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Greece passes austerity measures, readies for more bailout help

ATHENS, Greece — Greece has endured street violence and strikes for the sake of financial aid it was promised and needs to avoid bankruptcy. Now its fellow European countries will be expected to come up with a second rescue package to convince investors that the 17-nation euro will survive the debt crisis.

A new austerity package that lawmakers cleared in Athens is required to get more rescue loans but will force deep changes on all parts of society. Minimum wages will be taxed more and key assets like water, gas and oil companies will be sold, possibly to foreigners.

Having done what it was asked, Greece will now look to its bailout creditors to hold up their side of the bargain.

Finance ministers from the eurozone meet in Brussels on Sunday to rubber-stamp the release of a $17 billion installment of rescue loans from the existing $159 billion bailout.

They will also discuss the terms of a second rescue plan meant to reassure markets over Greece's longer-term prospects, although many experts say the debt pile is so big that some form of default will eventually be required.

"Greece has bought more time," economist Vagelis Agapitos said. "This time, however, will start running out rather quickly unless Greece starts to deliver on its promises."

Finance Minister Evangelos Venizelos, who has been in the job less than two weeks after being appointed in a Cabinet reshuffle, has openly admitted some of the measures are unfair. But he has insisted the country has no choice — Greece would have run out of money to pay salaries and pensions in mid June had it not passed the two austerity bills.

Caroline Atkinson, chief spokeswoman at the International Monetary Fund, welcomed the vote in Athens.

"This will pave the way for the completion of the fourth review by the IMF's executive board and the release of the next tranche," she said.

But Greece has only won a reprieve of a few months. The next batch of rescue loans will see it through September, after which it will once again have to prove it has implemented all it has promised before it can receive any further funds.

The details of a second rescue plan from Greece's international creditors will be crucial.

Prime Minister George Papandreou has indicated it will be roughly the same size as the last one — but it is unclear how much money will come from a voluntary debt rollover by private investors and how much of Greece's selloff of state assets will be used to plug the funding gaps.

The involvement of the private sector is likely to feature heavily at the Brussels talks after German banks agreed to roll over some of the debts Greece owes them. German Finance Minister Wolfgang Schaeuble indicated that about $4.6 billion in debt that is due for repayment by 2014 could be rolled over, though details have yet to be finalized. The news follows a similar announcement earlier this week from French banks, although details of the initiatives remain sketchy.

Greece needs the second rescue plan to clear up market worries about a default.

Fears of a debt default have weighed heavily on global markets in recent weeks. Investors worry that it could trigger a major banking crisis and turmoil in global markets, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.

Strikes in Britain

Hundreds of thousands of British teachers and public sector workers swapped classrooms and offices for picket lines in what unions hope will be the first salvo in a summer of discontent against the Conservative-led government's austerity plans. Union members marched through London and other cities to demand that the government rethink its plans to curb public sector pensions. Small groups of anticapitalist protesters scuffled with police as the march neared Parliament and were cordoned in by officers. Police said 41 people had been arrested in relation to the protests over the past 24 hours, although the demonstrations were overwhelmingly peaceful.

Greece passes austerity measures, readies for more bailout help 06/30/11 [Last modified: Thursday, June 30, 2011 9:19pm]
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