Business Blog Posts

The government of Prime Minister George Papandreou, which won a first vote on Wednesday by 155 votes to 138, expects to pass the second and final bill covering detailed measures to implement the 28 billion euros in tax hikes, spending targets and privatizations agreed as a condition of an EU/IMF bailout.

Parliament resumed debate at 9:30 a.m. (0630 GMT) and the decisive vote is not expected before 2 p.m. (1100 GMT).

After two days of violent protests in central Athens, which ground to a halt during a 48-hour strike by powerful public and private sector unions, teams of street cleaners swept up broken masonry and shattered glass overnight.

Only one member of the ruling Socialist party voted against Wednesday's bill and he was immediately expelled, leaving the government with 154 deputies in the 300-seat chamber.

Before the vote, it had not yet been decided whether deputies would be allowed to vote on individual clauses as well as for the overall law, as is common in Greece.

While Socialist lawmakers are expected to approve the legislation as a whole, some would vote against individual clauses, such as increases in a levy on heating oil and a rise in the minimum income tax threshold. In a bid to win over waverers, new Finance Minister Evangelos Venizelos offered some concessions on tax measures on Wednesday.

The conservative New Democracy opposition, which voted against the first bill but is broadly in favor of privatizations and some other reforms, said it was willing to support some measures in the second bill to have it passed.

"We will do what we can to support the government. Today we will vote for two chapters in the implementation law," said New Democracy lawmaker Nikos Dendias, a former justice minister.

Parliament must approve both bills for the European Union and International Monetary Fund to release a 12 billion euro loan -- essential for Greece to meet debt payments in July -- under a 110-billion-euro bailout agreed in May 2010.

World stocks rallied on Thursday for the third day running and the euro rose to its highest dollar level in 20 days on relief that Greece looked set to avoid the euro zone's first debt default.

Tents and protest banners remained in Syntagma Square outside parliament where demonstrators have camped for more than a month to show their anger at austerity measures driving many Greeks to desperation during the worst recession since the 1970s.

"The implementation law will pass, without problems," said Costas Panagopoulos, head of ALCO pollsters. "The problem for Papandreou is not in parliament, it is what is happening outside parliament: not in Syntagma Square which is just a few hundred protesters, but with the whole of Greece's 11 million people."

Implementing the measures will be hard for the government, which has fallen behind the opposition in opinion polls and has faced heated criticism from its own deputies.

Unions have vowed to oppose privatizations and other austerity steps. The Socialists, who halted Greece's privatization process when they came to power, must sell off 5 billion euros in assets this year or risk missing the targets under its EU/IMF program, which would cut off funding again.

"If Papandreou and Venizelos miss this last chance and do not proceed with the needed reforms and a real shrinking in the wasteful state, they and the country will face an explosive situation in the autumn with no way out," wrote center-right daily Kathimerini in an editorial.

The anger among the Greek population was underlined by violence on Syntagma Square as votes on the first bill were being counted.

Hooded youths and police fought battles into the night. The protesters set fire to the post office in the building where the Finance Ministry is located, and tried to set a bank ablaze. Across the square, the luxury King George Hotel was evacuated.

Doctors working with the demonstrators said they had treated at least 25 people for minor injuries and hundreds with respiratory problems at the adjacent Syntagma metro station. At least 40 police officers were hurt, the police union said.

The laws are also needed for talks on a planned second and longer-term bailout of about the same size, which will include some 30 billion euros in private sector participation.

Locked out of bond markets, Greece needs the extra cash to avert default and keep the debt crisis from spilling over to the rest of the euro zone.

(Additional reporting by Harry Papachristou and George Georgiopoulos; Editing by Robert Woodward)