Greek Prime Minister Antonis Samaras mustered support inParliament to approve austerity measures needed to unlock bailoutfunds, in a tense vote that weakened his majority after theexpulsion of seven dissenting lawmakers.

The bill on pension, wage and benefit cuts was approved with 153votes in favor in the 300-seat Parliament early today, according toacting Parliament speaker Athanasios Nakos. A total of 128 votedagainst the bill, with 18 voting “present.” One lawmaker wasabsent.

Samaras fought to stem defections from the three-partycoalition, which boasted 179 seats when formed in June, as Europeanleaders including German Chancellor Angela Merkel look for signsthat Greek action justifies their efforts to keep the country inthe euro. The second round of cuts to pensions and wages this yeardrew more than 50,000 protesters to Parliament as the governmentargued for support of the bill.

“The wider prognosis is not good; the government has now lostmore than a third of its majority in 5 months,” Alex White, aneconomist at JPMorgan Chase in London, wrote in a note. “Lastnight's vote has demonstrated just how brittle the coalition is;while it has passed an important test, another serious challengecould be fatal.”

Samaras expelled one lawmaker from his New Democracy party forfailing to support the legislation while his main coalitionpartner, Pasok, which provides Samaras with the majority he needsto rule, expelled six lawmakers after the vote for their failure tosupport the legislation. Today, another Pasok lawmaker quit theparty to retain his seat as an independent, state-run Athens NewsAgency reported.

The Greek 10-year bond yield rose for a second day, adding 10basis points to 17.5 percent at 1:18 p.m. Athens time. Thecountry's benchmark ASE Index declined 2.3 percent to 807.24, thebiggest loser among western European stock markets today.

Approval of the austerity bill, which raises the retirement ageby two years to 67 and caps wages at state-run banks and companies,is the first of the votes required by Nov. 12 to get a 31.5billion-euro ($40 billion) aid tranche and avert a financialcollapse that could drive the country from the euro.

Samaras faces Parliament again when it convenes to vote on the2013 budget on Nov. 11, a day before euro-area finance ministersmeet to discuss whether to unlock the funds.

Extending Funds

German Finance Minister WolfgangSchaeuble signalled that Greece shouldn't expect finance ministersto free up the funds next week.

“We're not out of the woods yet,”Schaeuble said today in Hamburg. “At the moment, I don't see how wecan take the decision already next week.”

Samaras may get relief in the comingbudget vote from Democratic Left, the junior coalition partner with16 seats, who held back support from the austerity package thismorning to protest changes to labor laws it says have no fiscalbenefit.

Party leader, Fotis Kouvelis haspledged to support the budget, underlining his commitment tokeeping Greece in the euro.

“Greece today took a great, decisiveand positive step,” Samaras said in a statement after the vote.“This vote was a condition that will create jobs for our children,for all of Greece to see better days. The next step is the budget,which will also go well.”

The vote occurred on the second day ofa 48-hour general strike which shut down hospitals, schools andgovernment services and brought public transport to a standstill.Police estimated there were at least 50,000 people at a rallycalled against the measures, making it one of the biggest anti-austerity protests in the country since Greece sparked the Europeandebt crisis in 2009.

Officers clashed with protesters duringthe debate, using water cannons and tear gas to combat rioters withfirebombs.

They detained 103 people and arrestedfive in the violence and said seven officers were injured.

Bloomberg News

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