Greek deputies to begin debate on austerity bills

June 27, 2011 - 5:14 AM
Greece Financial Crisis

A young protester shouts slogans in front of the Greek parliament during a protest for a fourth consecutive week against austerity measures in Athens on Sunday, June 26, 2011. Parliament is due to start debating on Monday the program of tax increases and spending cuts worth 28 billion euros over five years as labour unions plan a 48 -hour general strike for Tuesday and Wednesday. (AP Photo/Kostas Tsironis)

ATHENS, Greece (AP) — Greek lawmakers begin debating new austerity plans Monday that must pass this week if the debt-ridden country is to receive the critical next installment of loans from its international bailout plan and avoid default.

The deeply unpopular spending cuts and tax hikes in a midterm austerity bill and an additional implementation law are expected to be voted on in parliament on Wednesday and Thursday. They must be passed for the European Union and International Monetary Fund to release the next euro12 billion batch of loans from the euro110 billion bailout.

Without those funds, Greece runs out of money in mid-July and faces becoming the first eurozone country to default on its debts — a potentially disastrous event that could drag down European banks and affect other financially troubled European countries.

"The euro12 billion of this fifth installment is absolutely essential to service the cash needs of the public sector, which is in reality the servicing of citizens' immediate and vital needs," Finance Minister Evangelos Venizelos said over the weekend.

Prime Minister George Papandreou's Socialist party has a five-seat majority in the 300-member parliament, so should be able to pass the bills. However, Papandreou has faced an internal party rebellion over the measures, and at least two deputies have said they are considering not voting in favor.

The rebellion peaked in a political crisis earlier this month that almost led to a government collapse as Socialist deputies began resigning their parliamentary seats and cross-party talks to create a coalition government with the conservative opposition collapsed. Papandreou faced down the revolt and bought time with a broad cabinet reshuffle in which he replaced his finance minister.

The main opposition Conservative party leader, Antonis Samaras, has withstood intense pressure from European officials to lend his backing to the bills. While he supports certain cost-cutting measures and privatizations, he says the overall thinking behind the euro28 billion midterm austerity bill is flawed and he will vote against it.

The new austerity measures, which run two years beyond the current government's mandate to 2015, have already sparked widespread protests. Workers across the country are to hold a 48-hour general strike on Tuesday and Wednesday, while groups of protesters who have been camped out in the capital's main Syntagma Square have vowed to encircle the parliament building on Wednesday to prevent lawmakers from entering the building and voting on the austerity bill.

"I know very well that the measures in the midterm fiscal program and the implementation law are heavy and in many parts unfair," Venizelos said, but added they were essential if Greece is to continue receiving its rescue funds.

Ahead of the general strike, a communist party-backed union, PAME, held a protest at Greece's most famous ancient site, the Acropolis, hanging banners in English and Greek over the monument's walls reading: "The peoples have the power and never surrender. Organize counterattack."

"It's a symbolic act by PAME," said activist Giorgos Peros. "We want to show to all the people of Europe and Greece that people don't surrender to the desires of the monopolies, multi-national corporations, big capital, the government, the IMF and the EU."