final decisions are not expected until a subsequent meeting on July 11th.
“We reiterate Europe’s unwavering support and solidarity for the Greek people, in whose future we are confident. In view of the hard work that still lies ahead, we repeat our call for all political parties to work together to take to their country forward,” Mr Van Rompuy and Mr Barroso said.
European Central Bank president Jean-Claude Trichet adopted a similar tone, telling MEPs in Brussels that the private and public sector in Greece “would change totally the picture” if they played a winning game.
Mr Trichet offered no firm view on the French-inspired initiative to encourage Greece’s private creditors to extend the maturity on some of the country’s debt by up to 30 years. “We are very alert but I cannot give you a precise judgment on what is going on. There are several concepts being examined,” he said.
The ECB was vocal in its resistance to anything other than a voluntary effort to impose bailout costs on private investors in Greek debt.
Answering an MEP’s question, Mr Trichet reiterated the stance that the ECB did not plan to roll over or renew its own holdings of Greek debt as it matured.