By a vote of 167-128, the Greek Parliament shortly after midnight on Nov. 12 easily approved an austerity-packed budget for 2013 that includes big pay cuts, tax hikes and slashed pensions as part of a $17.45 billion package that narrowly passed just four days earlier. Four voted present and one lawmaker was absent.
Only about 15,000 protesters gathered outside the Parliament this time, far less than the 70,000-100,000 estimated to have demonstrated during a cantankerous debate over the spending cut and tax hike plan that was being closely watched by European Union (EU) leaders.
While the first round produced a close vote, with Prime Minister Antonis Samaras getting only a three-vote majority in the 300-member Parliament because of defections from some Members of Parliament of his coalition partners, this time the PASOK Socialists and Democratic Left locked arms and gave him their support.
That did not include seven former PASOK members who were ejected from the party by leader Evangelos Venizelos for not backing the spending cut and tax hike plan earlier, nor one who later quit the party. Samaras had earlier ejected one member of his New Democracy Conservatives for not following his orders on how to vote.
Samaras had said that unless the Parliament adopted the spending cut plan for 2013-14 and the 2013 budget, that Greece’s lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) would not release a long-delayed $38.8 billion installment that is set to be the first in a second bailout of $173 billion. Greece has been surviving for the last 2 1/2 years on a first rescue package of $152 billion. Samaras had also warned that Greece would run out of money by Nov. 16 unless the Troika releases the money.
The vote came only hours before the finance ministers of the Eurozone, the 17 countries that use the euro as a currency, were to meet. Samaras had hoped that approval of the spending cut and tax hike plan and the budget would be enough for the EU leaders to sign off on the next installment but they have indicated they are going to wait for a report from Troika inspectors on whether Greece has made enough progress to reduce the deficit to 3 percent from nearly three times higher now.
The Troika said Greece must be on a path to reduce its debt-to-Gross Domestic Product (GDP) ratio, now at nearly 180 percent, to 120 percent by 2020, although officials have said it seems unlikely that can be achieved because the austerity measures have worsened the country’s five-year recession, creating 25.4 percent unemployment, closing 68,000 businesses and shrinking the economy 7 percent.
BREAKING RANKS
Former minister Costas Skandalidis, ousted from PASOK earlier for not backing spending cuts and structural reforms, voted in favor of the legislation, giving the government an extra vote. Giorgos Kasapidis, ejected from New Democracy for the same reason, also backed the bill.
Democratic Left MP Yiannis Panousis was absent and only two of the party’s other 15 deputies voted no while the party leader, Fotis Kouvelis, who made a public show of saying he opposed some of the harshest measures but voted present in the first round this time backed Samaras too.
In his speech moments before the vote, Prime Minister Antonis Samaras insisted that the coalition was on the right track to keep Greece in the euro. “Within a few days, we are changing all those things that had not been changed in decades,” said Samaras. He attacked Alexis Tsipras, head of the major opposition Coalition of the Radical Left (SYRIZA) as being “full of divisions” and having no plan to exit the crisis. He insisted that the three-party coalition would lead Greece out of the crisis. “Greece will exit the nightmare,” he said. “We will either exit united or we will not exit at all.”
Samaras said that the government aims to improve on the deficit and recession figures in the budget. He added that he would make a personal effort to bring more investments to Greece through economic diplomacy. Tsipras accused the government of giving in to the plans of German Chancellor Angela Merkel to make Greece a “debt colony.” He said to the government: “You agreed to everything the lenders demanded but now you accuse them of blackmail, why?”
He called the coalition government “part of yesterday” and said that SYRIZA would come to power following elections in the near future. Tsipras added that there was no point debating the 2013 national budget because none of the targets would be met because of the deepening recession.
Finance Minister Yiannis Stournaras snapped back and accused Tsipras of not wanting to pay Greece’s debt. “Where do you live Mr. Tsipras? Do you believe this stuff?” said Stournaras, who stressed that not keeping to its bailout program would lead to an exit from the Eurozone. He said that Greece would receive its next loan tranche on time. “Nobody can say Greece is not meeting its commitments. We are doing so, and then some,” he told MPs
While PASOK leader Evangelos Venizelos earlier ejected seven of his MP’s for not supporting the spending cut and tax hike plan, his remaining 25 deputies went along. But he lost the party’s General Secretary for Communications, Yiannis Datseris, who resigned. Datseris had remarked in a radio interview that PASOK was a “bubble of the post-dictatorship era”.
He also criticized ex-minister Andreas Loverdos in a newspaper article over the content of a book Loverdos wrote. Loverdos has frequently postured himself as a possible challenge to Venizelos’ leadership, with the party sinking in the polls to as low as 5.5 percent but keeps giving Venizelos his vote in the Parliament..
Venizelos said that recovery was in sight. “We can reach a primary surplus in the first half of 2013 and see the first small signs of growth in the second half of 2013,” he said. He also called on Greece’s lenders to stop holding back the country’s loan tranches and to agree on a comprehensive solution to its debt sustainability problem. “The technical solutions to Greek debt problems are straightforward and easy,” he said.
The 2013 budget forecasts a 4.5-percent contraction of the economy on the back of about 9.5 billion euros in spending cuts and tax hikes next year. It will be Greece’s sixth straight year of recession. The budget sees average unemployment next year at 22.8 percent. The decline in private consumption is seen at 7 percent, compared to a 7.7 percent fall in 2012.
If execution goes as planned, the budget will next year have a primary surplus of 748 million euros, or 0.4% of GDP, and an overall deficit of 5.2% of GDP or 9.4 billion euros. The budget foresees debt rising to 346 billion euros, or almost 190 percent of GDP, from 175 percent this year. EU and ECB officials say that means that Athens will not be able to reduce its debt to 120 percent of GDP by 2020, the level the IMF has said is the ceiling for debts to be sustainable in the long term.
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