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Greece readies for crucial austerity vote

ATHENS, Greece — Greece’s fragile coalition government faces its toughest test so far when lawmakers vote Wednesday on new painful austerity measures demanded to keep the country afloat, on the second day of a nationwide general strike.

The (euro) 13.5 billion ($17.3 billion) package is expected to scrape through Parliament, following a hasty one-day debate. But any defections or abstentions could severely weaken the conservative-led coalition formed in June.

The Greek Parliament has to approve the package of spending cuts and tax increases agreed with the country’s international creditors so that it can continue receiving vital bailout loans. The next loan installment of (euro) 31.5 billion, out of a total of (euro) 240 billion, is already five months overdue and without it, Prime Minister Antonis Samaras has said, Greece will run out of euros on Nov. 16.

If Athens cannot raise sufficient funds otherwise, it will quickly find it impossible to pay its huge debts. The government would then be forced into reissuing its old currency, the drachma, to pay bills and wages. As well as pushing the country out of the 17-country group that uses the euro, this could trigger a nightmare of bank runs, hyperinflation and currency depreciation that would vaporize savings and put even the most basic goods out of the reach of many Greeks.

Should Greece be forced into a default and begin printing its own currency, the entire eurozone’s finances would become increasingly shaky as markets would assume other countries in the bloc might be the next to go. Investors would begin to pull their money out of the region or demand higher returns to keep it there.

“We must vote in favor of the measures,” conservative New Democracy lawmaker Constantinos Tassoulas urged Parliament at the start of Wednesday’s stormy debate. “It is our duty.”

The measures being debated include new deep pension cuts and tax hikes, a two-year increase in the retirement age to 67, and laws that will make it easier to fire and transfer civil servants who are currently guaranteed jobs for life. The country is suffering a deep recession set to enter a sixth year, and record high unemployment of 25 percent.

Opposition parties accused the government of trampling on Greece’s constitution with the proposed cuts in pensions and benefits, and complained that the several hundred pages-long bill was too complex to be debated in a single session.

“This is blackmail,” main opposition Radical Left Coalition MP Zoi Constantopoulou said.

The debate, scheduled to end around midnight, was delayed after opposition parties called for Parliament to rule whether the bill is unconstitutional. The motion was rejected by roll-call an hour later.

Adding to the confusion, judges in the country’s Supreme Court ruled that new cuts to their own pay contained in the draft bill were illegal.

Samaras’ small Democratic Left coalition partner has said it will not back the measures, while a handful of lawmakers from the third coalition party, the Socialists, are expected to vote against the austerity package.

The government combined has 176 of Parliament’s 300 seats, and needs a simple majority of those present to pass the bill. Without the Democratic Left, Samaras’ conservatives and the Socialists control 160 votes. However, there is still a threat of more dissenters.

Greece’s main trade association warned that the new cutbacks would further reduce consumer and government spending, driving even more retailers out of business.

“To vote for the measures ... will deal the coup de grace to an exhausted and battered society,” association head Vassilis Korkidis said Wednesday. “In effect, the package will starve the market of the last reserves of liquidity that could have allowed businesses to maintain even minimal activity.”

While Samaras has been facing increasing pressure at home, other members of the 17-country eurozone have been doing what they can to ensure Greece stays in the currency group. Germany’s Chancellor Angela Merkel, for example, has softened her previous tough stance — paving the way for a deal to let Greece take more time to meet loan conditions.

Even if Parliament approves the draft legislation, it is not clear whether Greece will receive the next bailout installment in time for Samaras’ Nov. 16 deadline. The payment was expected to be approved at a meeting of European finance ministers on Monday Nov. 12. However, the ministers’ vote hinges on a report by the so-called troika of austerity inspectors from the European Union, IMF and European Central Bank — which may not be ready in time. In this case, the EU or ECB may have to step in with some interim financing.

The vote in Athens comes on the second day of a 48-hour general strike which has shut down the public administration, left hospitals functioning on emergency staff and closed schools and tax offices. All ferry and train schedules have been canceled until Thursday, flights will be disrupted by a four-hour air traffic controllers’ strike and Athens will be without public transport for most of the day.

Two separate anti-austerity demonstrations are expected to converge on Parliament in the afternoon, at the height of the debate on the new cutbacks. Earlier, a few municipal employees briefly invaded the Ministry for Administrative Reform, and about 40 uniformed police officers protested outside Parliament.

On Tuesday, more than 35,000 people marched through central Athens to express their anger at the new belt-tightening.

The country’s biggest union has also called for a demonstration outside Parliament on Sunday evening, when the 2013 state budget is due to be voted on.

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