Interim Greek government wins confidence vote

Prime Minister Lucas Papademos’ coalition wins large majority support for austerity and bailout plans.

Around 30,000 civil servants will be furloughed with partial pay under Greek’s austerity plans [AFP]

Greece’s new coalition government has won a parliamentary confidence vote with a large majority, proving support for a pledge by Prime Minister Lucas Papademos to speed up long-term reforms and secure a massive new bailout deal involving banks and rescue creditors.

In the country’s 300-member parliament, 255 members voted in favour of the new government formed last week by the majority Socialists, rival conservatives and a small right-wing nationalist party. Only 38 voted against, while the
remaining seven were absent.

Papademos’ government, which is temporary and is only expected to be in power for a few months, is tasked with pushing through the new debt deal agreed on last month and securing a vital installment of Greece’s initial
bailout loan.

Papademos must also oversee the implementation of a raft of austerity measures already passed, including increased taxes and the suspension of about 30,000 civil servants on partial pay.

Papademos’ coalition won support from the vast majority of deputies in both main parties and the right-wing party, as well as from a number of independents. All left-wing and communist party deputies voted against.

Greece is at the heart of a vicious debt crisis that has brought it to the brink of bankruptcy. In return for bailout loans, the previous Greek government had to force through a deeply resented austerity programme, which has seen repeated tax hikes, and cuts in pensions and civil service salaries.

Speaking just before the vote, Papademos called for unity in order to ensure Greece remains within the eurozone, and stressed that his brief government’s task is “disproportionally large” compared to the time it would be in power. Elections have been tentatively set for Feb. 19.

“There are no magic solutions,” he said. “I thank all of those deputies who supported the government and gave it a vote of confidence. I believe each of those votes represents a responsible decision to avoid placing our country’s membership of the eurozone in danger.”

Austerity details still under negotiation

After the vote, Papademos, a former vice president of the European Central Bank, is to meet with Charles Dallara of the International Institute of Finance (IIF), a global bank lobbying group that is negotiating Greece’s voluntary debt reduction.

Dallara met Finance Minister Evangelos Venizelos in Athens late on Wednesday, a ministry source told the AFP news agency. Greek officials will also negotiate over the phone with bankers in Paris and Frankfurt on the debt relief deal struck last month in Brussels.

The talks between Dallara and Venizelos covered the Greek rescue deal agreed by eurozone leaders in an all-night summit last month and “in particular the participation of private creditors”, the finance ministry source said.

The banks had agreed to accept a 50 per cent writedown on Greek debt as part of a second European bailout deal, which also gives Athens 100 billion euros in loans and 30 billion to recapitalise its banks.

But the details of the so-called “haircuts” must still be hammered out, and Dallara will head to Frankfurt to meet leaders of financial institutions that hold a significant chunk of Greece’s 350-billion-euro debt, the IIF said.

The European Central bank increased the pressure on Athens on Wednesday to commit itself in writing to deeply unpopular austerity measures and structural reforms demanded by its European Union and International Monetary Fund creditors.

Jean-Claude Juncker, who heads the group of eurozone finance ministers, said they would discuss before the end of November whether to release eight billion euros in frozen funds from a first rescue deal agreed in May 2010.

Greece needs the money before state coffers run dry on December 15. Papademos must then force through reforms required in return for the second bailout deal agreed in October.

“We are waiting for a letter from the Greek prime minister on the precise intentions of authorities regarding the recommendations made” last month, Juncker told the European parliament in Strasbourg, France.

Source: News Agencies

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