Greece Shocked by Riot Deaths; Parliament Approves Draconian Saving Reforms
Greece's parliament approved Thursday the hefty cuts and reforms proposed by the government to address the country's financial crisis. Members voted 172-121 to pass the bill, which includes tax rises and cuts in pensions and public sector bonuses. Police used tear gas to disperse protestors who rallied outside. On Wednesday, three bank workers died in a petrol bomb attack as demonstrations over the planned austerity measures turned violent.
The deaths have shocked many in Greece. Bank workers have gone on strike in anger at the loss of their colleagues. Speaking in parliament ahead of the vote, Prime Minister George Papandreou said violence was “not a solution”.
“The future of Greece is at stake,” he said. “The economy, democracy and social cohesion are being put to the test.” He expelled three Socialist deputies from his parliamentary team for abstaining in the vote.
In New York, the Dow Jones Industrial Average (INDEXDJX:.DJI) plunged almost 1,000 points as investors succumbed to fears that Greece's debt problems would halt the global economic recovery. Greek Finance Minister George Papaconstantinou has warned Greece is two weeks away from defaulting on part of its debt; bonds worth 8.5 billion Euros fall due on 19 May. “We have done what was necessary, not what was easy,” Mr. Papaconstantinou said after the vote. “Without these measures, we'd be thrown into the deepest recession this country has ever known.”
He warned that the only way for the country to avoid bankruptcy was to take the 110 billion Euro bailout from 15 European countries and the International Monetary Fund (IMF), contingent on the three-year austerity programme. Those measures will mean a freeze on public sector pay until 2014, the average retirement age will rise by two years, and VAT will go up from 19% to 23%.
The aim is to achieve fresh budget cuts of 30 billion Euros over three years, with the goal of cutting Greece's public deficit to less than 3% of GDP by 2014; it currently stands at 13.6%. But Greece's conservative opposition leader has criticized the austerity measures as being too harsh. “The dose of the medicine you are administering is in danger of killing the patient,” Antonis Samaras was quoted as saying by AFP news agency.
Minor skirmishes broke out in Athens following the vote, as police moved to disperse a few thousand demonstrators who had gathered outside parliament. But the violence was quickly contained with riot police firing tear gas at the protesters, who had earlier thrown stones and bottles at them. Wednesday's deaths—the first such fatalities in protests in nearly 20 years in Greece—have shocked many people in Greece.
The Marfin Investment Group Bank branch where the two women—one pregnant—and a man died has become the focus for grieving, with a steady stream of flowers being placed at the front door by people paying their respects, the BBC's Duncan Kennedy in Athens reports. Shops and businesses have been clearing up after the riots. Many are boarded up, others are burnt out shells, he adds. Bank workers took to the streets on Thursday to demonstrate their outrage at the deaths. President Karolos Papoulias has warned Greece is on the “brink of the abyss”.
“We are all responsible so that it does not take the step into the void,” he said in a statement.
However, unions have been undeterred by Wednesday's events, urging members to continue demonstrating. The GSEE (Greek General Confederation of Labour) private sector union condemned the “fires, blind violence, vandalism”, but: “We are determined to pursue and extend our struggle to meet our fair demands.”