News / Europe

Greece Readies Tough Austerity Package for Bailout

Greek riot police officers charge protesters at Syntagma square in front of the Greek Parliament in central Athens, during minor scuffles following a peaceful ongoing rally against plans for new austerity measures,  June 22, 2011
Greek riot police officers charge protesters at Syntagma square in front of the Greek Parliament in central Athens, during minor scuffles following a peaceful ongoing rally against plans for new austerity measures, June 22, 2011
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Greek Prime Minister George Papandreou is now pushing for approval of unpopular austerity measures that are aimed at securing emergency international bailout funds to keep the country from defaulting on its debt.

Earlier Wednesday, Papandreou survived a crucial parliamentary confidence vote, making passage of the controversial economic reforms more likely.

Crowds in the square outside parliament reacted angrily to the vote. Riot police used tear gas to disperse protestors who broke off from the main rally.

Many Greeks said that while they understand the need to get the public debt under control, they feel the government, the European Union and International Monetary Fund are not going about it the right way.

But EU leaders are adamant that Greece move ahead with sharp economic reforms including increased taxes and privatizations of the public sector before they release the next $17 billion of last year's promised $160 billion bailout funds.

Wednesday's confidence vote fell strictly along party lines, indicating that Papandreou will continue to face challenges to the reform program. The vote passed with 155 lawmakers backing the government and 143 voting against it. Two abstained.

Following the vote, Asian stock markets rose, with Tokyo's Nikkei gaining 1.8 percent.  The euro also managed short term gains.

EU leaders are to meet in Brussels Thursday to further discuss the debt crisis.

Papandreou is appealing to lawmakers to pass his package of spending cuts, tax hikes, and the sale of state assets. He warned parliament that Greece would face bankruptcy and default next month if it fails to back his reforms and secure the loan payment.

The opposition and some members of the prime minister's own Socialist Party say the reforms will not work.

Economic analysts say a default by Greece could spark another global financial disaster.

Some information for this report was provided by AP, AFP and Reuters.

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