The Greek government was under pressure yesterday to convince a skeptical eurozone that it would stick to the terms of a multibillion-euro rescue package endorsed by lawmakers despite violent protests.
Parliament backed drastic cuts in wages, pensions and jobs on Sunday as the price of a 130 billion euro (US$172 billion) bailout by the EU and IMF, as running battles between police and rioters in central Athens outside parliament drove home a sense of deepening crisis.
Firefighters yesterday doused the smoldering remains of movie theaters, shops and banks set ablaze in the capital. It was the worst violence in years, and spread from Athens to Greece’s second city of Thessaloniki and the islands of Crete and Corfu.
Eurozone finance ministers meet tomorrow.
The fragile ruling coalition of Greek Prime Minister Lucas Papademos has until then to say how 325 million euros of the 3.3 billion euros in budget savings will be achieved.
Brussels also wants written commitments from party leaders that they will implement the terms of the deal even after an election penciled in for April.
However, a recession, now in its fifth year, and two years of painful spending cuts have shaken the political establishment to its core. Voters could be driven further to the left and right, straining EU confidence in whether Greece will hold the course.
First reaction from eurozone paymaster Germany was cautious.
“Now we need to wait and see what comes after the legislation,” German Minister of the Economy and Deputy Prime Minister Philipp Roesler said on German television.
“We have taken one step in the right direction, but we are still far from the goal,” he said.
Critics said more austerity would only condemn the economy to an ever-deepening downward spiral.
“Yesterday’s vote in the parliament may have saved the country temporarily from default, but the Greek economy is going bankrupt and the country’s political system is failing,” the head of the Greek Commerce Confederation, Vassilis Korkidis, said in a statement.
Papademos had warned of a “social explosion” if lawmakers rejected the deal and Greece defaulted next month. They passed it after 10 hours of fiery debate.
However, the unrest outside, and a rebellion by 43 parliamentarians of the ruling coalition, suggested Athens might already be on the brink.
“The people yesterday sent a message: Enough is enough! They can’t take it anymore,” said Ilias Iliopoulos, general secretary of public sector union ADEDY.
The cuts include a 22 percent reduction in the minimum wage and 150,000 jobs from the public sector workforce by 2015.
Greece needs the international funds before March 20 to meet debt repayments of 14.5 billion euros, or suffer a chaotic default that would send shockwaves through the eurozone.
The deal provides for a bond swap to ease Greece’s debt burden by cutting the real value of private-sector investors’ bond holdings by about 70 percent.
Greece would have missed a Friday deadline to offer a debt “haircut” to private bondholders if the vote had not passed.
However, in comments that could further sow doubt in the minds of eurozone finance ministers, conservative New Democracy leader Antonis Samaras — a frontrunner to be the next prime minister — indicated Athens might yet try to renegotiate the deal.
“I am calling on you to vote for the new loan agreement because I want to avoid falling into the abyss, to restore stability,” he told Sunday’s parliamentary debate, “so that we can have the possibility tomorrow to negotiate and change the policy that is being imposed upon us today.”