Athens explodes as Greek lawmakers ram through new austerity package

80,000 protesters clash with police near Parliament as a slim majority approves cuts to pensions, pay and social services

PUBLISHED : Friday, 09 November, 2012, 12:00am
UPDATED : Friday, 09 November, 2012, 3:27am

Amid some of the most violent demonstrations in Greece in months, its Parliament approved a sweeping set of austerity measures early yesterday in a desperate bid to keep the country in the euro zone.

But passage was so narrow that the government's continued stability remained at risk. Rioters earlier rampaged outside Parliament during an 80,000-strong anti-austerity demonstration, clashing with police who responded with tear gas, stun grenades and water cannons.

After 14 hours of debate, the three-party coalition of Prime Minister Antonis Samaras held together to pass the measures, 153 to 128, after several lawmakers broke ranks. Eighteen members voted present, the equivalent of a blank vote, including 15 from the smallest coalition party, Democratic Left, which opposes the measures. There was one abstention.

After the vote, six lawmakers were expelled from the governing coalition's Socialist Pasok party and one from the conservative New Democracy party

The measures - which include sharp cuts to pensions, salaries and social services, as well as tax increases and raising the retirement age to 67 from 65 - are expected, but not guaranteed, to persuade Greece's foreign creditors to unlock €31 billion (HK$306 billion) in aid the country needs to meet expenses.

A vote on the 2013 budget to activate the austerity package is expected late on Sunday.

In presenting the €17 billion austerity measures to Parliament, Samaras acknowledged that the new cuts to pensions and salaries were "unfair", but said Greece was bound by its agreement with creditors.

"A lot of what we're voting on today are measures we should have taken a long time ago," he said, adding that they would be "the last, the last" such cuts. Future "adjustments" would come from a crackdown on tax evasion and public-sector waste.

Samaras, however, is the third prime minister to promise the "last cuts" since Greece asked for a foreign bailout in 2010. The deep cuts, which have helped Greece's economy shrink 25 per cent in recent years, are undermining the country's social and political stability.

"You can't rebuild institutions when you've cut down the salaries of people who work for them," said Alexis Papahelas, the managing editor of the Kathimerini daily.

On the eve of the vote, nearly 50 employees of Greece's central bank resigned to protest the deep cuts to public sector salaries, while on Wednesday, Greece's Supreme Court ruled that cuts of up to 30 per cent in judges' salaries would violate the constitution. Parliamentary staff also threatened on Wednesday to resign over their salary cuts.

Greece's troika of foreign lenders - the European Commission, European Central Bank and International Monetary Fund - have demanded that Greece reduce its budget deficit in exchange for more aid.

Yet few believe that the measures will help improve the country's economic health.

"Telling a whole people that they have to commit collective suicide to save the debt is not a policy," Zoe Konstantopoulou, a member of Parliament from the leftist Syriza opposition party, said in an interview, expressing a sentiment growing across the political spectrum.

"The reason why we've seen the economy implode much more rapidly than thought is that they grossly underestimated the impact that fiscal austerity of this magnitude would have on the Greek economy," said Simon Tilford, chief economist at the Centre for European Reform in London. "Additional austerity is going to compound that."

He said the slump in the economy was also making it harder for Greece to meet the troika's demands to reduce a mountain of debt. "The whole strategy for Greece has failed," Tilford said. "It's led to collapse in the Greek economy and the ballooning of debt, so it's an abject failure."

Stella Dimitrakopolou, a 29-year-old graphic designer at the demonstration outside Parliament, agreed.

"These measures are inhumane. The young generation has no future, older people have no money and the measures do not help society economically."

Additional reporting by Associated Press