Greece enacted billions of Euros in spending cuts and austerity measures last night in a volatile parliamentary vote, an attempt to avoid another potential default on its national debt and keep the precariously perched Eurozone intact.
The members of Greece’s much hated and targeted parliament passed the austerity bill amid some of the worst rioting and political violence witnessed in the country in years. The caretaker government has ordered for a further 3.3billion Euros of savings by slashing wages and pensions and laying off public sector workers, resulting in more than 40 buildings being set ablaze and stored looted and destroyed. The story holds little new for observers, as the country is in its 5th year of recession and has little prospect of halting a steep decline in living standards. The turmoil of the streets was mimicked by division inside the parliament, with strong dissent among the two main coalition members. A total of 37 politicians from the majority of Socialists and conservative New Democracy party either voted against the party line or abstained. A further 6 voted against sections of the legislation. After the vote, the caretaker government announced that those 43 MPs had been expelled.
“I am calling on you to vote for the new loan agreement because I want to avoid falling onto the abyss, to restore stability, so that we can have the possibility tomorrow to negotiate and change the policy that is being imposed upon us today. We have to exist first to be able to change it.” – Antonis Samaras, leader of conservative New Democracy party
The ballot, widely seen as the most important in modern Greek history, ignited division in party lines and ignited eruptions of violence that trailed in the parliamentary chambers. The next step along the lines of the austerity measures necessary to receive Eurozone loans, include a 22% reduction in the minimum wage and 150,000 jobs from the public sector workforce by 2015. In return, Greece is to receive a second Eurozone bailout in 2 years, worth 130billion Euros in addition to a 100billion Euro write-down of debt by the country’s private creditors, a cut of the real value of private-sector investor’s bond holdings by some 70%. Greece needs the international funds before March 20th to meet debt repayment of 14.5billion Euros, or suffer a chaotic default that would send reverberating shock-waves throughout the Eurozone. Nevertheless, street battles between police firing rounds of teargas and demonstrators hurling firebombs and marble slabs left Syntagma square, the plaza in front of the parliament building, already resembling a chaotic war zone. The scenes of mayhem on the streets of Athens, coupled with political dissent, begs to questions whether Greece has the capacity to implement and carry through with the strict austerity measures.
“Yesterday’s vote in the parliament may have saved the country temporarily from default, but the Greek economy is going bankrupt and the country’s political system is failing.” – Vassilis Korkdis, head of the Greek Commerce Confederation
In retrospect, the scenes of violence and insecurity are a recent intensification of protests for the still-young caretaker government under Prime Minister Lukas Papademos. Regardless of the social strife, without the bill for future loans, wages and pensions would go completely unpaid, hospitals and schools would be devoid of funding, banks would collapse and people’s savings would be lost. George Papandreou, the former socialist Prime Minister, declared that Greece was embroiled in war that it had to win, for the sake of restoring faith and credibility to Greece in the long-run.