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Greece agrees to austerity plan to secure European Union, IMF rescue loans

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By Associated Press
Friday, May 7, 2010

ATHENS -- Greece's Parliament approved drastic austerity measures Thursday in order to secure a $140 billion international rescue package. Clashes briefly erupted in the streets outside Parliament, causing police to use tear gas on demonstrators.

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The rescue loans are aimed at containing Greece's debt crisis and keeping the troubles from spreading to other countries with vulnerable state finances, such as Portugal and Spain. The money will come from the International Monetary Fund and the 15 other governments whose countries use the euro.

Fears about Greece defaulting on its debt have undermined the value of the euro, and although the rescue package should keep Greece from immediate bankruptcy, the country's long-term prospects are unclear. Greece's economic growth prospects are weak, and the population's willingness to accept cutbacks may wane, leading some economists to predict an eventual debt restructuring.

Greek lawmakers voted 172 to 121 to approve the austerity measures -- worth about $38.18 billion through 2012 -- which will reduce pensions and civil servants' pay and raise taxes. Opposition parties lambasted the government for imposing measures that they deemed too harsh.

"The dose of the medicine you are administering is in danger of killing the patient," conservative opposition leader Antonis Samaras said.

Clashes broke out in Athens at the end of a protest that drew tens of thousands of people as police pushed back a few thousand demonstrators outside Parliament. The violence was quickly contained after police fired tear gas at the protesters, who had earlier pelted them with stones, oranges and bottles. Several small fires burned in surrounding streets. No injuries or arrests were reported.

Protester Thodoris Mougiakos said he was angry the IMF would control Greek finances.

"It's blackmail," the 32-year-old engineer said. "There is money, but they spend it on things like armaments and businesses. The church has money, too. If we had been drawing money from all these sources, we wouldn't be in this situation now."

But the protest was peaceful in contrast with Wednesday's rioting, which left three people dead, 59 injured and 25 arrested. Police said 50 stores, banks and offices were damaged and seven vehicles damaged or burned.

Finance Minister George Papaconstantinou said Greece would default on its debt payments this month unless it received bailout loans from the IMF and the 15 euro-zone countries that had remained divided for months on how to aid Athens.

"We have done what was necessary, not what was easy," Papaconstantinou said after the vote. "Without these measures, we'd be thrown into the deepest recession this country has ever known."


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