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Eurozone crisis: Greece backs bailout conditions


Prime Minister Papandreou's government survives a confidence vote with a narrow majority.

Nevil Gibson
Wed, 22 Jun 2011

Investor optimism that drove worldwide sharemarkets higher overnight proved to be well placed as Greece's prime minister survived a crucial confidence vote in Parliament by a narrow majority.

Wall Street surged nearly 1% and other world markets rose as investors gambled the fears of a Greek default were overstated.

Prime Minister George Papandreou was able to rally his Socialist deputies (MPs) to support a package of tough budget cuts that European authorities have demanded as a prerequisite for a second bailout package.

In the late-night vote, Mr Papandreou's government won 155 votes in the 300-seat Parliament; 143 deputies voted against it, and two members didn't cast votes.
The success of the vote adds to the likelihood that the Greek parliament will pass the budget cuts – some €28 billion of them – by the end of this month.

There are two pieces of money at stake.

The first is a €12 billion quarterly installment on a €110 billion bailout package granted last year by the EU and the International Monetary Fund. Euro-zone finance ministers have said they are prepared to approve their portion if the budget cuts were passed. The IMF is likely to follow suit, though it has expressed a desire for firmer commitments from the Europeans.

The second piece of money is a fresh bailout package – likely around €100 billion – that Greece will need for 2012 and beyond. There remain differences in Europe over how to shape that bailout and it is expected to take at least a month, and possibly well into the summer, to work out.

The confidence vote came days after a mass protest over new government cutbacks shook Greece's political establishment and touched off a revolt within the ruling Socialist party.

In an effort to assuage both public opinion and the party rank and file, Mr Papandreou sacked the previous finance minister, who was seen as the architect of the austerity measures.

Nevil Gibson
Wed, 22 Jun 2011
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Eurozone crisis: Greece backs bailout conditions
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