Greek government survives confidence vote. Now, the hard part.
Prime Minister George Papandreou is faced with passing an unpopular austerity program so it can get the $17 billion it needs by July 15 to avoid default on Greek debt.
The Greek government survived a parliamentary confidence vote last night, but Prime Minister George Papandreou's hobbled government must clear a larger hurdle next week by passing an unpopular austerity measure worth $40 billion to avoid possible bankruptcy and default in July.
The confidence vote saw 155 members of Mr. Papandreou’s Panhellenic Socialist Movement (PASOK) party back him in the 300-seat body by ratifying last week's cabinet reshuffle that followed protests over the austerity package.
Greece needs $17 billion by July 15 to avoid defaulting on its debt. Athens is in the midst of a second bailout plan with the European Union, the International Monetary Fund, and the European Central Bank after an earlier $110 bailout, agreed in May 2010, was acknowledged in late winter to be inadequate. Greece indebtedness is upwards of $500 billion.
Ahead of the last night’s vote, Papandreou, who replaced his finance minister with a key rival from his own party to placate opponents, made his own impassioned plea that, “If we are afraid, if we throw away this opportunity, then history will judge us very harshly.”
Yet the mood outside parliament on Syntagma Square, where protestors have gathered in large numbers, remained opposed to further cuts in a system where some 1 million out of 11 million Greeks owe their living to the state. While some analysts say the protest movement that has camped out on the square since May 24 is losing steam, that wasn't evident last night.
The broad sense among protestors is that elite politicians are agreeing to plans dictated in Brussels and the IMF in Washington that will tie the nation to an impossible yoke for the indefinite future – and that involves a fire sale of Greek state assets including airports and utilities at bargain basement prices.
Many called for new elections and shouted, “thieves, thieves, thieves” with palms and fingers stretched out and flapping in what is a derogatory Greek expression.
“We are not just some people that exist to keep an economy and a finance system grinding on,” says Filos, a tall 20-something.
He claims to live in a posh suburb and has a car and a job: “But I feel a need to come here in the evening. The Greeks don’t just exist to consume and buy and sit around in clubs. Our politicians don’t acknowledge this. The rich need to pay more taxes,” he says, referring to the austerity package’s unpopular across-the-board cuts.
On June 17, German Chancellor Angela Merkel and French President Nicolas Sarkozy temporarily assuaged world markets with Germany appearing to back away from requirements for more private creditors involvement in any Greek bailout.
Yet European finance ministers in a Monday decision, which was made in tandem with the IMF, said it would delay bailout money until Greece passed the $40 billion austerity program, which includes a privatization plan to sell $50 billion in state assets.
Yesterday, US Treasury Secretary Timothy Geithner weighed in on the fitful effort to solve the Greek crisis, saying, “It would be very helpful to have Europe speak with a clear, more unified voice and strategy.”
Fresh criticism has arisen here of the terms of the new Greek bailout plan, over its lack elements to stimulate the economy and promote growth.
José Manuel Barroso, president of the European Commission, on Tuesday offered Greece access to “a significant amount of EU money,” which is earmarked as growth packages for peripheral European states that are less competitive. Mr. Barroso implied Greece had in its earlier negotiations not attempted to find such a growth sweetener – news of which met criticism around Athens.
“What Barroso made clear is that the Greek government never went in an organized way to find a balanced plan that would promote both growth and the needed austerity,” argues Andreas Antoniades of the Institute of International Relations in Athens. “We need both to get out of our predicament. In this sense, the protestors on the square have a point.”