Papandreou wins austerity plan vote

Written by Bloomberg | Updated: Jun 30 2011, 09:03am hrs
Greek PM George Papandreou clinched enough votes to pass the first part of an austerity plan aimed at meeting European Union aid requirements and staving off default for his debt-laden nation.

After gaining 155 votes in the 300-seat Parliament, Papandreou is now on track to secure a bill setting out the strategy for a 78 billion-euro ($112 billion) package of budget cuts and asset sales that is the condition for further rescue funds. The vote, overshadowed by a 48-hour strike, became the target of protests outside the parliament that saw the police fire tear gas at demonstrators.

The euro gyrated through the course of the roll-call vote as wavering lawmakers clarified their positions. Attention now shifts to the vote on a second bill tomorrow that authorizes implementation of the measures. A successful vote would allow finance minister Evangelos Venizelos to attend a meeting of European counterparts on July 3 for talks on releasing a fifth tranche of aid from last years 110 billion-euro bailout.

The overriding feeling across Europe will be relief, Tobias Blattner, an economist at Daiwa Capital Markets Europe in London and a former ECB official, said before the vote. There will always be people who say it wont really change anything and well still get a haircut, but at least it will buy time and calm the markets.

Scores of police lined up to guard parliament against protesters amid the risk that failure to pass the austerity package could have led to the euro areas first sovereign default. Greece needs to cover 6.6 billion euros of maturing bonds in August and government officials have said they may lack money to pay wages and pensions by mid-July.

Trichet urges new vision for Europe

ECB President Jean-Claude Trichet urged policy makers to revitalise the vision of an integrated Europe. These days, Europe and the benefits it brings have come to be taken for granted, Trichet said in a speech in Brussels on Tuesday. Thanks to the success of European integration, the threat of war has become a memory of the past for many Europeans, in particular the younger generation. This makes it all the more urgent to develop a renewed vision of the kind of Europe we want and indeed need. Trichet spoke just hours after police fired tear gas on demonstrators in Athens. Each generation needs to affirm its commitment to Europe, he said.