- 30 июня 2011, 11:55
Greek parliament expected to approve next stage of cuts despite violent protests in Athens
The battle to prevent Greece lurching into disorderly default continues as lawmakers return to the Athens parliament on Thursday to approve the next stage in the hugely unpopular austerity package.
Having approved the €28bn (£25bn) programme of fresh taxes and cutbacks in principle on Wednesday, Greek MPs will vote on an enabling bill giving the government authority to implement the new measures speedily. Analysts are broadly confident that the legislation will pass but are still unconvinced that George Papandreou's administration can actually implement the tough measures in the face of deep public hostility.
"If we wanted to be cynical, or realistic, we could say that the disaster scenario has been averted for now but we may well be revisiting in three or six months," predicted Gary Jenkins of Evolution Securities in a research note on Thursday morning. Jenkins fears that Greece will fail to make enough progress to placate its European neighbours and the International Monetary Fund (IMF), which it relies on for its funding.
The financial markets were broadly calm on Thursday, following strong gains on Wednesday. The FTSE 100 index opened 22 points higher at 5878, after Asian markets recorded gains. The euro gained around 0.7 cents against the US dollar, to $1.4505.
European leaders have hailed Wednesday's vote, by 155 votes to 138, as a key moment in the debt crisis that has gripped the region for many months.
"The country has taken an important step forward along the necessary path of fiscal consolidation and growth-enhancing structural reform. But it has also taken a vital step back – from the very grave scenario of default. This was a vote of national responsibility," said Herman Van Rompuy, president of the European Council, and European commission president José Manuel Barroso in a joint statement.
Attention may shift to Italy, as the Italian cabinet meets on Thursday to approve its own austerity budget. This includes about €47bn of spending cuts and tax increases, and is rumoured to include a Robin Hood-style tax on financial transactions.
Wednesday's vote took place against a backdrop of clashes between protestors and police in Athens. About 100 people were treated in hospital, according to Reuters.
Several people reported that police officers had fired stun grenades and tear gas at peaceful crowds. But there were also images of individuals, some wearing gas masks, throwing stones or wielding sticks at police officers.
Further demonstrations are expected on Thursday.
A new EU/IMF rescue package for Greece worth about €110bn is expected to be agreed in the next few weeks.
Some form of Greek debt restructuring is widely seen as inevitable – the challenge is to find a method that will not be treated as a default by credit rating agencies. Eurozone finance ministers will meet on Sunday to consider a proposal from France under which lenders would agree to roll over their maturing Greek debt and buy new bonds.
John Lipsky, acting chief of the IMF, said on Wednesday that the private sector will have to be involved in the second Greek bailout.
"Eventually there will be on a voluntary basis some degree of contribution by private-sector creditors," Lipsky said.