ATHENS, Greece — Greek lawmakers passed a deeply resented new austerity bill Thursday, caving in to the demands of international creditors in order to avoid a national bankruptcy. The austerity measures won 154-144 in the 300-member parliament despite dissent from a prominent Socialist lawmaker who voted against a key article of the bill. The vote was expected to pave the way for a vital $11 billion payout from creditors within weeks so Greece can stay solvent.
Unions kept the country’s services crippled on the second day of a general strike, in opposition to the new measures that include pay and staff cuts in the civil service as well as pension cuts and tax hikes for all Greeks.
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BRUSSELS, Belgium — Europe’s efforts to solve its escalating debt crisis plunged into disarray Thursday, after Germany and France could not bridge their differences in time for a summit Sunday, forcing them to call a second meeting.
| Eurozone crisis efforts in disarray amid divisions |
| The offices of French President Nicolas Sarkozy and German Chancellor Angela Merkel announced that they needed more time after it became clear that the currency union’s two biggest countries could not agree on the main points of the plan. |
Former Labor Minister Louka Katseli voted against one article that scales back collective bargaining rights for workers. Although she voted in favor of the overall bill, Prime Minister George Papandreou expelled her from the party’s parliamentary group, whittling down his parliamentary majority to a bare three seats — down from 10 seats two years ago.
Passing the entire bill was “a matter of national responsibility for the critical negotiations that lay ahead in the next few days,” Papandreou said in a statement announcing Katseli’s expulsion. “The government exhausted every possible effort to incorporate proposals made by members of parliament.”
Greece now heads into a series of tough negotiations in Brussels involving the 17 finance ministers of the eurozone and European leaders. The meetings kick off on Friday, when eurozone finance ministers gather, with the finance ministers of the full 27-nation European Union in talks on Saturday, and the EU heads of state and government on Sunday.
Greece has avoid bankruptcy only with an $152 billion bailout loan from its 16 eurozone partners and the International Monetary Fund since May of last year. Creditors worried about Greece missing budget targets had demanded that Athens pass extra austerity measures before its gets the next payout. Greece says it will run out of money in mid-November without the next $11 billion installment.
The meetings on Greece this weekend are crucial because the efforts so far to get the country back on track financially have been failing. In July, eurozone leaders tentatively agreed to a second $150 billion bailout for Greece, conceding that the first was not enough.
That second bailout would also see banks and other private bondholders give Greece easier terms on its debt. European banks that hold Greek bonds are fighting efforts to make them accept larger losses, and many experts are concerned about the ability of European banks to handle a Greek default.
But Greece’s international creditors are warning that even the second bailout may not be enough to save the country from bankruptcy, according to a draft of a debt inspectors’ report obtained Thursday by the AP in Berlin.
The inspectors said Greece has missed its deficit-cutting targets and called the pace of its reforms insufficient. They still added that Athens should get the next Û8 billion tranche as soon as possible so it does not default.
Papandreou called on Greece’s eurozone partners to urgently end a deadlock in negotiations over a broader European debt deal.
“Europe is now at risk because of its inability to grasp the scale of the crisis in time — the systemic problems — and take the necessary decisions,” he told an emergency Cabinet meeting in Athens. “Europe must now assume its responsibilities — all of us in Europe. A small fire has become a pan-European fire.”
But fury at his government echoed across Athens.
“He [Papandreou] doesn’t know what is going on. For me, it’s the worst government of all time,” said protester Haralambos Tahoulas.
