Late on Thursday night Greek Prime Minister Andreas Papandreou was able to obtain enough votes for his government to pass legislation on a new set of tough austerity measures. This could not exactly be called a victory for Papandreou as violent protests were held outside the Greek parliament resulting in the death of one man. A two-day general strike was held to show discontent for the austerity measures.
After the vote passed, protests continued and violence once again erupted, continuing into the night, with at least 74 people were taken to the hospital. One man is dead.
The vote passed by 154 votes against 144. The cost-cutting agreement reduces wages and raises taxes which is highly unpopular to the Greek population. But Greece has no choice but to meet its international lender requirements as the country tries to avoid bankruptcy and secure the aid tranche as agreed by the troika (made up of the IMF, EU and ECB).
The new austerity measures come two years after the debt crisis first came to light in Greece. However, Greece’s debts still look unsustainable, and even if the passing of the new austerity bill will lead to further international aid, could it just be another stop-gap measure and not actually prevent Greece from default?
Disagreement between France and Germany may prevent eurozone leaders from reaching a crucial deal on a second bailout package for Greece at the EU Summit in Brussels this weekend.
Germany is pushing for banks to accept cuts of 50 per cent to 60 per cent in the value of their Greek bonds, while France is insisting that leaders should only make technical revisions to a preliminary agreement reached with private investors in July.
The weekend meeting of European policy makers in Brussels aims at taking steps to come up with a plan to finally end the region’s problems. But if the deep divide between France and Germany on how to bolster the European Financial Stability Facility will not be resolved at the summit, the single currency will plunge further, and risk spreading the debt crisis from Greece and other indebted peripherals to the rest of the euro zone.