Greece surveys riot damage as politicians pass austerity vote
Europe gave Greece until tomorrow to convince sceptical international creditors that it would stick to the punishing terms of a multibillion-euro rescue package, endorsed by parliament as rioters torched downtown Athens.
Lawmakers backed drastic cuts in wages, pensions and jobs on Sunday as the price of a €130bn bailout by the European Union and International Monetary Fund to avert a messy default that would send shockwaves through the eurozone.
Scenes of running battles between police and rioters and flames engulfing cinemas, shops and banks underscored a sense of deepening turmoil in the country after more than four years of recession and two of punishing austerity.
The EU warned yesterday that the consequences of failure would be "devastating".
It gave the fragile ruling coalition of prime minister Lucas Papademos until tomorrow, when eurozone finance ministers are expected to meet, to specify how €325m of the €3.3bn demanded in budget savings will be achieved.
By the same deadline, Greek political leaders must give a written commitment to implement the terms of the deal, a Greek government spokesman said, reflecting fatigue among EU leaders who say they have heard enough broken promises.
The spokesman said Greece would hold an election in April, when deep public anger over the second round of austerity could drive voters further to the left and right and test Greece's commitment to the programme.
Eurozone paymaster Germany said ahead of the vote that it was losing patience with throwing money into the "bottomless pit" of Greece's debt crisis.
"Now we need to wait and see what comes after the legislation," economy minister and deputy prime minister Philipp Roesler said.
"We have taken one step in the right direction but we are still far from the goal."
Greece needs the international funds before March 20 to meet debt repayments of €14.5bn.
The deal provides for a bond swap to ease Greece's debt burden by cutting the real value of private-sector investors' bond holdings by some 70pc.
The terms of the debt talks will be announced after eurozone finance ministers meet tomorrow.
They will include a new average interest rate of 3.5pc for bondholders and an additional warrant linked to Greek growth, one of the sources said.
"It will be concluded in March," Greek government spokesman Pantelis Kapsis said of the debt swap deal.
Mr Papademos is likely this week to replace one minister and five deputies who quit over the rescue bill. He had warned of a "social explosion" if lawmakers rejected the deal and Greece defaulted.
The cuts include a 22pc reduction in the minimum wage and 150,000 jobs from the public sector workforce by 2015.
Unemployment in Greece reached 20.9pc in November.