Greek PM survives confidence vote in parliament

Greek Prime Min­is­ter George Papan­dreou, right, is con­grat­u­lated by his Deputy Prime Min­is­ter and Min­is­ter of Finance Evan­ge­los Venize­los in Athens on Tues­day. Debate began in par­lia­ment last Sun­day on a vote of con­fi­dence in the reshuf­fled gov­ern­ment. The rul­ing social­ists win the vote with 155 over 300-seat par­lia­ment. (ASSOCIATED PRESS | DIMITRI MESSINIS)

DEREK GATOPOULOS

Asso­ci­ated Press

ATHENS, Greece — The Greek prime min­is­ter sur­vived a cru­cial con­fi­dence vote early Wednes­day, keep­ing alive a gov­ern­ment ded­i­cated to avert­ing a debt default that could spark a finan­cial mael­strom around the world.

Law­mak­ers voted 155 to 143 along party lines to back Prime Min­is­ter George Papan­dreou, who now faces a crit­i­cal vote next week on a mas­sive aus­ter­ity pack­age that Greece’s inter­na­tional cred­i­tors have said must pass by the end of June.

He is seek­ing euro28 bil­lion ($40.24 bil­lion) in bud­get cuts and new taxes and euro50 bil­lion worth of pri­va­ti­za­tion of pub­lic assets. Unless the new mea­sures pass, Greece will not receive the next batch of bailout funds, worth euro12 bil­lion, and will face a dis­as­trous default in July, when it runs out of money.

A default by Greece could drag down Greek and Euro­pean banks and renew fears over the finances of other euro­zone coun­tries such as Por­tu­gal, Ire­land and Spain.

Papan­dreou must still con­vince all the law­mak­ers from his Social­ist party to sup­port the aus­ter­ity bill, which has pro­voked strikes, riots and a slump in his pop­u­lar­ity. While all 155 Social­ists voted in favor of the con­fi­dence motion, sev­eral have pub­licly crit­i­cized the aus­ter­ity mea­sures and at least one has said he will not back them.

After the vote, riot police fired tear gas and stun grenades to push back a group of about 200 pro­test­ers who had bro­ken off from a main rally of sev­eral thou­sand to throw bot­tles and other objects at the police lines guard­ing Parliament.

“We will do every­thing in our power to end the state of inse­cu­rity Greek fam­i­lies face and exit this cri­sis in a safe way. We have a plan, we have prospects,” Papan­dreou said dur­ing a debate before his vic­tory. “Regard­less of the panic caused by some, we are on an orga­nized course, helped by the inter­na­tional com­mu­nity with mas­sive loans — the largest every given in the his­tory of our planet.”

Papandreou’s gov­ern­ment came to the brink of col­lapse last week as pro­test­ers rioted on the streets of Athens, two party rebels resigned their par­lia­men­tary seats and talks with the oppo­si­tion con­ser­v­a­tives over form­ing a pro-austerity coali­tion gov­ern­ment fell apart. In response, he reshuf­fled his Cab­i­net, replaced his increas­ingly unpop­u­lar finance min­is­ter with a party heavy­weight — his main inter­nal rival — and called for the con­fi­dence vote.

Euro­pean offi­cials have been press­ing oppo­si­tion leader Anto­nis Sama­ras to back the aus­ter­ity bill, which will run to 2015, two years beyond the cur­rent government’s man­date. But Sama­ras has insisted the think­ing behind it is wrong, say­ing it is keep­ing Greece in a reces­sion. He has called for a rene­go­ti­a­tion of the ini­tial bailout deal.

Papandreou’s los­ing the con­fi­dence vote would have likely led to early elec­tions and thrown into ques­tion whether Greece could pass the new aus­ter­ity mea­sures. Expec­ta­tions he would win lifted world mar­kets ear­lier in the day.

After the vote, Asian stock mar­kets, includ­ing Japan’s Nikkei 225 and Hong Kong’s Hang Seng, were higher in early trad­ing Wednes­day. Invesotrs were find­ing relief in what was viewed as a “cru­cial step toward sta­bi­liz­ing the whole debt sit­u­a­tion,” said Ben Pot­ter, a strate­gist with IG Mar­kets in Mel­bourne, Australia.

“In sum­mary, it looks like another broad-based rebound today as investor con­cerns ease over the Euro­pean debt sit­u­a­tion,” Pot­ter said in a note to clients.

As the Greek deputies voted, sev­eral thou­sand pro­test­ers gath­ered out­side Par­lia­ment chant­ing “Thieves! thieves!”, shin­ing green laser lights at the par­lia­ment build­ing and into the eyes of riot police pro­tect­ing it. Con­tin­u­ing strikes by elec­tric­ity com­pany work­ers object­ing to pri­va­ti­za­tion caused a sec­ond day of rolling blackouts.

“I under­stand the anger, the fear, and the ques­tion whether we will make it,” Papan­dreou said. “My answer is that we have been mak­ing it every day for the last 20 months, with dif­fi­cul­ties and mis­takes, with a price to pay and with sac­ri­fices but we are succeeding.”

Greece is being kept finan­cially afloat by a euro110 bil­lion ($157 bil­lion) pack­age of bailout loans granted by other euro­zone coun­tries and the Inter­na­tional Mon­e­tary Fund last year, and has imple­mented strict aus­ter­ity mea­sures in return, cut­ting pub­lic sec­tor salaries and pen­sions, increas­ing taxes and over­haul­ing its wel­fare system.

But the coun­try has strug­gled to meet it tar­gets, miss­ing many, and is now in nego­ti­a­tions for a sec­ond bailout, which Papan­dreou has said will be roughly the same size as the first.

Offi­cials from the IMF, Euro­pean Com­mis­sion and Euro­pean Cen­tral Bank who have been over­see­ing Greece’s reforms were in Athens Wednes­day to dis­cuss the new aus­ter­ity measures.

On Tues­day the new finance min­is­ter, Evan­ge­los Venize­los, promised that par­lia­ment will pass the unpop­u­lar aus­ter­ity pack­age by the end of June.

“We must fol­low this course to save the coun­try,” Venize­los said.

“Our Euro­pean part­ners … face us with dis­trust,” he said. “This is an atmos­phere that we have to change.”

Papandreou’s pop­u­lar­ity has been ham­mered by the lat­est aus­ter­ity mea­sures, with an opin­ion poll pub­lished Tues­day giv­ing the Social­ists a 20.1 per­cent approval rat­ing. Rival con­ser­v­a­tives fared mar­gin­ally bet­ter, at 21 per­cent, in the GPO sur­vey for pri­vate Mega tele­vi­sion of 1,000 adults. No mar­gin of error was given.

Posted by AP News on Jun 22 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.