Greece passes key austerity plan

flovestock

Eric RegulY
ROME— Globe and Mail Update
Published Wednesday, Jun. 29, 2011 9:18AM EDT
Last updated Wednesday, Jun. 29, 2011 9:29AM EDT

Greece stepped back from the brink of default by narrowly voting in favour of a sweeping austerity program, early reports from Athens said, though the final tally was not known yet.

The “yes” vote in parliament will pave the way for fresh bailout loans at the risk of plunging the country into deeper recession.

The parliamentary vote was in danger of going against socialist government of prime minister George Papandreou because his PASOK party has only a five-seat majority in the 300-seat chamber.

The vote came after two days of often violent protests in central Athens. Some protesters tore up marble structures in Syntagma Square, facing the parliament building, to make stone-sized weapons that were hurled as police. Vehicles were burned and dozens of police and protesters were injured.

The vote to approve the austerity program may trigger more protests, violence and strikes.

The vote does not automatically secure new loans from the European Union and the International Monetary Fund. A second vote on Thursday, one that would approve the implementing legislation for the austerity program, is required to allow a loan agreement between Athens and the EU and IMF to be negotiated. Wednesday’s vote, however, is the more important of the two.

The austerity program approved Wednesday is worth about euros 28-billion through 2015, a figure that has been promised to international creditors. It includes a “solidarity levy” on incomes as low as