Submission of the Greek Prime Minister George Papandreou to avoid the first sovereign default to the euro area will now culminate with a vote of the budget in a Parliament besieged by protesters in a wave of national strikes.
Papandreou may scrape through approval by stifling dissent of 155 votes he instructs Parliament's 300 seats and recruiting opposition allies to offer a set of austerity 78 billion euro ($112 billion) that will determine if its indebted countries may be save more money. Rallying legislators might be easier than adopting the plan as the Greek discontent deepens on an increase in taxes and what is called "crisis wages charges."
"Opportunities for Government and parliamentary approval," said Wolfango Piccoli, analyst Eurasia Group in London. "But this will be a Pyrrhic victory and an election expected later this year or early 2012 is almost certain." "It is difficult to see how the Government can implement the necessary measures to meet the conditionalities of rescue."
Legislative Assembly of the Greece remains the subject of demonstrations that yesterday clogged downtown Athens with more than 20,000 people in the first half of a general strike for 48 hours. Thirty-seven policemen were injured and clouds of tear gas filled the air as youth hooded brandishing clubs shattered Windows at the Corp. (MCD) a McDonalds restaurant and burned vehicles.
At 10: 30 last night, police estimated the crowd outside Parliament to 8,000. Officers used more tear gas against demonstrators rush the enclosures of the legislature.
Despite the impasse will continue today, with a group who has camped before Parliament with the intention of blocking access to the building at 8 o'clock in the morning to prevent voting will take place. Trade unions provide a second series of marches and demonstrations. The vote is scheduled for 2 hours.
Papandreou called on legislators to "do their patriotic duty" and to adopt the Bill of austerity. That and a vote tomorrow managed to allow the implementation of the plan would allow Finance Minister Evangelos Venizelos to appear at a meeting of finance ministers this weekend in Brussels.
The Prime Minister had difficulty in gathering the support of the opposition to the package while keeping his own party in line. He has appointed a new Finance Minister to stem defections, survived a vote of confidence and described 5.6 billion euros of additional fiscal measures, including a 5% tax on the salaries of legislators. June 24, he won a pledge for a second rescue of the European Union leaders plan to condition, it can provide internal support.
In a gesture that could help Papandreou, the Group of the Democratic Alliance of lawmakers, a party founded by the former Minister of Foreign Affairs Dora Bakoyannis, said late yesterday that its five lawmakers in Parliament should vote "according to their conscience" taken into account "the immediate bankruptcy danger" that the country.
Failure to pass two bills can lead to first euro area sovereign default as Greece needs cover 6.6 billion euros ($9.4 billion) of bonds maturing in August. Greek Government officials said they may have also not cash to pay salaries and pensions mid-July.
As Papandreou races for the agreement, the German Finance Ministry officials will meet with banks and insurers in Berlin today. They will use a French proposal as a blueprint for the discussion to find an agreement on their role in a Greek rescue operation, said two people with knowledge of the case.
Officials and leaders of the EU have considered Papandreou to draw the widest possible support for a program that goes beyond 2013, when it is then expected to deal with surveys. Economic and Monetary Union Commissioner Olli Rehn, said yesterday that there is no "plan B" for the country if the laws are not passed.
"The European Union continues to be ready to support the Greece," Rehn said in Brussels. "But Europe can help only Greece Greece contributes to itself".
Christine Lagarde, yesterday named as next head of the Monetary Fund International, called the Greece opposition parties to provide support. The IMF provides approximately 30% of the Greece bailout funds.
"They need to put aside political differences and work in the service of their country", she said France of TF1 television.
Antonis Samaras, head of the opposition party more great new democracy, has defied calls and repeated yesterday that his party will vote against the Bill.
While Papandreou yesterday appeared to have enough support, there is always a risk that the package could go, according to Christian Schulz, an economist, based in London, Joh. Berenberg, Gossler & Co. said in a note.
"Risks remain," he said. "The result of the Greek votes is not certain, and it could still be surprises negative when it comes to the vote on the law of implementation."
Venizelos said late yesterday that the Government considers all vote for the austerity and a law that accompanies it as "a very courageous and responsible action". He spoke after Socialist Parliament Vasso Papandreou said that it will return the package "in full knowledge that I am choosing the knife over the gun."
Apart from the sale of property of the State as an issue for Public Power Corp SA (PPC), the monopoly of the former power and levies ranging from 1% to 5% on wages, Papandreou plan includes an increase in taxes on restaurants and bars, higher heating oil taxes and lower the threshold non-taxable to 8,000 euros from 12 000 euros currently. Greek newspaper to Vima calculated the additional burden for the family Greek four to 2,795 euros per year, on the same income a month on average.
Implementation of austerity measures more threat to deepen a recession in three years and to complicate efforts to increase the revenue of the Government. Gross domestic product Greek, who was contracted by 4.4% in 2010, will drop another 3.8% this year, according to a report of the EU inspectors and the IMF in June. Burden of the debt of the countries peak at 166% of the GDP in the next year is already the most important in the history of the euro area.
To contact the reporters on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net; Natalie weeks in Athens at the nweeks2@bloomberg.net
To contact the editor responsible for this story: James Hertling at the jhertling@bloomberg.net
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