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May 05, 2010

Greek Parliament Approves Stringent Austerity Measures

The Greek parliament approved tough new austerity measures to help curb its soaring debt and deficit as thousands of people demonstrated against them in Athens. European Union leaders are holding an emergency meeting on the crisis on Friday.

Thousands of protesters again took to the streets of Athens (on Thursday) to register their dismay at tough spending cuts that will affect their pensions and salaries. But the Greek parliament went ahead and voted in favor of the package of tough, new austerity measures, demanded by the European Union and the IMF in exchange for a $145 billion loan deal with the European Union and the International Monetary Fund.

The Greek government says the country has no option but to grit its teeth and cut spending to tackle the soaring debt and public deficit.

Polls show a measure of popular understanding.

But this sentiment is far from unanimous - as seen from the reaction of this Athens resident.

He says he feels disgusted and desperate for the Greek nation that cannot find its way out of the crisis.

Despite the bailout crisis, concern is growing that Greece's crisis will spread and infect other shaky European economies. Moody's rating agency warned Thursday the Greek crisis risked affecting banking systems in other European countries, including Portugal, Spain and Britain. The euro also plunged to its lowest level in over a year, reflecting the jittery markets.

On Friday, leaders from the 16 eurozone countries sharing the European currency are meeting to sign off on the bailout package - and to discuss ways to prevent a larger crisis.

In Portugal, European Central Bank President Jean-Claude Trichet sought to calm fears, saying there was no question of Greece defaulting on its loan repayments He said that shaky economies like Spain and Portugal did not face the same fate as Athens.

Trichet also defended the European reaction to the Greek crisis, saying it had been marked by consistency - including when it came to the bailout package. "We were unanimous on asking Greece to embark on a recovery program. My first point. We were unanimous in judging positively the recovery program that had been negotiated by the (European) Commission in liason with us and by the IMF," he said.

Critics say the EU was slow to respond to the Greek crisis. And they note Europe offered a divided response, with Germany initially reluctant to loan Greece money unless it agreed to new austerity measures.