EUROPEAN UNION

Europe cautiously positive after Greek austerity vote

As buildings around Greece smoldered on Monday, Europe was cautiously optimistic the country could see at least short-term economic stability following parliament's approval of another round of biting austerity measures.

The Sunday vote had been eagerly awaited by other EU member states, with warnings that failure to approve the plan - and a subsequent default by Athens - would throw the eurozone into crisis. If deputies had rejected the package, the Greek government said it would have been unable to secure funding in time to repay existing debts worth 14.5 billion euros ($19.2 billion) by a March 20 deadline.

At a press conference on Monday, German Chancellor Angela Merkel hailed the vote as she insisted the reforms agreed must be put into action. She said the vote was "a very important step," but stressed there "would not and can not be any changes" to the agreed program.

"This is not just about saving, it is also about structural reform and, on top of this, the European Union will help the institutions to be better set up," Merkel said. "It is important for us that Greece has a chance to return to the markets in the year 2020 with a debt sustainability of 120 percent."

German Finance Minister Wolfgang Schäuble responded to accusations that the reforms demanded of Greece were too harsh. "These measures are not about torturing anyone," he said, sitting alongside Merkel.

Merkel's spokesman, Steffen Seibert, meanwhile, insisted that the unpopular reforms were in Greece's best interests. "They are reforms in all political areas and they are measures that should, step-by-step, give the country back its financial room to maneuver, which it needs to foster new growth and jobs."

Much anger in Greece has focused on Germany, Europe's economic powerhouse and paymaster, which has been perceived as being behind the push for the austerity programs on Athens.

Olli Rehn said he was confident Greece was on the right path

Cautious optimism

EU Economic Affairs Chief Olli Rehn said he was confident Greece would take the extra measures demanded by its foreign lenders.

"[Sunday's] vote in the Greek parliament is a crucial step forward towards the adoption of the second program," Rehn told a news conference.

"I am confident that the other conditions, including for instance the identification of the concrete measures of 325 million euros, will be completed by the next meeting of the Eurogroup, which will then decide on adoption of the program," he added, referring to a demand by eurozone finance ministers last week that Greece make an additional 325 million euros in cuts.

The austerity package, which also includes a cut to the minimum wage and some 15,000 public sector layoffs, is intended to secure a new 130-billion-euro ($171-billion) bailout package - the second of its kind - from the EU and International Monetary Fund.

Greecemust now produce written commitments from the main party leaders that they will stick to the austerity program before and after elections which could come as soon as April.

Street clashes

As Greek lawmakers came together Sunday evening to vote on the latest package, as many as 100,000 protesters gathered in Athens and Greece's second city, Thessaloniki, in anti-austerity rallies that eventually turned violent.

Several buildings around Athens were set ablaze in the violence

Banks were among the buildings targeted by the rioters, and looting of shops and cafes was also commonplace. A historic building that houses a pre-World War II cinema was set on fire. Some threw firebombs at police, who responded with stun grenades and tear gas. At one point, tear gas infiltrated the parliament building.

Dozens of police officers and at least 37 protesters were injured in the violence, with at least 20 suspected rioters detained. State television reported that violence also spread to the islands of Corfu and Crete.

Critics on Monday said more austerity would only condemn the economy to an ever-deepening downward spiral.

"[Sunday'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," the head of the Greek Commerce Confederation, Vassilis Korkidis, said in a statement.

dfm/ncy (AP, AFP, Reuters)

Greek anger over new austerity measures

• Date 13.02.2012
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