05:21
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Paris – Greek legislators under formidable urging from officials of the European Union today voted 155-148 to accept a package of austerity required to prevent a Government default and avoid a chain reaction of market turbulence feared in Europe and the world.
Markets were optimistic before the vote today that Greek politicians would ignore a screaming audience that polls as high as 80 percent who opposed to 40 billion dollars in public spending cuts and tax hikes that the price of international rescue plan that is off by default. Other members of "peripheral" eurozone struggling, including Ireland, Portugal, Spain and Italy, are anxious not to suffer the negative consequences of Greek market by default.
The current crisis in Greece, the second in just over a year, was seen by some as a possible harbinger of European disunity, a turning point for increased isolation among the 17 members of the eurozone. Others see it as a spur to towards deeper integration.
Prime Minister George Papandreou framed the vote today in historical terms, together with the new Finance Minister Evangelos Venizelos, Pasok party heavyweights, pushed through the package and also avoided defections that could have brought the Government down.
IN pictures: protests in Greece
News reports have a Pasok party Office in Crete be burned in Athens, and the outcome of the vote brought enough tear gas on the way to put 30 people in hospital. The nation is on the second day of general strikes called by unions. In recent weeks, the atmosphere for the mostly peaceful protests at Syntagma Square, the epicenter of political anger, turned violent.
Tomorrow brings another vote in Parliament to allow the austerity legislation. That vote is treated as a Pro, even if some of the specific details – for example, a huge cut in spending utility – remain sensitive.
See Greece vote moneyToday, if ratified tomorrow, allows the release of a slice from the bailout of 142 billion dollars of 16.5 billion dollars agreed in May 2010, after the Government Papandreou admitted his books had been cooked to conceal a deficit of 350 billion dollars. [Editor's Note: this story has been modified since the publication of the rescue package size.]
In the absence of a package of structural adjustment and growth, many Greek citizens say that they accept only a package of austerity phrases of a problem of inexorable long-term debt that can't see a way out.
"I don't know what will happen now. What I see is a lot of social and political polarization in Greece, "said Takis Pappas, an expert on Greek politics at the University of Strasbourg," and this is what concerns me at this time. Greece does not have room for manoeuvre. The opposition will try to overthrow the Government or be silent. The opposition [new Democrats] will probably play hard. "
' Kick the can The fresh 16.5 billion, however, will only support the payroll Greek through the summer, causing some analysts to say the vote today to simply "kick the can down the road".
Still analysts Morgan Stanley, speaking anonymously, said that the time and money new bought by â € œkicking € the Cana
Philippe Waechter, Chief Economist at Natixis Asset Management in Paris, said the vote may be healthy, but still does not offer a long-term response.
"Thanks to this vote, we avoid the situation that would arise from default straight of Greece," Mr. Waechter argues, "but this vote, on a very, very drastic austerity, allows only for Greece to take advantage of the Troika [EU, IMF, the European Central Bank] next tranche of funding. What is worrying is that a considerable effort is made to satisfy only a short-term maturity. What will happen tomorrow if Greece is again in the same situation, which will surely happen if nothing is done to address long-term problems? "
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