Samaras Secures Greek Austerity Bill

Seven dissenting lawmakers are expelled, fraying coalition's unity.

Greek Prime Minister Antonis Samaras mustered support in Parliament to approve austerity measures needed to unlock bailout funds, in a tense vote that weakened his majority after the expulsion of seven dissenting lawmakers.

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

Samaras fought to stem defections from the three-party coalition, which boasted 179 seats when formed in June, as European leaders including German Chancellor Angela Merkel look for signs that Greek action justifies their efforts to keep the country in the euro. The second round of cuts to pensions and wages this year drew more than 50,000 protesters to Parliament as the government argued for support of the bill.

“The wider prognosis is not good; the government has now lost more than a third of its majority in 5 months,” Alex White, an economist at JPMorgan Chase in London, wrote in a note. “Last night’s vote has demonstrated just how brittle the coalition is; while it has passed an important test, another serious challenge could be fatal.”

Samaras expelled one lawmaker from his New Democracy party for failing to support the legislation while his main coalition partner, Pasok, which provides Samaras with the majority he needs to rule, expelled six lawmakers after the vote for their failure to support the legislation. Today, another Pasok lawmaker quit the party to retain his seat as an independent, state-run Athens News Agency reported.

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

Approval of the austerity bill, which raises the retirement age by 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 31.5 billion-euro ($40 billion) aid tranche and avert a financial collapse that could drive the country from the euro.

Samaras faces Parliament again when it convenes to vote on the 2013 budget on Nov. 11, a day before euro-area finance ministers meet to discuss whether to unlock the funds.

 

Extending Funds

German Finance Minister Wolfgang Schaeuble signalled that Greece shouldn’t expect finance ministers to 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 we can take the decision already next week.”

Samaras may get relief in the coming budget vote from Democratic Left, the junior coalition partner with 16 seats, who held back support from the austerity package this morning to protest changes to labor laws it says have no fiscal benefit.

Party leader, Fotis Kouvelis has pledged to support the budget, underlining his commitment to keeping Greece in the euro.

“Greece today took a great, decisive and 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 of a 48-hour general strike which shut down hospitals, schools and government services and brought public transport to a standstill. Police estimated there were at least 50,000 people at a rally called against the measures, making it one of the biggest anti- austerity protests in the country since Greece sparked the European debt crisis in 2009.

Officers clashed with protesters during the debate, using water cannons and tear gas to combat rioters with firebombs.

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

 

Bloomberg News

 

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