Greece's Parliament Approves Austerity Measures
RENEE MONTAGNE, host:
This is Morning Edition from NPR News. I'm Renee Montagne.
STEVE INSKEEP, host:
And I'm Steve Inskeep. Good morning.
This is the day that Greece either accepts the latest phase of a bailout or says no. The Greek parliament is voting on new austerity measures - Greece's end of a bargain in exchange for billions of dollars in aid from Europe and the International Monetary Fund. NPR's Sylvia Poggioli is covering this story from Athens.
SYLVIA POGGIOLI: Hi, Steve.
INSKEEP: What are the chances of the Greek parliament approving new austerity measures given that demonstrations have been in the streets for weeks?
POGGIOLI: Well, the forecasts have been fluctuating for the last couple of days. The government of Prime Minister George Papandreou has a majority of five seats in the 300-member parliament. And over the last few days some of the more vocal socialist critics of the measures from his own party seem to have closed ranks around the government, except for perhaps one deputy.
There are actually two key votes. Today it's on the $40 billion austerity package, which includes an ambitious privatization program. And tomorrow the deputies vote on legislation to implement the new austerity measures.
European Union leaders had hoped the center right opposition would also give it support. But the new Democracy Party leader refused, calling for a renegotiation of the entire package. So it's likely to pass but by a narrow margin.
INSKEEP: And let's remind people that one reason we've paid such close attention to the Greek crisis is fear that a financial crisis, a financial collapse there could spread and have effects across Europe and even in the United States. But, of course, Greeks on the streets see it very differently, and they're in the middle of a 48-hour strike. What's it like to be in Athens in the middle of a 48-hour strike, Sylvia?
POGGIOLI: Well, I shouldn't say this, but it's incredibly pleasant, because it's much quiet. There's hardly any traffic, at least in the center of the city.
So but then you go into the main square where they're protesting and they start - as most protests here, they started peacefully and then sort of - then there were clashes between some of the protestors and the police. And there was an awful lot of teargas and we all got - our eyes were stinging for quite a while.
But essentially the strike is - it's the first time since 1974 for the return of democracy in Greece that the unions have gone on such a long strike. So it's definitely a message to the deputies that, you know, there's three-quarters of the population here basically are totally opposed to these measures. And there are a lot more protests expected outside the chamber today.
INSKEEP: And if the streets are quiet that suggests that people are heeding this call for a widespread strike across at least Athens where you are.
POGGIOLI: Absolutely. And the only thing that's working is the metro, which the reason is to allow people to come to the center and protest. And, you know, it's - the austerity measures have already hit very hard and they are very, very upset about another further blow. There's a lot of controversy over this new package that the government's going to pass.
INSKEEP: OK. So we're talking about a wide range of efforts that will affect people all across society. But what if parliament were to reject these austerity measures?
POGGIOLI: Well, the government says it will run out of money by mid-July and be unable to pay any public workers' salaries or pensions unless it receives this next $17 billion installment from the EU and IMF.
That would mean a no vote default on Greece's $467 billion debt. But nobody really knows what will happen, because it's not only a Greek crisis but a European crisis. As you said, there's an enormous fear that a Greek default would have a contagious effect in Ireland and Portugal, which are also heavily indebted.
And the victims won't be just countries, but also the major financial institutions in Europe and primarily French and German banks, which hold more than a half a trillion dollars of the three countries' sovereign debt. And then the ripple effect could also spread to Spain, Italy, Belgium and beyond, involving also global financial institutions.
INSKEEP: Well, given that, are there Greeks saying essentially we don't have to do these austerity measures because the Europeans will be forced to loan to us regardless. They don't have any choice. They're desperate.
POGGIOLI: Well, that's certainly what a lot of people on the street will say. But yesterday the EU economic commissioner Olli Rehn said that there is no plan B. And yet, of course, you know, European leaders are aware that the whole Euro Zone is at stake here.
But they've been divided on what to do. Each one more concerned about his or here domestic problems. They've been unable to come up with a broad overall solution.
But nevertheless, I think it's really unlikely the Europeans are going to stand by and watch it all unravel. But there's concern that it will be just another stopgap measure and that they won't really tackle the basic short comings of the whole Euro system and realize that this financial crisis has turned into a political crisis.
INSKEEP: Sylvia, it's always a pleasure speaking with you.
POGGIOLI: Thank you, Steve.
INSKEEP: NPR's Sylvia Poggioli is in Athens.
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